NEW LENOX — Lincoln-Way District 210 officials will have to issue more tax anticipation warrants to fix past improper accounting practices, raising the district’s borrowing by $5 million, according to a district news release.
At Thursday's meeting, the Lincoln-Way board received a presentation and report from Crowe Horwath that identified inappropriate expenses and fund transfers.
The accounting firm examined bond issues from a 2006 referendum that led to the construction of North and West high schools, as well as improvements for Central and East.
“The result of these previous accounting discrepancies mitigated the deficit spending that was part of the district’s true financial picture from [fiscal years 2008 to 2013],” said Steven Langert, the district’s interim business manager, in a news release.
That picture has been bleak for the district as it has landed on the state financial watch list twice. State education officials are investigating the district – and five others on the watch list – to determine if it qualifies for more stringent oversight.
In an effort to control its multimillion-dollar deficit spending, district officials have planned to close North high school, but that action is being met with legal resistance from residents who are mostly North parents.
Residents have criticized the district for months over a lack of transparency and financial mismanagement. Crowe Horwath’s report of inappropriate expenses and fund transfers gave more fuel for those criticisms.
While district officials said all bond proceeds and investment earnings were accounted for and spent for legitimate school purposes, some of the discrepancies found by Crowe Horwath include:
• About $4.6 million meant for capital expenses instead used for other funds. Former Superintendent Lawrence Wyllie directed the bookkeeping department – without board knowledge or approval – to reclassify that spending as capital expenses.
• $10 million in bond proceeds from 2009 incorrectly deposited and spent as part of the life safety fund after the board gave direction to have the money deposited into the capital projects fund.
• About $32 million in bond funds used for temporary loans to cover expenses in the general, payroll and student activity bank accounts. The funds were then transferred back to the bond proceeds bank account.
The board approved a resolution Thursday to properly categorize all funds, transferring $4.6 million from the operating fund to other funds and about $366,985 from the education fund to the capital projects fund. Those transfers will require more tax anticipation warrants and increase the district's borrowing by $5 million.
Last year, former board member Christopher McFadden raised concerns to the district's former auditors about using money in one specific fund for other purposes and board Vice President Christine Glatz has said the former administration's accounting practices were "not very strong."
Superintendent Scott Tingley said Thursday district officials sought an agreed-upon procedures examination after identifying irregularities in bond proceeds. The board approved Crowe Horwath for the task in November.
Residents have petitioned for a forensic audit since last year.
When asked if the board would consider doing such an audit after the Crowe Horwath report, Board President Dee Molinare said a forensic audit is a broad statement and the report shows it is not necessary.