In a dramatic turn of events, Indian River County School District Superintendent Mark Rendell at a July 31 public hearing accused Assistant Superintendent of Finance Carter Morrison of transferring $2.3 million from the general fund to 12 schools for positions that don’t exist.
The hearing was the first of two on the upcoming district budget. Rendell said Morrison’s transfer negatively affected a key indicator watched by the state, school board and credit raters – the projected cash balance in the general fund at the end of the year.
State law requires only a 3-percent cash reserve but board policy mandates a 5-percent cushion, and Rendell claimed the $2.3-million transfer was to blame for failure to meet the board requirement.
“As I stated at the [July 24, budget] workshop, I was surprised to see the end-of-year unrestricted fund balance of the tentative budget projected to be as low as 3.5 percent,” Rendell said, in an email sent to school board members seven hours before the public hearing.
“We had reduced our overall instructional position count (number of teachers) and successfully trimmed department budgets . . . What I discovered was that at many of our schools, 12 to be exact, there were extremely large increases in the Non-Discretionary Salary accounts. These large increases in the salary budgets at these schools were not associated with increases in teacher or other staff allocations. In other words, the budget for salaries at these schools was increased substantially without any associated increase in staffing.”
Rendell said Morrison acknowledged “he inserted approximately $2.3 million into these various school salary accounts to ‘cover’ a list of vacant teaching positions he had received from Mike Smeltzer, our position control specialist . . . I reminded Mr. Morrison that we had indeed reduced the overall number of teaching positions in the district, so all of the positions should already have been accounted for in the current budget. He admitted this was correct.
“I asked Mr. Morrison who made the decision to transfer the $2.3 million into these accounts. He stated that he did it on his own,” Rendell said. “He made the transfer without my knowledge or direction.”
Morrison was told to transfer the money back into the general fund. “The return of the funds that were inappropriately transferred on July 20 resulted in a projected fund balance of 5.7 percent,” Rendell said.
Morrison was not at the hearing to defend himself or offer a counter narrative. District public information officer, Brenda Davis, said she could not confirm whether Morrison is on unpaid leave, paid leave or terminated because of an “ongoing investigation.”
Rendell did not return a phone call asking for firm answers about Morrison’s work status.
Morrison has worked for the district since 2006, Davis said. He was executive director of finance for three years before being promoted to the assistant superintendent position in 2009.
School Board Chairman Shawn Frost said, in an email to 32963, “Through conversations with Dr. Rendell since the budget workshop on July 24th, what I perceive to be, and have long referred to as, the ‘shell game’ has now been decoded. I look forward to the forensic accounting expert’s analysis of this practice so that I, and the citizens of Indian River County, get the level of trust and transparency in the budget process we deserve.”
School Board Member Laura Zorc said, “As a school board member I am responsible for making critical budget decisions based on the information presented to me. Anything less than full transparency is unacceptable.”
Other school board members did not respond to a request for comment.
Morrison did not respond to requests for comment sent to his business phone and email, to which he may no longer have access.
Zorc raised concerns about unexplained expenditures in the budget last year. At that time Rendell and other board members seemed unconcerned that millions were being spent unaccounted for.
“We’re voting the budget blind,” she said last year. “The budget review process is flawed and lacks true transparency. It does not give back-up information or rationale for line items. Detailed information is not provided and when questions are asked, it takes weeks and sometimes months to get a reply.
“As your elected representative, I cannot vote yes for the use of $287 million of taxpayers’ money if I do not have access to information to know what is in it.”
This year the projected budget is nearly $292 million.