Audit cites loss of $195k on investment
HUNTSVILLE — An annual audit of county finances conducted by the State Comptroller’s Office cited a nearly $200,000 investment loss related to a school energy loan.
The audit, for fiscal year 2008, was released last week by state officials. According to the audit, funds held in escrow for energy management improvements at Scott County School Systems facilities were invested in mutual funds, which lost $195,415 as the economy weakened last year.
The school system borrowed $2,442,680 from Bank of America on May 15, 2008. Terms of the loan called for the funds to be deposited into an escrow account until required for payment as the energy improvements were completed.
According to the audit, the investment in mutual funds was not in compliance with state statute, which requires that county funds be invested in bonds, notes or treasury bills, or in certain other areas. Mutual funds are not included in the statute.
By the end of the fiscal year on June 30, 2008, the fund had decreased to $2,247,265, a decline of $195,415.
The audit also warned of using the county’s General Fund to provide funding for school purposes, questioning the legality of such funding.
The funding in question was $90,000 that was spent from the general fund, with $61,000 going to the county school system and $28,000 going to the Oneida Special School District. According to the state’s report, auditors were advised by county officials that the funding was needed in order for the county to meet minimum local education funding requirements through the Basic Education Program. Auditors cited a state attorney general’s opinion, which stated that “a county legislative body cannot lawfully divert revenues collected for general county purposes, or other non-education purposes, and apply those moneys to education purposes.”
The school financial matters were among eight mostly-routine findings cited by the Comptroller’s Office in the audit report.