Audit: Poor Accounting For Class-Size Reduction Funds

Concerns From USOE

Highlights of the Audit

• School districts cannot document 59% of class-size reduction expenditures.

  "The legislature allocated over $344-million total since 1990 to reduce class size among Utah's school districts. In 1999 Utah's school districts received in excess of $56-million to support class-size reductions.

  Our audit determined that many districts co-mingle class size reduction monies with other district funds and cannot account for specific expenditures related to class-size reduction efforts. Because 59 percent of class-size reduction monies are co-mingled with other funds, we cannot be sure school districts have spent class-size reduction funds as intended by the Legislature, in spite of the fact that the Utah Code requires school districts to account for class-size reduction spending.

  Finally, the Utah State Office of Education should have provided the districts with more direction and uniformity in reporting on class-size reduction monies."

  Response from Utah State Office of Education: "USOE again commits to working with districts to improve reporting mechanisms that will allow the accounting of expenditures by revenue source.

  The audit noted that several districts already segregate class-size reduction funding. USOE will use those districts' practices on which to model a statewide reporting system."

• About 28% of board leeway expenditures are for purposes other than class size.

  "The Legislature intended board leeway revenue be used to help school districts reduce class size. From a sample number of school districts, we determined that about 40 percent of the board leeway revenues were spent for teachers and other appropriate class-size reduction purposes.

  However, 28 percent of the board leeway revenues have not been used for class-size reductions-- but rather for teacher benefits, salaries, cost over-runs or to replace other district expenditures. We believe that much of this spending was not in compliance with the requirements of the law.

  The remaining 32 percent of leeway revenues cannot be accounted for because documentation is lacking. The school districts do not have documentation to support board leeway spending because the leeway revenue is generally co-mingled with other revenue and loses its identity."

  Utah State Office of Education: "USOE does not encourage or condone the use of leeway revenue for purposes other than those designated by law.

  USOE will redouble its efforts to ensure that district business officials and their private auditors are aware of the law surrounding the use of property tax revenues and their responsibilities in following that law."

• Utah's class sizes have decreased significantly since 1990.

  "An analysis of Utah State Office of Education data indicates Utah's school districts have reduced student-to-teacher ratios by an average of 4.27 students in kindergarten and 3.21 in grades one through six.

  Our random sample of 225 kindergarten and elementary teachers indicates a 2.06 class size reduction in kindergarten and a 2.72 class size reduction in grades one through six.

  This is a significant reduction, but this report indicates more could be done to further reduce class sizes in Utah's schools. Analysis of two different measurements indicate class-size reductions have occured."

• Misleading Statements

  "USOE believes that the reference to a total amount that was appropriated for class-size reduction could be misleading.

  Of the amount mentioned ($344 million), only $66.4 million over the ten years audited, or 19.4%, could have been used to reduce specific class sizes. The remainder of the funding had to be used to maintain class sizes as reduced previously rather than reduce them further."

• Overstating the Problem

  "The auditors only considered teacher salaries and benefits as class-size expenditures. There are other legitimate expenditures associated with class-size reduction-- such as new space for students, equipment and supplies for new classrooms, and administrative costs.

  Furthermore, the law allows districts to use nontraditional and innovative and creative methods to reduce class sizes with this appropriation. The audit does not consider those possible nontraditional methods to reduce class size."