Richland One put on ‘fiscal watch’ by S.C. Department of Education

COLUMBIA, S.C. (WIS) - Following an audit of district spending, the South Carolina Department of Education has placed Richland School District One under “fiscal watch.”

The audit, which spans from March 28 to August 27 of this year, details inappropriate spending and improper oversight of the district’s purchase-card program.

In a letter to Richland One leadership on December 6, State Superintendent of Education Molly Spearman wrote, “The findings listed in the audit report identify numerous significant deficiencies and material weaknesses that could potentially have a significant effect on the financial condition of the district.”

Board Chairwoman Cheryl Harris told WIS Wednesday that she is “confident” that with the internal controls the district has in place, it will correct these issues going forward.

Newly-elected board member Barbara Weston, and board member Robert Lominack, say these are significant problems.

Lominack said his concerns about spending had been ignored for months, and for things to get better, there needs to be a change in leadership.

In a statement, Lominack said, “I have repeatedly said that there seem to be two standards: one for our teachers and staff in our schools and one for the administration. We have high expectations for the former and virtually none for the latter. The board chose to defend the administration at all costs.

We have accepted mediocrity, and it is harming our district. Our students, teachers, staff, and R1 families deserve exceptional leadership that exemplifies integrity. It is time for a change. We cannot continue down this path.”

Weston, who ran on addressing misspending in the district, said she is not surprised by the review’s findings.

“In order to move forward, you have to acknowledge the fact that there are some issues and not sugarcoat it, and then address them,” she said.

There are three levels of budgetary concern for school districts under South Carolina law.

This one is the lowest level.

The second level is fiscal caution, and the most severe level is fiscal emergency.

The State Department of Education could take over the financial operations of a district under this designation if concerns are not addressed.

The audit found multiple instances where employees did not provide proper documentation on P-card purchases.

It also shows that personal purchases were made using the P-cards. One employee used it to make an Amazon Prime purchase, while another used it for a Sam’s Club membership.

The audit found at least 35 instances where p-card memberships were made with vendors that were supposed to be banned...

And at least 29 instances where the p-card was used by a different employee, which could be a fireable offense.

In releasing its corrective action plan, the district wrote in a statement, “We have been informed that the South Carolina Department of Education (SCDE) is putting Richland One on fiscal watch based on their findings from a P-card audit of the district. In reviewing the findings, Richland One still maintains strong internal controls (checks and balances), which include a review of all transactions on a monthly basis by our Procurement Department. As such, those checks and balances discovered issues concerning a former employee that were turned over to law enforcement.

The audit covered a period from March 28, 2022, through August 27, 2022. According to our records for this time period, the audit consisted of 426 statements with a total of 3,858 transactions. The audit found some exceptions. Of the 426 statements that were audited by SCDE, exceptions were found with 18 (or 4.2 percent); of the 3,858 transactions, exceptions were found with 71 (or 1.8 percent).

The District appreciates those identified opportunities to improve; however, in our opinion, none of the findings were significant or rose to material impact.

The District has controls that help establish more than reasonable assurance that risks are mitigated to an acceptable level. The District will continue to ensure those controls are in place, and the potential impact of any exception is kept to a minimum.

For 34 consecutive years, Richland One has received clean audits and no material audit findings.”

Weston disagrees with that assessment.

“I have confidence that I will be able to address those things and to work on making them more transparent and getting to being responsible because as a board if we’re allowing those things to happen then we aren’t being responsible,” she said. “I think we need to be responsible for the actions that are going on in our district.”

This designation means that Richland One is going to be under more intense scrutiny from the State Department of Education for at least the next fiscal year.

It must submit a financial recovery plan within 60 days. The State Department of Education can determine whether to accept that plan or reject it with modifications.

In August, Attorney General Alan Wilson requested that the Inspector General look into Richland One’s spending practices as well.

When asked about the possibility of such an investigation, Governor Henry McMaster’s office sent WIS this statement in response Wednesday: “With the Department of Education’s latest audit, and its decision to place the district under a fiscal watch, it very well may be redundant to request an investigation by the inspector general at this time.”

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