The Harrisburg School District is facing the loss of up to $1.5 million from federal grants because of poor record-keeping and financial records that vanished amid a mass firing of top administrators.
The loss of funding comes after the district raised local property taxes and while it already has a nearly $5 million hole in its $150 million budget for 2019-20.
While the district is prepared to lose up to $1.5 million in federal reimbursements, it could potentially reduce its losses, depending on how many records administrators can piece together, said John George, the district’s new Financial Recovery Plan Service Director. He and his team from the Montgomery County Intermediate Unit were brought in by the recently appointed receiver to take over operations of the troubled school district.
The prior administration was awarded $12.8 million for federal programs last year, but the district is paid through reimbursements. The previous administration already submitted for reimbursements of $3.6 million, but the rest of the money remains on the table unless district officials can find proper documentation to allow it to be reimbursed.
As of Wednesday, district officials had found records for about $8.4 million in expenses but George said they were finding evidence of new expenses each day and his team hoped to submit reimbursements that would bring the district close to the total award.
But George said they are prepared to lose about $1 million, because there are restrictions on how the money can be spent and the receipts and invoices they find might not match up perfectly.
Meanwhile, the district definitely has lost more than $436,000 in federal money, George said, because a program at the city’s main high school was rejected by the state Department of Education after “serious compliance issues.”
The state initially yanked funding for the Blended Transition Academy in March while it requested additional data from the district, which at that time was under the control of Superintendent Sybil Knight-Burney. The academy was designed to help struggling students gain enough credits to graduate.
The state apparently didn’t like what data it eventually received from the district, because the state then revoked the remaining funding for the program, George said.
That means the district’s new leaders can’t file for reimbursement for remaining expenses for the Blended Transition Academy. The district previously was reimbursed for about $474,000 in expenses out of more than $900,000 spent on the program.
George previously said a series of computers had gone missing from the business office as well as some financial paperwork after the district’s previous top leaders were fired in June, but at the time he would not say which files or documents were missing.
The computers later turned up and were turned over to the Attorney General’s office, where investigators are investigating the theft. It’s unclear what data, if any, was wiped from the computers.
George announced at a board meeting last week, however, that the district is missing all of its federal program records. The district is required by law to retain supporting documentation used to receive federal dollars.
A Right-to-Know request for a list of employees paid through federal grants revealed the district didn’t have that basic list or any supporting documentation for federal programs.
“Going through the records, there are no records,” George said. “The records for federal programs don’t exist.”
Not only were federal program files missing, Acting Business Manager Bilal Hasan’s office was completely empty of paperwork, worksheets or documentation, sources told PennLive. Even binders on shelves were emptied of papers.
The district already had a shaky track record with regard to federal programs. Previous annual audits dating back to 2010 cited federal programs as an area of serious concern. Employees were wrongly paid from federal grants, paperwork wasn’t completed to prove employees actually worked on grant-approved projects and required quarterly reports weren’t submitted, according to the audits.
Repeated problems in audits, missing documentation and a lack of internal controls are all considered risks for fraud, according to the Office of Inspector General, which investigates potential mishandling of federal money.
Violators can be punished be civil fines and penalties or criminal convictions.
The district’s poor performance in providing required documentation for federal programs in recent years prompted the state to start restricting federal money.
Starting last school year, the district could no longer get advances on federal grants. Instead, the district must spend its own money first, then submit receipts and documentation for reimbursement with federal money.
Earlier this week, the district’s new leaders feared they might lose nearly $5 million in federal reimbursements because of the missing records. But newly hired financial experts have exhaustively searched district offices and systems where they found individual invoices and purchase orders to close most of the gap, George said, assuming the documentation is accepted by the state.
But, he said, there could be $1 million that can’t be collected, in addition to the money lost from the Blended Transition Academy.
“The invoices and purchase orders we’re finding aren’t marked as federal program expenses and they’re not in the federal program files, because those files are missing,” he said. “But we can go receipt by receipt and figure out what are allowable expenses and submit those.”
The state department of education in June asked a judge to appoint a receiver to oversee district operations, and the judge appointed Janet Samuels, who had been acting as the district’s chief recovery officer.
Samuels then fired the superintendent, Solicitor James Ellison, Acting Business Manager Bilal Hasan and Federal Program Administrator Damali Brunson-Marry, among others.
Bilal Hasan has not returned messages and Knight-Burney’s attorney has not responded to emails for comments.
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