County commissioners, Ennis School Board again discuss audit and accounting

VIRGINIA CITY – The Madison County Commissioners and Ennis School Board will work together to get estimates from auditors on the costs of two different levels of review of the school district’s finances.

This decision was made Wednesday at a joint meeting between the two boards and after nearly three hours of discussion.

The meeting was the second the two boards have held in the past month. At the first meeting, the school board made a decision to write a joint letter with the county commissioners to Montana Attorney General Steve Bullock seeking further clarification on his opinion that was issued in early February. That opinion stated the school district illegally spent adult education and transportation funds on the new school building.

At the first meeting between the two boards, the commissioners seemed to be favoring the joint letter to Bullock, but after a subsequent meeting with Deputy County Attorney Chris McConnell, they changed their mind.

McConnell told the commissioners earlier this month he would not support another letter to Bullock seeking clarification. The opinion from Bullock was clear the county commissioners could demand an audit and ultimately the remedy to the situation was going to be determined locally. The commissioners had already informed the school board they wanted an audit.

“Our office is not going to ask for another opinion from the Attorney General,” McConnell said. “We think we have what we have and we have to go from that point on.”

After Bullock’s opinion was issued in February, the county commissioners sent a letter to the Ennis School Board demanding an audit of a variety of funds going back seven years. The audit, the commissioners stated in the letter, was the only way to determine how the school district used taxpayer money and allow the community to move past the controversy that’s plagued it for more than two years.

Central to the issue is the Ennis School District’s use of non-voted levies to fund the construction of the new school, which was completed last month.

The school district spent about $9 million on the school; nearly half of that money came from the adult education fund, which is supported by non-voted levies. The use of money collected with non-voted levies was central to Bullock’s opinion.

During the past two years the county commissioners and the Madison County Attorney’s office have sought a variety of opinions and audits from state agencies. They first contacted the Montana Office of Public Instruction to request an audit of the Ennis School District’s books. OPI in turn responded with a letter – the conclusion of which continues to be debated.

The school board felt the letter from OPI in August 2010 said the funding of the new school was legal. However, OPI maintains now that isn’t the case and has publically supported Bullock’s findings that the Ennis school construction was funded illegally.

McConnell also talked the Montana Department of Administration about auditing the Ennis School District’s books, but the DOA declined as well. Finally, McConnell and the county commissioners went to Bullock for an opinion.

At the meeting Wednesday several of the Ennis School Board members were troubled that the commissioners changed their mind about seeking more clarification on Bullock’s opinion and essentially the two boards were back to square one.

Madison County Commissioner Dave Schulz explained the commissioners weren’t able to make an official decision at the March Ennis School Board meeting because it wasn’t noticed as a county commissioner meeting.

Since then, through the discussion with the other commissioners and McConnell, the commissioners have changed their mind.

The school board and its attorney, Elizabeth Kaleva, both felt Bullock’s opinion asks for a basic accounting, which they had done since the joint meeting with the two boards in March.

“We are providing more information than what the attorney general’s opinion had to do with,” said Ennis School Board member Jim McNally. “I think you and the general public both need to recognize that.”

However, Schulz still feels like the school board should conduct an audit because it’s the only way for the community, the school district and the taxpayers to move forward.

Recent meetings with Madison County taxpayers in Big Sky just reinforced the fact too many questions still swirl around the Ennis School District’s finances.

“There’s some incredible concern by people in Big Sky about what’s going on down in the Ennis School District,” Schulz said.

A complete audit will go a long way to put those questions to rest.

“I believe it’s the school’s obligation to pursue and the school’s obligation to pay for it,” he said.

Ennis School Board member Gary Croy said he was in favor of an audit, but that he didn’t want to take money away from students and teachers to do it.

“If you guys want to have an audit, then let’s do it and you pay for it,” Croy said. “I do think you guys have the power on your own to have an audit.”

Estimates on the cost of an audit varied widely and no one seemed to have a definitive answer. However, it seemed certain the more in-depth the audit, the more costly.

The county seems to be looking for a forensics audit, Kaleva said. A forensics audit would require a lot of time and would result in a very detailed look at the school district’s books, particularly as it pertains to the funds in question, which include adult education, transportation, and building reserve.

Kaleva also didn’t believe Bullock’s opinion endorsed such an audit.

“They’re (commissioners) asking for way beyond what was asked for in the attorney general’s opinion,” she said.

After the last school board meeting, district clerk Ginger Martello did an accounting of all the funds the district spent on the new school. An accounting of the funds the commissioners are concerned with dating back seven years would be less expensive and would seem to fulfill what Bullock described in the remedies portion of his opinion, Kaleva said.

However, everyone seemed to agree it was the commissioners right to ask for an audit, the question remained about who would fund the venture.

Ennis School Board member Jim McNally wasn’t pleased the commissioners kept pushing for a forensics-type audit.

The discussion first centered on what Bullock said in his opinion, now it’s beyond that, McNally said.

“The discussion has transferred from the attorney general’s opinion to a witch hunt,” he said.

But the whole point is to clear the air, said commissioner Dan Happel. If there isn’t anything wrong beyond spending money the district shouldn’t have on the new school, then an audit and the truth will determine that.

“The truth is not a witch hunt,” Happel said. “I clearly think it would behoove the school to work with us on this.”

If the question comes down to cost, then someone has to get some estimates on the scope and price of the audit, Croy said.

He believes the commissioners should get the estimates, to make sure no one can question the validity of the process.

One cost that everyone should be concerned with is the toll this is taking on the students and staff at the Ennis Schools, said Ennis High School Principal John Sullivan.

“It’s been a trying two years to keep our school moving in a positive direction,” Sullivan told the two boards and the nearly 40 people present at the meeting.

The issue is ultimately a question of local control, he said. The commissioners are exerting more control than is warranted over the school district.

“It’s an Ennis problem,” Sullivan said. “This should be a local control thing.”

But the issues surrounding the Ennis School District have been lingering problems dividing the community and the school district, said Virginia City resident Ellis Thompson. An audit would be a big step in the right direction.

“The whole thing’s going to be an open sore,” Thompson said. “Get it over with, get it started and get it going.”

The two boards finally agreed to seek the estimates. Commissioners will seek two estimates from four different auditing agencies on two types of audit: forensics and basic accounting. The language in the commissioners February letter to the school board demanding an audit would serve as the scope for the more in depth audit and the school board directed Kaleva to provide McConnell with the language for the more basic accounting.

Once the estimates are gathered, the two boards will reconvene and decide on the next step.

2 Responses to County commissioners, Ennis School Board again discuss audit and accounting

  1. RWright says:

    Can anyone at the courthouse read?

    Mr. McNally is the only one who seems to have that ability at Ennis’s school. Audit is a term with a precise definition. The attorney general said “an accounting” of funds used to build school. Translation a few thousand dollars.

    A forensic audit could cost hundreds of thousands. What a true waste of school taxpayer money. The county already paid its auditor to go over Ennis’s books and they found nothing wrong because is not illegal to build with nonvoted funds. The county treasurer has been signing budgets for Ennis.

    The controversy is spending transferred funds. The Attorney General’s ruling stands until overturned by a court or changed by new legislation.

    The commissioners need to sign up for reading comprehension at the new Adult Ed department.

  2. What the Madisonian put in the paper about my comments was greatly condensed, yes I am for the audit and get it started and done. I also said that 5-7years could probably lead to even more auditing(investigating) for another 5-7years past that. I also said that this needs to be taken care of by the Ennis School district, they are the ones that brought this whole thing on, so they should pay for it; not the whole county. The Ennis District has the money available, it just might be harder to get it in the necessary fund to pay for the audit now since the AG’s ruling.

    To RWright: I believe that a lot more of the people at the courthouse can read than you think. Also some of them say what they think and believe should be done, but some people don’t pay attention! This whole thing was brought to the commissioners attention years ago, back to when Ted and Frank were on the commission. Random House Webster’s definition of audit is “an official examination and verification of financial accounts and records”. The definition of accounting is “the organizing, maintaining, and auditing of financial records”! Seems to me they both will cover what needs to be done in this case!!! If it costs hundreds of thousands, do it! This is going to be an open sore that is just going to get worse until it is addressed. It is a fact that things were done wrong, now work at righting them and start doing them right. Don’t try to brush them under the rug and say we’ll do things right from now on. Any new superintendant is going to be very apprehensive about picking up and taking over the way things are now. Give the new person a chance of starting with a clean slate!!!!!!!!

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