Broward schools have used $20 million from local developers to pay off old debts, instead of building new classrooms as required, a state audit has concluded.
The state Auditor General says the school district needs to restore $20.3 million to its capital budget if it can’t adequately explain its actions to the Florida Department of Education, according to a preliminary report obtained by the South Florida Sun Sentinel. That could be tough for a school district already struggling with how to pay the skyrocketing costs of school renovations and employee raises.
The funds questioned by the Auditor General are known as “impact fees.” Developers of new residential neighborhoods pay these fees to the school district to offset the impact that new students are expected to create.
In recent years, the school district has received about $15 million annually from these funds. Most of it has come from new development in the Parkland area, one of the few high growth areas in the county, said Skeet Jernigan, president of the Community and Economic Development Council, which represents local developers.
Jernigan has argued that the funds must be used to build classrooms or schools that will directly benefit the communities paying the fees. But Broward and at least eight other school districts have maintained the money can be used to pay off debts on previously built schools, arguing that those schools are serving students in recently built neighborhoods.
“As a board, we have been told repeatedly by both our general counsel and our chief financial officer that we are using the impact fees appropriately,” School Board Chairwoman Heather Brinkworth told the Sun Sentinel, adding that state law appears to be unclear on the issue.
A law that would have expressly banned the practice of using those fees to pay off debts failed in the Legislature last year. It’s being considered again this year.
However, the Florida Supreme Court has opined that school districts “must demonstrate a reasonable connection, or rational nexus, between the expenditures of the funds collected and the benefits accruing to the subdivision,” the Auditor General wrote in its report to the Broward district. The auditor said Broward schools provided no evidence that its fees met that threshold.
“In response to our inquiries, district personnel indicated that they plan [to] build additional schools in anticipation of future growth so that sufficient educational facilities are available when that growth occurs,” the report said.
However, the district submitted a five-year capital budget to the state in November 2017 that showed no plans to build or expand schools, the report said.
The Auditor General made a similar finding two years ago for Miami-Dade schools. That district disagreed with the finding.
“The district did not restore any of the questioned impact fees, and no changes were made in the way the district spends the revenue due to the Auditor General’s finding,” said John Shuster, a spokeswoman for Miami-Dade schools.
Both Broward and Miami-Dade school districts use the same lawyer to handle bond matters, Bob Gang of the Miami-based firm Greenberg Traurig. He has issued letters arguing it’s legal to use impact fees to pay off debts. Shuster said his district sent a response to the Department of Education explaining its position. A spokeswoman for the state department said Monday she’d have to look into the matter. In the past year, Lake and Lee counties have been similarly cited in audits.
The preliminary audit found some other problems with the school district’s operations:
— The school district overpaid teachers who received state bonuses because they were rated “highly effective” and met other criteria. Each teacher received $6,459 each instead of $6,000, resulting in $881,000 in extra payments, the audit found.
— The school district continued to pay some employees after they left the district. One former employee was paid for three months after leaving, totaling $14,303, and the district has been unable to recover that money, the audit found. There were $893,035 in overpayments identified during the 2017-18 school year, but $721,127 has been recovered, the district told auditors.
— The school district failed to conduct required 2016-17 audits for 187 of 226 schools. The audits were scheduled to be completed in the 2017-18 school year. The district cited reasons such as the retirement of former Chief Auditor Pat Reilly, Hurricane Irma and the Marjory Stoneman Douglas High School tragedy.
— The auditors found problems with district-issued credit cards, including a $4,999 charge “for a second deposit to a vendor for an event named ‘Broward Schools (before and after school),’ and the cardholder was the before and after school director.” There were no records justifying this expense, the audit found.
— General Counsel Barbara Myrick and two district lawyers who work for her had contracts with the district that would allow them to receive more than the five months maximum severance pay allowed by state law. Myrick would have received six months severance if she was fired in her first two years. Lawyers Robert Vignola, Marylin Batista and Thomas Cooney could be paid for the remaining time on their multi-year contracts, regardless of how much time was left. The district said Myrick’s contract now complies since she’s been general counsel for more than two years. The School Board changed the contracts for the other lawyers Feb. 5.
— The school district was not able to readily identify which employees had access to Social Security numbers and other sensitive data for current and former students, raising security concerns. The district also questioned whether some employees had inappropriate access to certain information involving employee payroll, vendors and other restricted information.
A district spokeswoman could not be reached, despite attempts on Friday and Monday.