12-13-2012 Joint Meeting with the School Board and Audit Committee


MISSION: TO SERVE EVERY STUDENT WITH EXCELLENCE AS THE STANDARD

The School Board of Brevard County, Florida held a Joint Meeting with the Audit Committee on Thursday, December 13, 2012, at the Educational Services Facility, 2700 Judge Fran Jamieson Way, Viera, Florida. Notice of the meeting was advertised in The Eagle newspaper on Thursday, December 6, 2012. The affidavit of publication with a copy of the ad attached is filed in the Affidavit File in the Board Office.

Opening Exercises
1. Opening Exercises

Minutes: 

Dr. Barbara Murray, Chairman of the School Board, called the Joint Meeting to order at 9:03 a.m.  She noted that the purpose of this meeting is for the Audit Committee to present the Board with their annual report.  Dr. Murray turned the meeting over to Art Edwards, Chairman of the Audit Committee.

 


Roll Call
2. Roll Call

Minutes: 

School Board Members Present: Dr. Barbara Murray, Dr. Michael Krupp, Amy Kneessy, Karen Henderson, Andy Ziegler

Audit Committee Members Present: Art Edwards, Wayne Cooper, Don Lusk, Frank Zilaitis, Jennifer Murtha, Clara Ewing, Jill Reyes

Audit Committee Member Absent: Tim Skeldon and Jim Milucky

District Employees: Sandy Demmon, Judy Preston, Jo Ann Clark, and Dr. Mark Mullins


Pledge of Allegiance
3. Pledge of Allegiance

Minutes: Chairman of the School Board, Dr. Barbara Murray led the Pledge of Allegiance.

Order of Business
4. Annual Presentation to Board: 2013 Progress to Date on 2012 Audit Committee Goals

Minutes: 

Mr. Edwards presented to the School Board their 2012 Annual and the 2013 Mid-Term Report.

Areas that were covered in the meeting were as follows:

  1. The Oversight function
  2. Introduction of the Audit Committee Members
  3. Discuss the Financial Reporting structure
  4. Internal and External Auditing
  5. Internal Auditing Implementations
  6. What the Audit Committee accomplished in 2012
  7. What the future plans are for the Audit Committee in 2013
  8. Corrective actions and remediations
  9. Goals and Objectives
  10. Questions from the School Board of Brevard County

Mr. Ziegler questioned what exactly was being audited under Special Requests-Viera High School in the 2012 Highlights Internal Audit Completed and Special Requests-Health Insurance Claims under the 2013 Internal Audits Objectives.

Mr. Edwards stated in terms of the Health Insurance claims, they looked at what was being submitted to Cigna and what was being paid to ensure the process was being followed.

Ms. Ewing added that a few years back, one of the findings from the Auditor General (AG) was the monitoring of the internal control activity over the pharmacy claims and over self-insurance claims.  The AG wanted to make sure that the district is looking at what is being processed.  She noted that every other year, the audit committee is checking on the self-insurance requests and the alternating year pharmacy claims.

Ms. Clark noted that one of the things that the AG said was because it is a third party administrator that is providing services, they are to make sure that they are providing the same internal controls that the AG is expecting of the district.

Chairman Dr. Barbara Murray told Mr. Ziegler that it would be the appropriate time to ask about the concerns that he has in this area.

Mr. Ziegler stated that he is very concerned about all the pieces and working parts to health insurance.  He spoke about the different components to a claim that are audit able.  Mr. Ziegler feels as though there are so many areas that we are taking for granted mainly because it is such a complicated process.  He noted that he wants to make sure that we are finding every efficiency and that we are negotiating the best contract and that we are not overspending, which has been suggested to him.

Ms. Murtha stated that companies do the audits that Mr. Ziegler mentioned for a percentage of what errors are found in the claims.  She noted that as internal auditors, that would impair their relationship with the district because it would be a different payment arrangement.  Ms. Murtha stated the types of audits that Mr. Ziegler referred to, takes an enormous amount of staff's time. She stated that it is a very progressive idea that the internal auditors could oversee and it could potentially net in dollars saved.

Dr. Binggeli stated the district is in fact in the process of looking at an RFP for both the Pharmacy Benefit Management (PBM) and a firm that does these audits. He went over some of the criteria of what was on the RFP.

Mr. Zilaitis gave his perspective as a father as it relates to the health care claims.

Dr. Binggeli noted that the average increase for heath care is approximately 40% of a business' bottom line.  He said that it is costing the nation 8-10 percent annually.

Discussion ensued about the fringe and benefits within the district and the cost savings that we have done thus far.

Mr. Edwards stated that the Audit Committee works within a limited budget and we have a scope within which we work.  He noted that this has not been brought to the audit committee as an over-arching concern.  Mr. Edwards suggested this be taken offline to better understand the issues, the direction that the Audit Committee will take,  how it will impact their budget, and how or if they will be involved at all.

Chairman Dr. Barbara Murray stated that is an excellent idea. She noted that it is within their scope but not their means, and we need to work through McGladrey and the potential of putting out an RFP.

Mr. Ziegler stated that he is looking for ways to reduce our cost yet increase the quality of the employee benefits.  He stated that he does not want anyone to think that the district or any of the staff is where the problem is, it is an industry problem.

Dr. Krupp noted that the After School Care is listed under special requests in the 2012 audits and again in the special requests in the 2013 audits. He noted that the After School Care has become a million dollar business.  Dr. Krupp asked who sets the rates, how often do the rates get changed, and how are these concerns being audited in terms of what we have from the perspective of the auditors.

Ms. Murtha explained the scope of what McGladrey does for the Before and After Care. She noted that they do the leg work to make sure that the Before and After School Care is in compliance with the Five Star Program.  Ms. Murtha stated that McGladrey does not get involved in the auditing of the pricing.

Dr. Krupp questioned what peaked the auditors for the second year in regard to the Before & After School Care.  Ms. Ewing stated that it is part of their safety program in which they have to be in compliance on a regular basis. 

Ms. Preston noted that Ms. Henderson serves on the district level committee for the School Age Child Care Program for the last three years.  Ms. Preston stated that the fees are something that they try to look at and address every single year as well as the overall structure of the program.

Dr. Binggeli mentioned that in the prior year, he cut the staffing in School Age Child Care to be consistent with the number of students that were signed up for the program while maintaining a safe number of students. They also raised the rates to make it pay for itself.

Ms. Kneessy noted that the district has taken on Head Start and was not sure if that was apart of these audit processes like we did with Title I.  Ms. Murtha stated that the External Auditors did a pretty deep dive in the Head Start Program but it will certainly bubble to the top of our questioning to what keeps you up at night.

Chairman Dr. Barbara Murray thanked Mr. Edwards for his report and all the work he does. She stated that Mr. Zilaitis comments were well received.  Dr. Murray turned the meeting over to Ms. Preston and Ms. Clark for the Auditor General update.

5. Auditor General Update

Minutes: 

Ms. Preston stated that the district was visited by the AG for three audits. The audits were for the FTE, Virtual Schools, and Operational Issues.  She noted that they have nothing in writing at this time but can tell the Board what they think will be in the audit at this point in time.

Ms. Clark stated that when the AG gave their verbal presentation to the district, there were nine issues.  She noted that their issues were all things that could be fixed rather quickly and nothing out there to be very concerned about.  She listed them so they could decide for themselves. Ms. Clark stated that their Chair would comment at the end of her presentation.

1.    Board Minutes - In review of the board minutes, there was not a timely submission of the minutes to the Board for approval. 

Ms. Preston stated that there was another tentacle to that in which the Board would approve all the minutes for all the committees. She stated that she is pursuing that issue. 

Ms. Henderson stated that was very disturbed because this district has never approved the minutes for all the committees and now we are going to be written up for that.  Ms. Preston said that this is something new that the AG is looking at in the districts and stated that she would like in writing to see the Rule or the Statute on it.

Dr. Murray stated that not only is the AG saying that they are wanting the Board to approve all those minutes, they are wanting us to do it in short order which is logistically impossible. She has asked for Mr. Bistline, School Board Attorney, to be involved in some of this because she questions their interpretation.

Mr. Ziegler stated that when minutes are approved, he is approving minutes for a meeting that he personally participated in to say that is what accurately happened.  He stated that he would never approve minutes for a meeting that he did not participate in because he would have no idea as to what happened during the meeting.

Ms. Preston stated that we had no idea that was going to be on the report.

Dr. Murray stated that she has had discussions in regard to the School Board minutes, as we put out a lot more detail then we are required to submit.  She noted that all we are required to show are the votes on the required motions, and we go way beyond that in our minutes.  Dr. Murray stated with some of the things that the district is currently going through, to maintain that level of transparency that is preferred, if we meet the auditors requirements, our only way of doing that is to cut down what we include in our minutes and tell everyone to watch our videos. She said that she would prefer to keep the detail in the minutes. We are having those discussions, and we will work to resolve it.

2.   Insurance Committee Minutes - There were no minutes taken at several of the insurance committee meetings because we were not aware that we needed to take minutes.  We are now taking the minutes so that item is now fixed.

3.   Fraud Policy-  We have a very detailed ethics policy which was not detailed enough for the AG. They had some specific things that they wanted included in our ethics policy.  The AG specifically mentioned anonymous reporting.  Dr. Binggeli spoke to the AG and told them we have that as a practice. The AG wants the district to work on the wording in the policy to make that clear.  Ms. Preston noted that a previous Board took the higher path and brought forth an ethics policy because of the negative connotation that fraud policy brings with it.

4.   Time Keeping Audit - The AG wished for us to expand on our time keeping and have the immediate supervisor approving the time and the leave for all employees in writing. The district responded that we are working on an electronic time sheet and we have a goal for 2015 to get that process up and working. It is very time consuming and the district is attempting to implement that within the confounds of the current staff.

5.   Differential Pay - Ms. Preston explained that the district had not properly addressed in the language about differential pay for your D and F schools or your low performing schools.  She questioned the AG on how you could address when there has been no money to address it.  Ms. Preston stated that some of these things are being tweaked in Tallahassee so some of these issues may be modified or even taken out before we receive the final analysis.

Ms. Kneessy brought up Endeavor and what has been done there.  Ms. Preston stated that the AG is looking for very specific language. She stated that we have addressed this issue.  Ms. Kneessy stated that it seems that the language is more important to the AG than what the district is actually doing. Ms. Preston agreed. 

Discussion ensued about the AG and how they changed their cycle of audits, the scope of what they are looking at, and the operational audit is different then it ever has been in the past.

 6.   Land Buildings and Improvements - The AG would like to see more detail in a subsidiary ledger by school, the year the school was built and all the additions and improvements that has happened to that school over the years since the school was built.  Ms. Clark said that would take a significant amount of staff time and could not even estimate when the district could complete a task of that magnitude.

Ms. Henderson stated that this should be a from this day forward type of solution.

Dr. Murray stated that if you look at how recordkeeping has changed over the past 50 years, much of that information is not available to us any longer. How can the AG hold us responsible for something that was not mandated for a 50 year period of time?Ms. Clark said that we have some of the data but just not listed in the format the AG wishes to see it.

7.   Wire Transfer Policy -  The AG wants the district to write a wire transfer policy. Ms. Clark noted that the district has good internal control on all our wire transfers.  She noted that we have the procedures in place, the Board approves the warrant list once a month  and the AG agrees that it is all in place, but we do not have a policy that says what we do.

8. Health Insurance Program - We had a finding that the AG wants the district to create the target balance of ten or eleven million of the sixty-day balance. They want us to bring the balance up to the sixty day balance.  Ms. Clark stated that we have been working on this for several years.

9. Purchasing Card and Procedures - The AG found that the principals are signing their own p-card. They want the principals immediate supervisor approving all p-cards for those principals rather than principal signing off for them.  Ms. Preston questioned the AG on who should sign off for the Board Members and the Superintendent p-cards.  Discussion ensued about the processes that are currently in place.

Ms. Murtha stated for the record that these recommendations were not from McGladrey.  They are from the Auditor General. She noted that if these findings (listed above) are what the AG walked away with after spending nine months in the district, the audit committee, the citizens, and the School Board should feel pretty good about what is going on in the school district.

6. Board Concerns

Minutes: The Board concerns were stated through the presentations.

Closing Remarks
7. Closing Remarks

Minutes: 

Ms. Clark asked if Mr. Edwards had any comments about the meeting.

Mr. Edwards stated there were a few things that got his attention but it was covered very well.

Chairman Dr. Barbara Murray stated that there are some that have to leave for other meetings and asked if there where any other concerns.


Adjournment
8. Adjournment

Minutes: Chairman Dr. Barbara Murray adjourned the Joint School Board and the Audit Commitee Meeting at 10:14 a.m.






Secretary

Chair