Financial audit reveals issues in Montgomery ISD’s FY 2019-20 budget; district takes corrective steps

The audit also identified MISD’s misallocation of CTE funds as a significant deficiency, which Roberts said is less severe than a material weakness but important enough to merit attention. In June, Lynn announced to the board that the district spent $1 million less in FY 2019-20 on its career and technical education department than was required by state law.

“There should have been a flag raised that this could have been a problem, but that flag was never raised. And if it was raised, the response was not adequate,” Roberts said.

However, Roberts added that the concern about the decrease in CTE funds was brought to her attention early and that she appreciated the transparency.

The Texas Education Agency will ultimately determine the compliance implications of these findings, she said.

Although MISD received an A for its FY 2018-19 annual financial management report—which is based on student, staff, budget and financial data—because of these findings, Lynn said, a C is the maximum rating the district's FY 2020-21 budget can receive.

“With material weakness being identified in this audit, as we stand here next year at this time, our ... rating will be significantly lower,” he said.

Board members asked Lynn how the district will ensure this does not happen again. Lynn responded that the district has already submitted a corrective action plan to auditors. The FY 2020-21 budget has the correct amount allotted for special programs—in some cases, he said, the district allotted more than required—and expenses will be monitored quarterly.

“We are increasing the level of staffing training for the finance staff ... so that we don’t wind up in this situation at the end of the year,” Lynn said. He further recommended a degreed accountant be added to the department.

“I believe the issues that were identified in the [FY 2019-20] audit at this point ... have already been corrected for [FY 2020-21],” he continued. “I want the community to understand this was a difficult situation walking into with a position being vacant for so long, but ... this board and this community has my full power behind [them] to make sure these issues don’t happen again.”