School Districts' Finances Can Plead the Fifth After So Many Years Under Bill

Legislation has been introduced to create what is in effect a statute of limitations concerning public school financial audits. House Bill 5007 would prevent auditors from delving into past school district audits other than those of the most recent years.

“We don’t want audits to go back 10 years,” said Nick Wake, spokesman for Rep. Mike Callton, R-Nashville, the bill's sponsor. “We’re capping the audits so they can’t go back beyond three years.”

In Michigan every school district, intermediate school district and public charter school has to complete a financial audit each year. These audits must be posted on the district’s website.

According to Wake, Callton introduced House Bill 5007 in response to the impact a financial audit had on Delton Kellogg Schools, which is in Callton's district. Auditors had reviewed past audits going back a number of years. 

“Kellogg’s issue involved finances that were audited way back,” Wake said. “Our concern is what happens when they start hitting school districts that are tight on money.”

Delton Kellogg Schools’ 2015 audit report released in October reveals that the district’s (unrestricted) deficit is $17,431,061, which was an increase of more than $16 million over the $1,038,121 deficit it reported in 2014.

The $17,431,06 deficit is highlighted in a section of the audit report titled "Delton Kellog Schools Administration's Discussion and Analysis." It states the following: "The $(17,431,061) in unrestricted net position [deficit] of governmental activities represents the accumulated results of all past years' operations.”

There were no responses to repeated attempts to contact the school district’s Superintendent Carl Schoessel.

Bill DiSessa, spokesman for the Michigan Department of Education said he wasn’t readily aware of any specific school district audit issues pertaining to the legislation.

“The department is reviewing the bill at this time,” DiSessa said.