001Are we We're good. We're good. Good afternoon. It's 12:15. All right, remember um Good afternoon. It's 12:15 on Thursday, May 29th. Uh this is the meeting of the AS Finance Committee. Um Alli Lesler's chairing uh the meeting and to my left just go around for interruptions. Higgins school board and member of the committee project Anderson CO officer America Sullivan executive assistant anybody online? Uh we have Mr. playing. Okay. And then right back here, go ahead. Robert Harris, senior director of choice schools, senior director finance. Okay. Well, welcome everyone. Um, we have three items on the agenda today. The first is a correspondence aotment audit. Um, and just as a very brief refresher, this was an audit that the finance committee approved some time ago and uh, it's just been in the queue. And so we're
002grateful to have Meredith and Scott here today. So I will open the floor to you for the presentation and I believe that we can follow along online to share. Perfect. Scott, I'll kind of start and go over the executive summary and then I'll go over the findings more in depth. Yes, we are presenting ASD internal audit report 20125-01 correspondence allowance spending audit. Um it was released yesterday I believe. Was it yesterday? Yesterday. And the objective about this is to determine if the Anchorage school district has adequate control over um correspondence school allowment spending and it um it practices complying with the any applicable state regulation or encourage school district policies. So our audit found that anchorage school district control over correspondment spending needs of improvement. We identified some inconsistency inconsistent practice in reimbursing educational expense
003among the different correspondence schools. And we also identified multiple purchases that appeared to be included curriculum that was purchased from the religious organization with the student alignment fund. We identified some instances where reimbursement appeared excessive and did not always appear to serve the public's interest. Our re review also revealed that correspondent school did not require nonpersonal materials to be returned to the San school district when student withdraw from the program. We identified correspondent school purchase request procedure were not always followed. And finally, we found that there was no clear guideline to define all course requirements. As a result, it was difficult to determine if academic goal were being met after money was spent. And I'll hand it over to Maris. So she'll go over each finding findings in more detail. Thanks. The first part here
004is introduction. This was the first audit uh done at the first school. So we added a little information on here as far as there's three correspondent schools the district supports. First one started as family partnership which began in 1999 with the objective to uh provide parent parent driven and student centered programs to achieve goals for academic performance. As of November 2024, there are a little over 2,000 students enrolled between the three correspondent schools which offer a home style school home styles home school style of learning by providing uh student aotment funds to cover the qualifying education expenses. These education expenses can uh be from textbooks, school supplies, and structural services such as tutoring and technology. State funds for the correspondent schools is based on a formula that accounts for the average enrollment and base student
005allocation numbers and then determines how much each correspondent your school receives. Once that amount is determined, the individual correspondent schools are able to decide how much of student aotment is spent per the different grade levels. That can range from 21,100 to $4,000 for elementary students depending on the correspondent school that they go to or 2600 to4500 for high school students depending on the corresponding school they're enrolled in. Upon enrollment into the correspondent school, each student is assigned a certified teacher who works with a parent or guardian to create an uh individual learning plan or what we refer to as an IELT in the report. This includes selecting curriculum, budgeting the student aotment funds for the year. Parents can utilize these funds by completing either a reimbursement or requisition request, which directly ties to the students
006learning plan. The reimbursement process includes the parent or guardian paying for the school material that's been approved by the certified teacher and then requesting the district to be reimbured or requesting the district reimburse them. The requisition process includes the correspondent school working with the purchasing department to then uh purchase the supplies and then provide it to the school for dispersement. Both the reimbursement and requisition process are reviewed by the accounting department. So the school year or the school the time frame we selected was July 1st 2023 to June 30th 2024 and the total amount of reimburseed transactions was 2.6 six million while the between the three correspondent schools and almost three million for a requisition request. So can you clarify what the difference between a reimbursement and a requisition request is? Yeah. Um so the
007reimbursement is when the parent pays for the supply first and then asks the district to reimburse them. Where the requisition is where purchasing pays for outright and then the parent doesn't really have to be out any funds and just has to go pick it up typically from the school that they're enrolled in. So that com made for combined 5.6 million was paid to cover student aotment funds. This doesn't include the PC card purchases. We do have a graph in fact that includes the PC card purchases, but because there was some overhead involved in there, we wanted to make it more clear as far as just what the parents are paying for in the reimbursement and requisition side. Thank you. As Scott mentioned, the objective of this audit was determine if the uh district is properly
008monitoring and accounting for it correspondent student aotments. And to achieve this objective, we reviewed the state of Alaska correspondents program regulations and the district's policies like correspondent schools. In addition, we visited three correspondent schools and interviewed staff and interviewed higher dollar correspondent school purchases. Kind of the boiler plate statement next where there um the audit was conducted with generally accepted accounting principles and was requested by the uh finance board committee. I'll just briefly go over the overall evaluations. I thought I had touched base on it a little bit, but some of the findings that we'll go over more in depth are inconsistent practices among the correspondent schools, purchases that appear to be uh purchase that appear curriculum that was purchased from religion religious organizations. We found instances where reinforcements appeared excessive and didn't always uh
009didn't always serve public's interests. Moreover, we both does not always require non-consumable materials be returned to the district when a student withdraws purchase request procedures from by the district were not always followed and there were no clear guidelines defined for course requirements. We'll go a little bit more in depth in these and what they can do. The first one was inconsistent practices among the correspondent schools. So we were asked to kind of look at these schools, identify their practices and see where maybe it would be better to align them with understanding that these correspondent schools um are a bit more competitive with one another in their nature. So this is also the first audit where management didn't always agree with our findings which I appreciate. You know, you don't always have to agree with them.
010It's just our report is. So we'll hit on that as well. So the first inconsistency we found was reimbursement practices for technology were not always consistent. For example, one of the correspondent schools, actually two of them, but one specifically, offer an amount of $500 once every three years. So, a student can purchase a laptop and the corresponding school would reimburse them $500 for that school year for up to three years. So, in the end, it would be up to $1,500, but not all at once. Whereas, a different correspondent school allowed a reimbursement amount of $1,500 just in that one year every three years. So, it looks a little bit different, but when we looked at comparison of the correspondent schools, for example, the one school that offered the $1,500 reimbursement, they had one purchase that
011included $7,500 in computer reimbursements for the five students enrolled. However, if these same computers had been purchased at the different correspondent school that only allowed a reimbursement of $500 per technology, they would have only been reimbursed $2,500. So there's a bit of a price difference as far as what parents are able to buy and things like that as far as technology practices. The second inconsistency we found was correspondent schools track curriculum differently. Each correspondent school track curriculum diff definitely making it unclear if the curriculum would be allowed. For example, one vendor was listed at one of the correspondent schools as not allowed to purchase with student aotment funds due to being religious and it was very clear where no student funds or no aotment funds could be used. Whereas a different correspondent school had the
012same vendor and they had it marked on there, but they had the web page and where you could buy that material available, making it kind of questionable of am I allowed to purchase that? Am I not allowed to purchase that? And so that was something that we thought could more easily for the reader to kind of view between the correspondent schools. Is it curriculum allowed or is this curriculum not allowed to purchase from that site? Clarifying question and hopefully this is an appropriate time to ask. Um, I guess my understanding was that a religious vendor or a vendor that is religious in nature can you a family could purchase materials from them as long as the materials themselves were not religious. You could purchase an algebra curriculum for example from BYU. And so some of
013these things we saw Yeah. where um they look to be like the actual materials were like sax and math which is very non-religious but because of the sites that they were purchased on and some of the we talk about that a little bit in finding too were the sites directly reference religious type you know it was um we'll talk about that in the next one but this like bib of bibl curriculum with biblical creationbased you know and so sometimes when it's like you're able to get saxs and math but potentially might be better to get it from a different vendor other than the that has creation based, you know, things like that in there and just making it. So, that's why we said it appears like that, but there the actual materials didn't appear to
014be religious like the first three books and things like that. The uh third uh inconsistency that we found was a lotment fund transfers and yearly rollover were not consistent between the corresponding schools. This is one actually quite a bit of this audit was there wasn't a lot of regulations in the state regulations. So the state doesn't say you can't do this. You you know there's no um max amount they are able to allow to roll over. And the state does allow you to transfer funds within the same household if that student is enrolled in the corresponding program. Nowhere in the regulations does it tell you how much though. And we found that if there was a limit set or more consistency between the programs, it would be potentially helpful. For example, when aotment funds were
015able to were able to be transferred from one household to another, there was an example where one student only spent $445 of the $3,000 aotment provided as $2,400 of it had been transferred to another household member to cover their ballet taxes. Uh furthermore, we found two of the correspondent schools that didn't have limits on the amount to roll over. So you're whatever unused portion of the allotment fund can be moved over into the next year. Again, the state allows that with no limit. But when we saw this happen, it appeared that the aotment funds could be accumulated to a large sum. For example, we identified larger purchases that included $12,000 to a private school and another purchase that included $8,000 to a different private school. all due to being the all a lotment funds being
016allowed to accumulate and roll over over the years. In addition, one household that had seven stu seven students enrolled in the correspondent school had a combined aotment totaling $49,000 with $34,000 being reimbursed in the 2023 2024 school year. And like I said, while there's no uh no limit set in the state regulations for the amounts transferred from one household member to another or rolled over from year to year, if there were limits that it would potentially assist with avoiding these higher dollar purchases. Um I think during this audit period, there was legislation going on and so families you saw a mass trying to spend of that allotment fund so they could have that you know that in case they weren't able to use that in the future. So it was an interesting audit period. Um
017the management comments were this was one where management comments were um slightly responsive or would we say partially partially responsive. Perfect. So u management uh agrees with the correspondent schools curriculum needing to be reviewed so that there's just a general standard. Uh they said they disagreed with the assertion that correspondent schools should be standardized as the programs have been developed for different services to different families based on the needs of those individuals. differentiating amounts to the program allow more options for parents or guardians to tailor to their students education. Definitely that's something that you thought in there was there each schools quite they serve different student needs. We just think that maybe if we could make it some of this more consistent between them it maybe would drive less families to go to one correspondent
018school over the other. One of the things with with with the correspondent type schools that APC folks they're doing with the academic that's the one area they should be separate that they get a chance to do the type of classes and how they do it differently from each other. So the recommendation that we not do it that way because that that would be kind of undermining the whole goal of what correspondence will allow. The recommendation is more of just reviewing it to make sure it's more equitable between the families. So if one school is allowing, you know, additional funds to be provided or a lot roll over where the other school like one of the correspondent schools only allows $1,000 to do over rolled over from year to year. just looking at how how do
019you make or how is it that to work with the correspondent schools to say like with the technology you don't need to buy the nice MacBook every time you can buy something a little bit more reasonable and that can be maybe put on between all of the correspondent schools if that thing yeah if I may just add some governance context to for the auditors because I don't see it explicitly listed in the report but we do have one charter school that or we do have one correspondent school that's also a charter school. So there are some autonomous decision making that will happen at one of our schools. But I take your point about for schools that are not charter was the district's role in the state. But I just wanted to be clear that there
020are different governance structures for parents. Thank you. The next finding we'll move on to was um the second finding we'll move on to we touched base a little bit which was curriculum appeared to be purchased from religious organizations student aotment funds. I think it touched base on this where sometimes the book themselves were like Sax and Math or history books, but when we looked into the vendors that they were purchased from, I wasn't sure as far as maybe there's a better place to buy these these materials from other than ones that specifically state um like creationbased or Christian homeschooling with Christian homeschooling curriculum and programs. Specifically, the state regulations say an Alaska or an employee of a district, including a certified staff member, may not advocate for religious partisan nominal doctrine as part of the
021employees instructional or other duties. Nothing in the subsection prevents the parent from providing supplemental instruction um to their own child using materials of the parents choice if the materials were not purchased with money provided by the district. talk a little bit about the workflow of how the parents input the curriculum and materials into the software that is then reviewed by the certified teacher. However, if materials are added and not reviewed in depth, maybe they didn't realize the vendor that they're coming from. You know, they just looked at the textbook that looks great. Um, no issues. It does allow some room to potentially buying items from sites or vendors that appear to be religious and curriculum. Specifically, we found some that were purchased from uh those when we went to the web page, the curriculum methodology
022was referenced as creation based the biblical world view and in addition to another web page that referenced Christian homeschooling curriculum and programs. So myself when I'm going and looking into these things just looking at that verse I would think hm is that a religious when you go into it more the actual book itself is probably not um and we added that the vendors that these schools were purchased that these were purchased from were actually on the school's curriculum list as cannot use school funding. So um point of that the district uh we recommended that the district just create a thorough curriculum list. So again, making it very clear to the parent or to the individual purchasing it whether it would be allowed, whether it wouldn't be allowed, or if there's a different source to be
023able to get that item from. So management stated uh that their um purchasing religious materials is strictly prohibited and expressing uh the statute expressly expressly allows parents to purchase non-religious materials from private and religious organization to ensure full compliance with legal pro uh prohibition proc on purchase religious material. We will implement clear guidelines including thorough review process, training for staff on permission municipal purchases and constant monitoring of upholding these standards. So management responses uh responsive question and just maybe this is a question really for the administration. um you know to what extent and maybe it varies by school. To what extent are parents you know at the outset of their each child's you know school year informed of what is permissible and what's the staff training seems like a critical thing but it seems as
024though ongoing uh communication with parents could be a really critical step and maybe that already is happening. Um I don't know there is in the handbooks they do have a parent signing agreement that talks about that you know they're not allowed to purchase religious material if they need to return. So this this correspondent school do have a thorough handbook that parents are signed off. It's always that thing um we see that are they really reading what they're signing and things like that or kind of a review can be done. We see that everywhere in life. Well, and I know that the teachers also work with the parents when they receive the reimbursement request whether it's acceptable or not. Yeah. At some point, could we get a definition and if I'm it's in here some please
025let me know. Uh the term in the public's best interest is has screams like it came from a legal citation somewhere. Where does that come from and how does it apply to this process here when we're looking I'm sorry the the term and I if we're not I don't think we're in the right section but at some point we talked about how fun being used in the public specific that comes from the Alaska correspondent school regulation I'd be happy to provide a copy of that but it's just the legal jargon that was from state Yeah, we'll move on to the third finding where um some reimbursements appear excessive and may not serve public's interest. Hopefully, I have the I try to include some of the regulation points in there. So, we'll go through that. Um,
026so some of these uh reimbursements that appeared excessive and didn't always appear to serve public's interest included reimbursements that ranged from $13,000 for a ski club, $6,000 for a hair design school, and a purchase that included 21 Lego set that were first for $600 to one household. Did you buy 21 Legos? Was that resell? Sure. Um I don't know if that's question is answerable. Mistake. So I understand this from the state. Um what was what was the team's northstar in terms of what's the public's best interest or not? Right. This is the first time we've done this audit. Uh is it just a logical test? You have some other legal references to use. I'm not disagreeing to be clear. This question is going to be asked. So yeah. So this is we also looked at
027the handbooks that the school provided. So it was kind of look what the schools implemented and what the state regulations said. And the school the handbooks were actually very thorough and were really aligned with the state regulations. And so they did some of these purchases. They were we talk about it in here where uh to enforce the regulations each correspondent school has a h handbook and list allowable purchases. We just didn't find a valid and and structural purpose for all of these. So it's like the we talked about the $13,000 appearing that is fairly excess. It seems fairly excessive for physical education. However, the principal did approve that which is allowed because the state regulation says with principal approval if they're able to vet that the student have enough curriculum then they can take these
028courses. Can I follow up? I'm sure. So can for example, could you walk me through and if again this is here somewhere I'm digesting this document as quickly as I can. the 2400 at 4,500 per student for pasta ski club. Kean, walk me through the logic that got us to the point of us saying that is not in the public's best interest. Again, not saying I agree or disagree. I truly want to hear how we got there. We looked at the higher dollar um the higher dollar purchase orders and that was one of the top ones where you didn't see that kind of expense with any other um any of the purchase orders that we saw was this higher dollar. that kind of caught our eye and that's why we thought maybe this one in
029addition to it was one of the few that we looked at that needed additional funding from the correspondent school provided to the students to cover this fund. So it was one of those outside of the a lotment. Yeah. Outside of the aotment. So each student had additional funding provided outside of the allotment from the school which they're allowed to do to cover this expense. In our opinion, it just appeared that possibly these funds could maybe less could have been provided for the ski club or it could have been used in a different manner. Again, the regulations allow for it allowable expense and the you know the principal had approved it and so we just marked this as was pretty it was actually the highest dollar purchase order we had looked at. So that was follow.
030So, I mean this is I mean putting this in writing is fascinating just from a regulatory standpoint and I mean my role in the board um again not saying I agree or disagree just geeking out here. We're just seeing that in writing. What I think you're saying effectively is that the state regulations allow for legal behavior that aren't isn't in the public's best interest. Is that I mean am I misconstruing that? I definitely felt the state regulations were fairly vague. It allowed for a lot of a different interpretation of how they they could be the regulations could be read as far as like oh that's an allowable um you know as far as if they have had if they've been in good standing in previous years and things of that nature that they'll be able
031to use this for a schooling you know whether it's the rock gym or things of that nature. So I follow one more. Thank you. Um, so with the skiing in particular, was it would the team have looked at the co I mean did you look at the cost to perform that activity generally to see if it was within the range or was it just the skiing costs were 24 to $2,000 to $4,000 compared to the rock gym which was a few hundred and that that disparity is what raised flags or is it does that what as you might imagine I don't ski um so if u the laughter sir um but I mean I guess your guest the average cost to to accomplish that activity. I mean, that's a relevant data point. So, which are
032we measuring it off? Yeah. Well, it was for the the entire family, but also it seemed excess because there were other ski clubs that were on there, other places that went to the same vendor, but just didn't spend the amount that this was this specific purchase was. So, it was maybe a few hundred towards a ski club and things like that. You just didn't see thousands going to this club. Was that potent? This is digging into that. Did that include equipment? Um, it was more it seemed more like lessons and things like that, but I'd have to double check the actual invoice to double check, but I believe it was more of lessons and like a period of time of lesson that this club. Thank you. Any other questions? And for the record, member Wilson
033has been online for some time. Can I ask? Go ahead. Yeah. So again to dig into the public interest bits is there aside from this document uh is there something that documents the rationale aside from this from a procedure standpoint like hearing this is great hearing the rationale to how we got to those decisions for what's in not in the public's best interest I think is is going to be very helpful to us as a board going forward. So is that documented anywhere? I there are the state regulations as far as uh that goes and we have like our work papers from my understanding what you're reading as far as um because what I did is reference basically the Alaska state regulations for children school. So every time I looked at it and I refer
034back to what's in the public's interest and what the spending was on because these ones are specifically like physical education maybe if it was like $13,000 for a history class or something like that. I may have not been I may have not scrutinized it as much or is something that appears a little excessive sure to us in first place but I can I would be happy to I thought about adding the document of the state regulations but I can also send it to America if that's helpful maybe we can if you could send it we could um post it to the agenda as in followup after it's made available to board members yeah member this is more a question to the administration but certainly We want to fall under state regulations always. But does ASD
035have its own written policies about reimbursements or correspondence for charter in um ASD program that's within the state regulations. The schools do have their own written reimbursement. The schools do. Yes. Yeah. And they're the ones who review all of the reimbursements initially. They are the ones who decide what's allowable and what's not and then it'll come through finance and then we also do two reviews and then we make sure that so at the district level do we have anything that either the administration has set out or the board has set out we do not we follow what the schools have decided because they are they are out yeah they are the governing body who make those decisions Well, that would follow up. It would make sense that the APC of a charter school is, but
036if it's a non-charter correspondent school, it would seem that the school board is the governing body. Am I correct? Yeah, Dr. So, I guess to answer your question, member lesson, theoretically, we could pass policies that that would dictate what what our school can or can't do. Um, but I had a point that I wanted to make. Oh, so I did want to add some nuance to the reimbursement because it's important in state law charter schools or correspondence/charter schools. It um speaks specifically to the teachers role or a certificated educator and approving individual learning plans that are then affixed to these curricular items and other materials. So it really does come down to the individual student levels which makes this uh very uh complicated to standardize. I just want to add that piece. not always policies.
037Sometimes it's about the individual learning plan approved by the certificated educator. Um, that's a great point. And just thinking a little bit about the world of skiing, which uh I am not an elite skier, but I could imagine that if I were an elite 15 or 16 year old skier and I was training for, let's say, the Olympics, I might be a correspondent student here in Anchorage, but actually part of a ski club in even in another state or seasonal. I mean, I don't know. It seems like that could be then a part a very reasonable part of your ILP. Um I mean it's complicated I think is it's just an observation and I don't want to just create ideas so I probably shouldn't share that but um you know the statute you speak of
038I think is a real concern that um seemingly if the certificated person has signed off on an ILP it prevents any further oversight or at least a position the state is taking which raises the question If a certificated teacher signed off on something that was fraud or place to refuse the coin of Christy, um would that still be okay? And and I think under the statute it kind of is, although this is the subject of a recurring lawsuit, but it also seems like ASD could have its own rules and regulations within that to where we we can exercise that minor oversight. Um because we did charter the one charter correspondence and we operate the other. Um I I when you say it's complicated, it it is interesting because it's been a complicated mess for decades
039and and these things have cycled back around, you know, family partnership for a very long time. And and part of it is people are just very creative about ways to spend money. uh sometimes very rightfully so and other times in a really self-serving manner and trying to write policy to cover all that I think is very tough but I I'm a little surprised that ASD is allowing money to be spent in some of these ways. Um, I I understood the pec card more because there's so many individual points of decision making that come back, but it it's I don't know. I'm curious. You know, I love complicating things even more. Um, but then if you were to try to pick a standard amount and in cross country costs us almost nothing for each high school
040student where hockey and swim and post gymnastics per person are really expensive. Do you do you now start charging athletic fees for this is only the amount that we'll spend on each student and anything more? I mean it would it would be difficult to it it would be difficult to pick what is the one standard amount that all sports should cost and if it costs more then do you not do it or do you and so if you were to hit correspondence and come up with a a fee rate that was reasonable it again it would be more expensive if you are if you're in the valley going to the female gymnastics club there versus if you're in the running club. And and I would just add that in my professional opinion, I do think
041that this is because the statutes and regulations are too lax. I think that they set the conditions for abuse and waste. I think that's just a fact. But I also want to say that we do have a precedent for putting regulations in place that affect all the schools. So, for example, um we wanted to really uh cut the pull the we wanted to make sure that we don't allow families to be full-time enrolled in private schools and receive a lotments. That was a district level decision that was made and sent memorandum to all the schools. So, there are other possibilities, but I will remind the board that for that specific change that ASD made, um we did lose about 800 students and I would guess in direct response to that change. And I will say
042that I also track feedback from students that live in Anchorage but perhaps go to a different statewide correspondent school that's not ASD. Um, a lot of them choose those schools because their reimbursements are very quick. And I just will add that we can regulate this. We could, um, but we create conditions that would really create additional, you know, administrative responsibilities, essentially more time. So, what this would mean is that for parents, um, it could be a lot longer to receive a reimbursement if we were to adopt policies that were more strict in nature. And I think that's a fair compromise for us to discuss, but I will mention that there probably are over a thousand correspondent students that live in Anchorage, but aren't going to ASD correspondent schools. So, when we want to think about
043attracting more students and that sort of thing, it's within correspondence. We really need to think about it within the statewide competitive marketplace for correspondencing. for um yeah and I I I'm flagging this now although it's not I think the focus of this report but I I agree with Dr. Brian, that I think this like a mistake might issue. Um, and while we can choose to and we need to choose to course correct and make some adjustments based off of this report, um, if it results in families choosing another district, um, because they don't have those types of controls in place, there's a bigger systematic issue here that I I I imagine isn't addressed in this report. Um, and so maybe there needs to be some sort of convening or a larger conversation about I just
044wonder if other districts who have correspondence programs should be made aware of what we found in what was found internally with us so that they can choose to course correct um as well. um as if I'm going to wager to say that if we have these uh challenges or opportunities for improvement um almost certainly other districts do as well and closing one window in a drafty house um isn't a great statewide policy. So I would go further and say that for other districts it is an opportunity. Well that's that's that's an ethical statement. I'm not interested in contending what they're dealing with, but at the very least, we can we can utilize this um opportunity to increase awareness um with other districts and increase collaboration there. And I don't know if that's the appropriate venue
045through the superintendent association or through the association of Alaska School Boards. And maybe this is just handed off to the state legislature to say um Anchorage identified these areas for improvement and some of these may carry over to other districts. And I mean the conversation is happening right now, but I agree with the superintendent in that um we need to be thoughtful for how we course correct and uh recognize that we don't want to always incentivize um students and families uprooting into another district um for any other reason than it's what's best for their students and not based on the financial. Thanks. I want to be a little cognizant of time here. Um and we still have more uh findings to review. two more question. You got your state statutes, but our policies are in
046place for all our charter schools as well, administrative regulations and and so I know we've had problems in the past where people have spent more than what they should have spent through PTO save money, contract with the principal to do extra work and you name it within that. Is is that is is it the matter of just not adequate policy that we could have that would address these issues because what the correspondence gets the control of the you know curriculum and and delivery but the court blanch spend money as you want to fall still fall within our policies and it looks like these things would be kind of out of step with that because we're required to have best value that we're paying for money kind of purchase and not doing that with the key
047things or other things that they would all qualify as as being policy issues that whole thing right on that refer to the CFO but I mean that's been an issue in the past that we've had to deal with and then the lease issue that comes out to mind but that was an example spending more than they have to in that case pretty but we still have that process seems like it's in place but we need more policies all So I'll just add the recommendation. Let's get to the thing. Oh yeah, absolutely. No, you're fine. So the recommendation was that the the correspondence that the district reviewed allowable purchases to ensure limits are set. We also understand that there is that um competitiveness between them between the correspondent schools to be able to get the students
048that they and so management sorry I'll skip on to the fourth finding. The correspondent schools did not always require non-consumable materials to be returned to the district. This was another state regulation. The state regulations specific to non-consumable materials states textbooks, equipments, and other curriculum materials purch including money provided the parent through the climate account property of the district. Materials that are not not consumable must be returned to the district when the student leaves the program for any reason. talked a little bit about the handbooks and in the handbooks the correspondent schools do have non-principal materials defined as typically but not always non-principal items exceed $200. While the handbooks uh are well handbooks define consumable materials as items that are marked in like workbooks or lab books and other uh put together permanently models. One version
049of the handbook includes all consumable materials purchased with the district funds or property of the school and must be returned to the office upon withdrawal. While some handbooks go on to say they expect the items to be returned at the end of the semester in which they're purchased. Again, this regulation is in that handbook. Um, however, we found that all three correspondent schools were not enforcing the policies for non-conceivable materials to your return. While this correspondent schools do have a software that they use to be able to track on consumable materials, none of the schools were using this feature. For example, we found materials that would be considered non-consumable would be considered that I'm sorry, materials that were considered non-consumable were a $989 computer that was reimbured in 2023, November 2023. a reimbursement for $1,600
050for one household per cameras with each camera price ranging from $270 to $450 to almost $800 that were spent on fitness trackers for four students, none of which were required to be returned. No. Uh the the our recommendation was that with the district work with the correspondent schools to create a policy for non-principal materials to track and maintain the correspondence at the correspondent school level. We didn't want to add on any work with different departments and things like that. And so management did agree with this and said they work with the correspondent school to develop a comprehensive policy and acknowledging the difficulties with storing these items because correspondent schools do have limited space. Refurbishing items and tracking these items can be considered. Hard to imagine a warehouse being established in Yeah. a charter or a
051corresponding school facility which so that was the difficult part. Oh yeah. If we get a computer back, Holland probably knows, you know, some of the searches on those may generate viruses or other things in these computers and they have to go try to refurbish the staff time to refurbish a computer that may cost a couple hundred dollars may exceed the actual value of the this device. So there is some nuance to this and some difficulty at the amendment. We're able to get what we can do to make sure we're compliance with the law. So the fifth finding, this is where we specifically looked at the district's accounting policies for the correspondent schools and we found some items that could be included on it that the not all the correspondent schools were always following. Specifically, the
052reimbursement submission deadline were not always being met and reimbursements were not reimbursements were not always submitted uh to the finance department within the deadline of 60 days of the date of purchase. Instead, we found during the audit items from 2021 and 2020 school year that were submitted for reimbursement in the 2023 2024 school year. For example, specifically, a purchase that was $1,400 included items from 2021 2023 that were not submitted to or sorry, 2021 2022 that were not submitted to accounting until July 2023. I think we uh just touched on this briefly, but one thing I heard from three spent schools was the length of time that it took for parents to be reimbursed. And I think these right here these findings will kind of help bring eyes to why it takes so long for
053the accounting department to really be able to go through that backup. Remember I said that there's two so there's quite a bit of um in-depth process. So another item we found were per the correspondent schools were not following the district's policy set was a personal account was reimbured when a business account made the purchase. Specifically reimbursement was made to a personal account when the business fought a subscription. Um and the the policy states if a business made the purchase the business will need to be reimbured regardless if the parent owns the business. For example, we found a purchase for subscription was made to with a business account. However, the personal account was reimbured, not the business account. I was told during the audit that this is actually a lot less now. Accounting was having to
054deal with more and more of these in the past, but it's kind of tampered down some, but we did still find an example of this during our audit. Another um example of district policies that were not being always followed was we see this one in the PC card audit too sometimes which is disallowed purchase methods used. So uh the district does not accept ID does not accept payment methods such as Venmo, PayPal and other digital wallet and unfortunately these were used repeatedly to purchase school materials. What we found is during when we were reviewing the policies the the methods were always not definitive and sometimes state may be approved on a onetime basis or under special special circumstances. The handbook also contains language saying the digital wallet payment meth digital wallet payments on PayPal purchases
055were not guaranteed making it appear as if the method could still be used. So this correspondent schools had asked for something very definitive so they could give parents something to say you're not allowed to use this and here are some warning. So we talked about um if we make the language a little less vague and more definitive that might be helpful. So the last item that we found on the policies that were um needed improvement was reimbursement detail sheet was not always submitted as required. The policy states if a reimbursement has more than 10 receipts please attach a detailed sheet to the PR as additional backup. That's just an Excel spreadsheet. And although not all the purchases had pen receipts, the purchase uh supporting documentation did typically include 25 pages, sometimes even as much as
05650 pages. So, you're asking the accounting department to scroll through page and page and page and trying to put these together to see what they're going to be approving. So, as a result, due to the not having that standardized um dig detail sheet, we found some uh examples of overpayments. one specifically was an overpayment of $123. Um, that happened because of a the materials were subtotal with a 10 key calculator instead of a detailed sheet and they were actually included twice in that calculation. It was very easy to see how it could be done when you're using paper and things of that nature. So, this error was not discovered at the time of the audit, but how um it was repaid after this finding, which was nice. Um, we also found a second overpayment of
057$912 that was caught and corrected by the accounting department within the school year. In addition, due to the number of pages included in the supporting documentation, it took accounting additional time to review the purchases, creating a backlog for reimbursement. So, that's something I heard again from bond schools is the length of time. But when you look at the materials, like for myself, it was quite a bit of time to try to break through what I'm looking at and how they tie to what was reimbured. So our recommendation was uh to work with the corresponding schools to implement some of the to implement the procedures and management response did generally agree with this comment and it want to ensure that there's compliance with the existing policies. We'll move on to the last finding which is there's
058uh we found there to be this kind of goes back to the state regulations. When I was looking at the state regulations, it was kind of very hard to read through some of their policies and things like that. And so we found there's no clear guidelines and core course requirements. Um, as a result, it was hard to determine academic goals were being met. The state regulations say student enrolled in correspondent to school program whether full or part-time must take 50% of the students coursework that the student takes through the correspondent school in core course courses. Core courses means study of English, mathematics, social studies, science, technology and world language. The regulations also state for course sorry words are very tongue twisting for course work performed outside of the student aotment correspondent study do not count
059towards this requirement set out. However, we found uh found some purchases that include appear to include mostly elective and physical education courses with minimal for courses included in the purchases for that school year. For example, one student's entire a lotment was spent on physical education which included $2,000 in reimbursement to athletic clubs and $640 to art class. the software that we also found that the software the correspondent schools used did not include a feature that could easily track student academic progress making it difficult to review if additional curriculum was completed to ensure the code course requirements were being met. This kind of talk about maybe that student had done well in previous years and the principal was allowing them to take more physical education classes, things like that. It was just very hard to tell
060in this audit if that was what was going on or if the students just had heavier physical education or art courses, which I love physical education in our classes, but I understand the balance of it. For example, one of the supporting documentations we received included a word document with Shar backyard puzzle disc that was listed under science, but with no clear information on how that course related to science. So we recommended that the district work with the correspondent schools to create a a basically create a software that's easier to tell if curriculum worked in the past or how that was for the community. So this was another one that uh management respond like um generally responsive and they give a good explanation of their processes to ensure that core course requirements are being met at
061the correspondent schools. I don't want to take up too much more of your time. I did include three tables in the back with the different reimbursements, requisitions, and cards. At least it was helpful. Um, so before we move off the topic, I guess I, you know, circle back to um the determination or the finding about some of the expenses not being may not be public's best interest. I I I feel like this I feel like here in some time this this report will be setting a precedent because I don't I think we we said that this is the first time ESD to conducted this kind of audit. I would imagine that other districts haven't extensively conducted a similar process or at least um if you if you found through your process that other district other
062districts have issued a similar report and used that as one of your north stars that would be good to know. uh as much additional information as we can get um would be helpful to me I guess as a member of our governing board when we say that we we engage in a process that found that this expense may not be in the public's best interest if we can if we can get the work that got us there to to being the it being part of the report I feel like it will help us as a board and hopefully help district administration utilize that as a roadmap app for measuring other things um going forward, but I I don't see that work here. And so I don't know what if it's possible to request that. Can
063we request it? Um I don't know if it's something else in writing or if there's notes. I I need more and I don't know where to get it. Yeah. So usually our work papers we um I'm sure I can work with Scott and kind of find out as far as I will be happy to send you the state regulations and things like that. I even created a workbook with links onto there for what we specifically looked at because we didn't look at anything as far as state regulation that didn't have to do with spending. There were other regulations on there like how often parents needed to follow up with the schools and that wasn't reviewed. But I would be happy to um give you that or give you an um I think would be completely
064okay to look at some of the purchase orders that we reviewed and things that any other questions on the correspondence uh audit for today. Thank you for letting me take up some of your time about that. Well, it was very thorough which I appreciate. I appreciate members questions. I would like to see right now we're scheduled to go until 1:15. Could we extend that um at minimum five minutes, maybe seven and a half minutes? Um a little bit beyond the normal uh time frame just so we can get to um the timeline. Um so thank you so much. Really appreciate your work and look forward to any followup materials. Oh yes, I thank you so much. Okay. So, item number two on the agenda is a legislative update. Really quick on that, um, they did
065transmit the operating budget to the governor. I believe it's due back on June 19th. So, we're just waiting to see what comes out of that. One of the things I did I want to follow up real quick on too was member Jacobs had a question about the bond debt reimbursement at the last board meeting. Within that operating budget, there was a 35% reduction in the the redu or the bond reimbursement for voter approved propositions prior to January 2015. Um that's going to amount to about $4.5 million for Anchorage. It'll end up getting passed along to our taxpayers. Um assuming the governor doesn't veto even more out of that from the operating from the budget. So that's kind of where we're sitting with that. And then the bond debt reimbursement for voter approved bonds after July
0662025. That bill stalled out and didn't get pass. So that would uh potentially come back into effect unless there's an additional legislation next spring during the legislative session or you know also a subject to appropriation. So even if it does come back, they can always remove it or at least the funding for it. Um, so that's kind of where we're at on the legislative. We want to continue to watch it and see what happens with the government. Okay. But June 19th is the date that we can expect to learn a lot more. Yeah. That's the last day of about ASD's fiscal situation. Yep. As a result, and then we'll put out some we'll send out some notifications to the board. I know we're not in session or anything, but so we all on the same
067page and know what to expect in August. Member from an administrative processing kind of position. We don't have we don't know what we're going to get yet. Uh he could veto all of it. We're back to that con, you know, reasonable uh risk that we've taken to go 560. If for some reason it doesn't go with the 560, our notification to employees time frame will have passed. Uh and we will be then dealing with just stopping the new hires, I assume, is what we would do in order to balance the budget. the the 400 positions that we're turning over, we won't let it fail and we'll we'll fill some of them and accomplish it that way. I mean, that's kind of where we are right now. We're not irresponsible, but we're going to be stuck
068with an impossible situation. Is that pretty accurate? Yeah, I'd like to just clarify that because I think it's a good point. If the governor were to, let's say, veto every dollar appropriated in addition to the BSA, I would recommend a a hard hiring freeze so we can counter dollars and figure out the power. Thank you. Um I I appreciate that. Um I think though I also want to share at least my understanding so it can be clarified that if you are an ASC employee essentially there is you have a contract with the district for next year come come what may is that is that a correct statement certificated for certificated employees okay and then the other ones are governed by their bargaining group which may be 60 or 90day notices okay okay so it it
069matters whether you're certificated or not. Thank you. Um, oh wait, let's pivot to the last item on our agenda, which is a budget timeline. Yeah. So, really just want to kind of get an idea of what the this body kind of wanted to see as far as presentations from the administration on um just kind of the budgetary data leading up to December and January when we're actually preparing the budget. you guys have been a long this is longest serving board together. You've heard a lot of the about as many budget presentations as you can at this point. Um so if there's any additional information that' be helpful to you guys to help make decisions later on. Happy to get try to prepare some of that over the summer. Yeah. So I I don't think our
070biggest hill is with this board. I agree that we're we probably could sit down and have a conversation now to be honest. Um well sorry we're not going to to be clear. Please don't walk out. But um I think we're we're okay. I think that the biggest hill we're going to have to climb is with helping the public get there because there's these really inongruent messages of a historic BSA increase happen. We're going to be right back in the same position here in January. And we I don't know what the answer to that question is. So I for me it's not a question for the seven of us. we're ready and we understand that the controls um I think we need to ask the question for how do we educate the public so there that
071we have that stakeholder engagement then really how we ed how we educate the legislature. I will say and I've been very impressed by the the messaging from the legislators who seem to truly understand how how much of a fraction of the work has been accomplished despite all their effort to to get HP57 um effectuated in the law. Um, but I still think there's I mean I I talked with a member of the legislature who was genuinely unaware that we had a a significant structural deficit even with a $700 BSA increase. And so where there's one, there's more. And so my question to you is what do we think we need to do to help educate the public and legislators? Is that do we start now? Do we start in December? I'm not interested in more
072powerpoints than we need. Yeah. Yeah. And I think we'd probably start, you know, when school starts up, we start talking about this again. Um, probably once we get the governor's what the governor does to the operating budget. Um, and then the other thing I kind of wanted to maybe try to prepare some more information on would be like administrative costs and FTE where those are. So that's the one constant that you hear every single year. You spend way too much on administration. Um, so to kind of outline, you know, where those dollars go, what the FTE is, how it compares to other um, entities, things like that. Try to get some more of that, uh, that narrative dispelled that were really topheavy. Um, I appreciate that. I I wonder what the I mean, we've had
073in-person sitebased right sizing conversations. Um, if we look back farther, I recall being a community member participating in a sort of a collective goal brainstorming um, C cafe style meeting. I just I wonder whether we need to shift our focus uh, from the boardroom to, you know, more direct outreach. Also potentially harnessing, you know, the power of principles, right? as trusted, you know, stakeholders and leaders. I I don't know, as we think about how to engage the community more effectively. Um, I wonder if us shifting, you know, it would be an ask of staff certainly to to have more community conversations. Um, I don't know. That's that's a thought I have. Yeah, think about it and we can adjust. You know, if you have ideas, send them over to me. The only other thing I
074wanted to kind of bring up with that was the way we do our proforma budget now is an action item and it's really moreformational. So kind of wanted to go down the path of maybe making that an it be the same cadence. You know, we give it to you the first meeting in December, but as an information item, like here's something that details out what that uh budget deficit's going to be rather than trying to tie it into like board guidance because I think that's what we've done the last few years is trying to have that in one document. It's a little bit clunky on that in that sense where you're saying, you know, here's what our deficit is and but here's what we kind of want to do about rather than having like one
075kind of standalone saying, you know, here's here's what it's going to cost to do business next year. Here's how much revenue we're getting in. And frankly, that gets adjusted, you know, once we get our demographic projections a little more refined. Um, you know, we'll get our impact aid counts after that. There's things that go into it. So, it's we never really match what that proform does. It's just an estimate of what that deficit is and then maybe have a separate guidance memo from the board to say here's kind of the the the guard rails we want you to follow when preparing the budget because we do want we do need that input from the board as well. But I don't think it ties into that proforma as um really smoothly. That's a great member. Um
076I speaking for myself I'm fine separating those two. Um I think that will be part of the education and awareness piece that I think we probably need to um increase effort on is really helping the public understand what the perform actually is. Uh because the headline in the first couple sentences of any news article will be ASD projects XYZ dollar deficit and here's how many then layoffs that means and and so we really need to frame that for what it is. I think if that's going to be the case, if we're going to untangle those two, which I'm I'm neutral on, um, whatever works. Well, I think that, um, you know, expanding our outreach, um, to ed to to community members, to legislators is going to be critical. Um, I also support, you know, the
077pivot to uh the performer being an information only item. Um and I think that we can have a further conversation about the most effective way for the board to provide guidance um in a timely manner to the administration. So I think certainly you know we can continue to have conversations the finance committee and continue to have you know work sessions as appropriate moving forward. Yeah, certainly something more fine this fall too. But something to think about over the summer would does the administration I mean we we did use the balancing act software this past winter which felt helpful and then also um impossible at the same time. Does the administration see value in continuing to use that? I do. I think I really liked it and I think you know the feedback that I got
078just from you know friends and family is it's really interesting to go in there and see how see the difficulty that it is to get to a balanced budget and um I would like to build it out a little more to see you know what's all included in those areas because we kind of we didn't have a lot of time to put that together this year but going forward you know if we have um some time we can get build out those narratives like what is business management you know so we didn't those are the kinds of things that was lacking But I think that's a it was a really great educational tool to see, you know, where the money goes and how what levers you can pull to actually get to a balanced budget.
079Are there ways that it can be used um you know sequentially over time to refine or dial in to priorities. Yeah. And we can make those adjustments to a a question from, you know, balancing act number one in September could then refine, you know, question number two in October or November. I don't know. Yeah, you can sit down and look at it, but there's a lot of functionality that we could and different types of surveys you can put in there, too. Great. So, it sounds like the doors open for board members to create suggestions or share suggestions with the administration um as we begin the process of FY27. Yeah. Terrific. All right. Well, we are a little bit over time. I know that we need to switch to the communications committee. So, um thank you
080all for your participation today. Happy to adjourn uh this meeting. Thank you. It's