DESPITE the shrinkage in local appropriations, the Guam Department of Education saw a revenue run-up in 2011,which the Office of Public Accountability attributed to additional federal funds rolling into the agency.

OPA said GDOE’s total revenues in 2011 went up by $80.3 million, going from $253 million to $333.2 million – a huge chunk of which went to the contract payment for the third-party fiduciary agent Alvarez & Marsal Public Sector Services.

The contract, according to OPA, cost $8.4 million and the new financial management system and related consultants cost $5 million.

The U.S. Department of Education had blocked the local education department’s access to federal grants due to the agency’s chaotic financial management. The federal agency eventually thawed the fund freeze in December 2010 after Alvarez & Marsal installed its new financial management system.

But despite an “unqualified clean opinion” issued by Deloitte & Touche on GDOE, OPA said the department remains on high-risk status with the USDOE for the ninth consecutive year. Although the audit found no questionable costs or spending, OPA said auditors continued to raise concern over the accounting of non-appropriated funds.

“Supporting documents for NAF (non-appropriated funds) expenditures and bank reconciliations were lacking, indicating noncompliance with policies and adequate documentation requirements,” OPA said in a June 29 audit report.

No receipts

OPA, for example, found that two schools, F.B. Leon Guerrero Middle School and Southern High School, did not have any records or receipts and disbursements for review.

“The lack of supporting documents for NAF reflects a reckless disregard for accountability by school officials,” OPA said. “This lack of accountability provides opportunity for theft and misappropriation of [non-appropriated funds].”

According to OPA’s report, GDOE’s revenues consisted of local appropriations of $196.1 million or 58.9 percent; federal grants and contributions of $136.1 million or 40.9 percent; cafeteria sales of $793,000; and fees and other programs of $155,000.

“Local appropriations for GDOE decreased by a total of $9.4 million, of which $7.5 million was for operations and $1.9 million for textbooks,” OPA said.

The audit found that the decrease in revenues was offset substantially by an increase in federal grants and contributions of $90 million, which is mostly attributed to a $60 million re-designation of American Recovery and Reinvestment Act money.

“Were it not for the re-designation, GDOE would have experienced a decrease of $1.2 million in net assets and its cumulative deficit would have been $23.8 million as of Sept. 30, 2011,” OPA said.

ARRA

The $60 million in ARRA funds were reprogrammed to cover personnel costs for projects initially identified in the State Fiscal Stabilization Fund, OPA said.

About $25 million from other federal grants has been obligated for various projects with the remaining balance going through the procurement process.

During the audit period, GDOE’s total expenditures increased by $86.5 million, from $253.6 million to $340.1 million.

“Expenditures comprised of $197.3 million in local funds and $142.8 million in federal funds. Local expenditures of salaries and benefits decreased by $69 million from $165.2 million to $96.2 million, whereas utilities increased by 1.7 percent or $251,000 from $14.3 million to $14.6 million,” OPA said.

“Water decreased by 14.1 percent or $314,000 from $2.2 million to $1.9 million, while power increased by 6.5 percent or $753,000 from $11.6 million to $12.4 million. Fuel costs decreased by 50 percent or $252,000.”