‘Red flags just everywhere’: Audit of McHenry County Regional Office of Education raises concerns

State lawmakers are not happy with the finding in the Illinois auditor general’s latest audit of the McHenry County Regional Office of Education, which revealed for the sixth year in a row that the county missed state required deadlines and had unaccounted funds and expenses.

According to the state auditors, the McHenry County ROE failed to properly control its financial reporting process in 2019, did not correct inaccuracies on financial statements, had several examples of imbalances between accounts, did not implement previously recommended procedures, and failed to meet state financial reporting deadlines. The problems include misclassifying $152,000 and allowing 243,726 transactions to go unreported.

In addition to the findings in the audit, the ROE also failed to meet deadlines for reporting information to the state. Auditors told lawmakers on the Legislative Audit Commission on Wednesday that the ROE was supposed to submit financial documents by an August 2019 deadline after fiscal 2019 ended June 30, 2019, but all required reports were not submitted until May 2020.

“There’s red flags just everywhere,” said state Rep. Jaime Andrade, D-Chicago. “None of us here clearly feel comfortable with this audit at all. Every textbook flag is here of fraud. Maybe there’s no fraud, but we don’t know. But all of us feel this is a very serious situation.”

Regional Superintendent Leslie Schermerhorn faced lawmakers in Springfield on Wednesday to review the latest audit and said the mistakes are not a result of fraud. She said the cause for the office’s sixth audit in a row with accounting mistakes is because the office does not have a bookkeeper and the County Board controls the ROE’s budget.

“The decision of our County Board was to accept and perform our auditing responsibility,” Schermerhorn told lawmakers. “Consequently, the County Board has put my office through multiple debacles.”

Although audits have revealed accounting issues at the ROE since 2014, Schermerhorn, who took office in 2012, said the problems really started when the ROE lost its bookkeeper in 2016.

“Knowing what I know now, I’ll certainly be more hands-on with the County Board. Should it continue, I would request support, I guess support from this body, to mandate the County Board provide our office with a properly trained accountant,” Schermerhorn said.

Lawmakers said it appears the problem is with the County Board, which controls the purse strings for the ROE by passing its annual budget.

“If they’re going to be doing your business and then you’re in violation, they should be able to answer some of those questions,” said state Rep. Tony McCombie, R-Savanna, suggesting that County Board Chairman Mike Buehler, R-Crystal Lake, should be answering questions from lawmakers about the ROE.

Buehler, who was elected chairman in November, declined to comment Thursday and said he needed to have more discussions with local state lawmakers.

After the last audit, in 2019, then-McHenry County Board Chairman Jack Franks put the blame at Schermerhorn’s feet, saying the persistent errors – which began after she became regional superintendent in 2012 – had made the ROE one of the worst-run offices in the state.

“[Schermerhorn] violated state laws for five years,” Franks said at the time. “In the private sector, if that happened once, that board would fire her.”

Schermerhorn told lawmakers Wednesday that it would be “informative” for lawmakers to hear from Buehler.

“This really seems silly that you’re sitting before us because they won’t give you an accountant,” McCombie said.

She also suggested Schermerhorn work with McHenry County state lawmakers on finding legislative solutions.

The McHenry County ROE is one of 35 regional offices in Illinois. The ROE works with both the state and local school districts. The superintendent of the office is elected by local voters in each of the regions.

Although blame was placed on the County Board, Schermerhorn said she takes the final responsibility for the findings in the audit as superintendent.

However, Andrade said it isn’t really important who failed at their responsibilities but that mistakes are continuing to be made for several years and nothing is being done to correct it. Schermerhorn said it has been “virtually impossible” for her to do because of the responsibility the County Board has in the situation.

Illinois Auditor General Frank Mautino said his office is currently working on the fiscal 2020 audit of the McHenry County ROE.

“I don’t anticipate the findings are going to be much better this year,” Schermerhorn said.

The lack of change is what raised red flags for Andrade.

“If I would’ve told that to my constituents, I would’ve been gone two years ago,” Andrade said to Schermerhorn, who was reelected to a four-year term in 2018 in an uncontested election.

Staffing issues at the six-person office also are a part of the problem, Schermerhorn said. She pledged to take advice from the auditor general’s office and state lawmakers to improve the ROE’s accounting practices and hopes she can work with the County Board to find solutions to the issues.

Last year, 53% of McHenry County voters voted in a nonbinding referendum make a change to the ROE’s structure, whether through restructuring the office itself or combining it with another ROE. Action would need to be taken by state lawmakers, however.