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TRANSFER, PA. School district's ex-manager: I didn't cause budget shortfall

By Harold Gwin

Monday, February 16, 2004

The business manager resigned in spring 2002.
TRANSFER, Pa. -- The former business manager for the Reynolds School District denied that his actions were responsible for the district's $2 million budget shortfall two years ago.
John W. Simon Jr. said Thursday the district's finances were in a downward spiral before he took the job in July 1999. He resigned in May 2002.
State Auditor General Robert P. Casey Jr. issued a report pointing the finger at Simon for the district's financial problems, accusing him of failing to carry out the duties of his office.
Casey also said the school board failed to adequately manage and oversee the district's business activities.
Governor's report
Casey's report didn't identify Simon by name but referred to "the business manager employed from July 1999 through May 2002."
"We found that the business manager failed to tell the school board that there was a deficit in the general fund when it was preparing the budget for the 2001-02 school year. At the same time, board members allowed themselves to be kept in the dark," the audit says.
His office was asked to investigate the district's finances after it was revealed in June 2002 that a $2 million general fund surplus had been depleted.
The auditor's Office of Special Investigations found that the business manager hid the district's true financial condition by providing incorrect and misleading financial information to the board, submitting inaccurate information to the state, keeping an independent auditor's report for the 1999-2000 school year from the board, and making unauthorized transfers from the capital reserve fund to the general fund.
Casey said the district's former superintendent was involved in keeping financial data from the board.
There were no criminal violations, but the financial problems were caused by "a combination of neglect of duty and incompetence," Casey said.
Simon denied the allegations.
"At no point was the board misled. All of the information was presented to them. I did nothing inappropriate," he said.
Simon said he spent most of his time trying to correct inherited accounting problems that had district funds placed in a variety of accounts that no one was tracking.
He said the district had tapped its capital reserve account for nearly $1.5 million to balance its general fund before he became business manager.
Cleaning up
Simon said he spent his first 18 months cleaning up the accounting mess. He also spent a lot of time going after $500,000 in special-education tuition that Reynolds had failed to collect over a period of four years.
He said he used money from the capital reserve account as a loan to pay general fund bills as the district was always cash poor until its bimonthly state subsidies arrived, but he never made any permanent fund transfers on his own.
The board was apathetic about finances, he said, noting that he proposed a 5-mill property tax increase for the 2000-01 school year, but the board passed a budget with no increase.
The board was increasing spending at the rate of $400,000 to $600,000 a year but was only raising taxes an average of 1 mill a year, generating $25,000 in new revenue, Simon added.
Superintedent Dr. Anthony Trosan said the district is financially stable, but it is faced with raising taxes 4 or 5 mills each year for three years to fully recover. The first increase came this year.