The Arkansas Board of Education last week designated the Pulaski County Special School District as “financially distressed” because of several irregularities over the past few years.
The district, which serves some 17,500 students, will ask the state board next month for authority to issue $104 million of general obligation bonds to build and renovate seven campuses.
Bill Goff, the state Department of Education’s assistant commissioner for fiscal and administrative services, said the financial distress designation should have no affect on the bond plan.
If the school district demonstrates it has sufficient funds for debt service, Goff said, the state board would approve the request.
The district’s outside auditors found issues in fiscal years 2008 through 2010, including failure to document sources of employee salaries and failure to reconcile bank statements in a timely manner.
An investigation by the state division of legislative audit said the district’s lack of internal controls led to the misappropriation of more than $400,000 in one department, the failure to follow purchasing rules, and contributed to a lack of oversight for overtime pay.
Goff told the board that the numerous audit findings and issues documented over the last three years at the Pulaski County district make it unlikely that the problems can be remedied internally.
He said the financial distress status would allow the state “to take more drastic measures if the current leadership of the district fails to take adequate corrective measures.”
The Pulaski County Special School District serves Pulaski County outside of the Little Rock and North Little Rock school districts, and portions of Lonoke, Saline, and Faulkner counties. It is the fifth-largest school district in Arkansas.
The special district’s debt, which is covered by the state school bond enhancement program, is rated A by Standard & Poor’s and A1 by Moody’s Investors Service.