Dozens of school districts are missing financial audits. Some are years late
By Devna Bose | Originally published by Mississippi Today
Almost half of Mississippi’s 138 school districts have not submitted at least one year of financial audits, leaving their finances murky.
As of Tuesday, 61 districts have not submitted the audits for fiscal year 2025, which ended June 30, according to records requested by Mississippi Today from the Mississippi Department of Education. Additionally, 29 of those districts are also missing financial audits for fiscal 2024, and 13 are also missing them for fiscal 2023 — risking an immediate accreditation downgrade.
Districts on probation must develop plans to come into compliance. Eventually, districts may have their accreditation withdrawn, which comes with sanctions, including limiting extracurricular activities.
Okolona Municipal Separate School District hasn’t turned in audits for the past four years.
Okolona school leaders reached out to the state education agency last year because they could not make the following month’s payroll. The state Board of Education voted to take over the district in November.
The interim superintendent, Chad Spence, would not comment on how Okolona is working to get up to date on audits, but agency spokesperson Jean Cook said the Education Department is working with Okolona to secure a contract with an external auditing form to complete the outstanding audits.
Following the Okolona takeover, state leaders have ramped up accountability for delinquent districts. In January, the board changed a rule that would put school districts with two or more outstanding audits on probation or downgrade their accreditation. Before the rule change, districts could have missed filing four consecutive annual audits before potentially losing accreditation.
Schools have been turning in their audits since the agency tightened its rules and upped the consequences — districts missing audits for fiscal years 2024 and 2023 have fallen from 47 in December to 32 in March and to 29 in May, according to state officials.
Even so, Paula Vanderford, the agency’s chief accountability officer, said the issue of missing financial audits remains a top concern for the state Education Department.
“I would consider this very serious,” she said. “We have to be concerned about whether we can be faced with another Okolona and be caught by surprise.”
State leaders dip into a specially allocated emergency fund when they take over a district, but that pot of money is limited. State Superintendent Lance Evans has said the agency already spent $1.5 million since taking over Okolona, meaning $4.8 million remains for future district takeovers.
If that money runs out, the agency would need to “have a conversation with the Legislature,” Vanderford said.
“That doesn’t give us the ability to walk away from a district in need,” she said.
Federal law requires public school districts to submit annual audits. Missing audits can mask urgent financial problems at school districts, which leaders have warned could lead to more emergencies and sudden takeovers.
District leaders must submit audits to the Office of the State Auditor for review before they can be submitted to the Federal Audit Clearinghouse. The education agency monitors district compliance with the audit deadline.
Because of the audit backlog, the Office of the State Auditor is prioritizing the review of fiscal 2025 audits, Cook said.
Still, although a number of districts submitted their fiscal 2025 audits to the state auditor’s office in March, the office didn’t clear those audits for release before the March 31 federal deadline.
That’s because a four-person team reviews school district audits and is managing over 40 school, county and community college audits, said Jacob Walters, spokesperson for the Office of the State Auditor.
The team had warned schools’ audit firms to submit the reports by Dec. 31 to get approved by March 31. Many districts submitted audits within the last few days of March, making it impossible for the team to review them in time, Walters said.
Another reason for the delay was that the federal Office of Management and Budget issued compliance requirements for those audits in November. Audit firms held the reports until then to ensure compliance with the standards, Walters said.
The office staff are prioritizing the audits, he said. State Auditor Shad White has approved hiring an additional employee to address the school audit backlog.
State education leaders have said the factors driving missing audits include school administrative turnover, too few district business managers, auditor staffing shortages and the burdensome federal funding portion of the audits.
Some districts are having problems finding accounting firms that have the capacity or ability to complete these audits.
The education agency is struggling to keep up, too. Because of limited capacity, the department can’t sanction every district, Vanderford said. Districts found out of compliance must have due process and show-cause hearings, depending on whether they risk being put on probation or having their accreditation withdrawn.
“We’re going to have to triage these districts,” Vanderford said. “While they’re all at risk, we don’t have the capacity to inform a dozen districts at one time they have to have a hearing.”
This article was originally published by Mississippi Today and is republished here under a Creative Commons license.
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