Mississippi Auditor Shad White reported his office discovered “alarming business practices” at the Hinds County School District — including a lack of spending oversight and an assistant superintendent who racked up nearly $50,000 in “improper expenditures.”

White’s office said Monday the findings resulted from a routine audit, one of several it is conducting on school districts. The fiscal year 2019 review found unapproved credit card spending, bank accounts that had not been reconciled in nearly a year and credit card spending records that “were destroyed before they were reviewed.”

“This uncontrolled and unlawful administrative spending is not acceptable,” White said in a statement. “It shortchanges teachers and students. It’s not fair for taxpayers. They all have a right to be angry about this kind of administrative spending. It results in money going outside the classroom and it violates our spending laws. I expect the district to take swift action to make sure this stops.”

The district said in a statement it is cooperating with auditors and “working diligently” to address issues in the report. Officials pledged to conduct a “full review” of fiscal policies and practices and carry out financial training with staff who have money-related responsibilities.

Officials said the district “remains on strong financial footing” despite the findings. The district oversees more than 5,500 students and has a total operating budget of $72 million.

Earl Burke, the assistant superintendent who was the focus of several of the audit’s findings, did not return a message or email seeking comment on the audit’s findings Monday. A district spokesman, John Neal, refused to comment on Burke’s employment status or answer further questions about the district’s response to the audit.

The audit found:

• Burke, an assistant superintendent and the district’s chief financial officer, spent nearly $50,000 improperly, auditors said, including on a “car allowance” and salary. Auditors reported the assistant superintendent also used district funds for reasons such as an in-flight internet subscription, a luxury hotel suite stay and more.
• Bank account reviews were infrequent, requiring $54,000 in adjustments to “reconcile the district’s bank statements.”
• Some credit card statements weren’t reviewed by district officials, some purchases were made without justification and credit card limits were exceeded. The credit card expenditures in question were largely made for school district purposes, however they did not go through the necessary approvals by the school board or superintendent, auditor spokesman Logan Reeves said.
• The district bought iPads and Apple laptops worth almost $2 million without a bidding process, which is required under state law. The district relied on a letter from Apple saying it was a “sole source” provider of such electronics, but auditors noted that similar products are sold by other vendors.

The audit recommends 22 corrective actions. They include bolstering internal financial controls, and broadly “more effective and appropriate oversight of the district” — from both the Hinds County Board of Education and Superintendent Delesicia Martin.

“The actions and findings noted in this report indicate a lack of appropriate oversight and ‘tone at the top’ leadership when considered in the aggregate,” auditors wrote.

Auditors recommended more internal controls over travel expenses. Auditors said Burke should repay more than $18,000 in personal and travel expenses not authorized by the board or superintendent.

In one case, auditors said Burke spent $576 for a hotel in Jackson during a conference, even though he lives in Clinton. In another, he spent $1,325 on a hotel suite during a conference trip — more than the travel amount allowed by the school board. Another district employee stayed in a regular room for the conference at a cost of $616.

Auditors also recommended better internal controls over cash receipts, bank deposits and financial reports generated by the district.

Officials said the audit’s findings related to Burke will be forwarded to the Auditor’s Investigations Division. Such a probe could result in criminal charges. Burke has been with the district for more than 20 years.

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