Millcreek School District Audit Raises Issues - WICU12/WSEE Erie, PA News, Sports, Weather and Events

Millcreek School District Audit Raises Issues

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Millcreek School District released the report of an independent audit conducted last fall and it's raising red flags.  The audit completed by the firm of Felix and Gloekler shows the district ended the 2012 school year with a $3.5-million dollar deficit, when some school officials and taxpayers believed there was a surplus.  

It also shows last July 23, someone approved the transfer of $5-million dollars from a capital projects fund to the general operations fund.  The audit firm did not return our calls, but we talked to audit specialist Vinnie Halupczynski at Malin Bergquist & Co.  He said capital bond funds for school districts and municipal organizations must follow very strict rules and regulations and should not be used for any other purpose.  "It is troublesome," said Halupczynski, "when those funds are transferred, what's the guarantee that the funds will be there to move back to the other account, for the capital needs.?" 

In this case, the funds were replaced on October 22, 2012, after the audit was underway.  But there could be a cost.  Bond proceeds in the public arena are tax exempt and moving them could impact that status and result in a fine from the IRS. But the biggest issue may be a failure of checks and balances that permitted the transfer.  " You typically would not want to have an environment where one individual perhaps could make this decision and move funds without another individual catching it in a timely manner," said Halupczynski. 

While he has no first hand knowledge of the issue, our expert said, "If someone in the course of their job detects an issue, he or she should inform the appropriate entities to correct the matter." 

Superintendent Michael Golde was in charge at the time of the transfer of funds.  He has been off the job on "administrative leave" since January 18.  So far, the district says that leave is a "personnel" matter and not because of any wrong doing.  We asked district solicitor, Tim Sennett which employees were aware of the inappropriate transfer of funds.  He said, "I'll have to look into that and get back to you."

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