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Ferebee: IPS will make major changes in financial reporting

USN 6th grader during a mindfulness practice.
USN 6th grader during a mindfulness practice.
J. Zubrzycki

In 2009, when a member of the Indianapolis Public School Board asked to see a detailed budget she was told no.

On Tuesday, Superintendent Lewis Ferebee said the board was going to get exactly the sort of detail then-board member Kelly Bentley asked for five years ago, and he suggested IPS should have been providing the data to the board all that time.

Bentley, who is considering running again for the school board this fall, was told at the time that board members did not need to see such detail by then-Superintendent Eugene White.

Ferebee, on the other hand, raised concerns in March, which have now been confirmed by two external audits, that IPS’s financial reporting to the school board barely existed before his own calculations earlier this year to determine that the district was not operating $30 million in the red, as the board believed when he was hired last year.

Consider this finding from one of audits released Tuesday: The district had not produced an annual budget book for the school board or the public since 2010, a year after Bentley complained.

What little information was presented to the board were simply projections, which often were overstated, and not actual account balances, auditors wrote.

Now, Ferebee said, his team is working to restore faith in a system that an audit by the Council on Great City Schools called “lacking transparency at virtually every level.”

IPS officials officially announced the results of the audits — the other was performed by the State Board of Accounts — at Tuesday’s IPS school board meeting. But already, IPS officials have started reconciling projected versus real expenses and revenues on a monthly basis and providing board members and the public regular updates.

The district also formed a budget development committee, which will meet for the first time June 18, to guide the board as it plans for next year’s spending and revenue. Ferebee said bringing the community together around the budgeting process, and being more transparent about it in the future, will help build trust in the district.

“We need an all-hands-on-deck approach,” Ferebee said. “We believe this should be a community effort from the entire city.”

In light of the findings, IPS’ financial services division also will be restructured. The board in March fired its chief financial officer for performance-related reasons a week after Ferebee first announced that he did not believe there was a deficit.

While the audit findings largely focused on the actions of IPS’s prior administrations, Ferebee said he “doesn’t want to focus on what happened in the past.”

“Similar to other departments, we are currently studying the business and finance department and will reorganize to ensure we have optimal effectiveness and efficiency,” Ferebee said.

Before Ferebee’s announcement in March, many in the district feared IPS was on the verge of closing schools to try to reduce its proclaimed $30 million deficit. With the district was no longer in that position, Ferebee said he is looking for ways to use mostly empty school buildings differently, possibly by selling or renting some of them, and looking ahead to the district’s growing space needs over the next few years when it implements universal preschool across IPS.

“I don’t want to look at closures at this point,” Ferebee told reporters. “There are a lot of options.”

He’s also keeping the district’s modest surplus in mind when it comes time in August to officially begin collective bargaining over teacher contracts, which have not seen raises in five years.

IPS board members stayed mostly silent after Ferebee’s presentation, and did not discuss the audits much afterward, except to ask a question about what would be required of them if the board were to decide to create an audit committee.

Board Member Michael Brown said that while the results of the audits did not surprise him. He was “overjoyed” to hear that nothing illegal or unethical had been found, he said.

“I’ve been calling for an internal audit for 10 years,” Brown said. “Somebody needs to report regularly to the board so this never happens again.”

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