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Superintendent Theo Cramer has pledged to issue a written report to the School Board in the coming weeks detailing his efforts to resolve the larger-than-expected deficit auditors identified from Isle of Wight County Schools’ prior school year.

IWCS exceeded its budgeted operating expenses by $703,151 according to a draft audit by the accounting firm Robertson Farmer Cox. The listed dollar amount is roughly $100,000 more than the $603,163 shortfall Cramer had acknowledged in August. According to the audit, IWCS remained $345,717 in the red as of Jan. 2.

“We’ve looked at places where we can take funds to resolve that deficit,” Cramer told the School Board at a Jan. 11 meeting.

According to School Board Chairman Jason Maresh, the money will need to come out of the roughly $88 million budget the board adopted last March for the current school year.

Cramer and Maresh blame turnover in the school division’s finance department for accounting errors the audit attributed to a “material weakness” in oversight and a second finding against IWCS that alleges “one instance of noncompliance” that’s “required to be reported under Government Auditing Standards.”

Virginia public school divisions are required to submit financial data from the prior school year annually on Sept. 15 as a component of a document known as the annual school report. The noncompliance finding, according to auditors, pertains to IWCS having still not submitted the document as of Dec. 31.

Auditor Aaron Hawkins briefed the School Board on the draft audit report he’d previously presented on Jan. 4 to county supervisors, who serve as the local funding authority for the division.

Hawkins’ report to the School Board included a third finding that was not previously presented to supervisors. Hawkins said the division’s spending of federal dollars allocated to its child nutrition program must be audited every three years if the dollar amount exceeds $750,000, and in doing so discovered four of the 40 applications for free and reduced-price school meals Robertson Farmer Cox examined were improperly processed. Another seven applications for students who’d qualified for free or reduced-price meals were missing.

“There should be applications on file for everyone that does it,” Hawkins said.

Maresh said a closed-session meeting of the board had taken place prior to the 6 p.m. start of the public meeting, during which the board discussed unspecified “personnel issues” exempt from mandatory disclosure under Virginia’s Freedom of Information Act.

“The staff that we have on board today is the right staff,” Maresh said. “There has been some accountability; it’s been taken care of.”

IWCS operates on a July 1 through June 30 fiscal year. For “several months” during the 2022-23 year “we did not have a chief financial officer,” Cramer said.

Cramer’s predecessor as superintendent, Jim Thornton, retired, and the division’s former CFO, Steve Kepnes, resigned within roughly a month of Thornton’s departure at the end of the 2021-22 school year. The CFO role remained vacant for the first three months of 2022-23. Rachel Trollinger, who was hired in August 2022 as Kepnes’ replacement, tendered her own resignation in October of that year. The role remained vacant for another three months until Cramer, in February 2023, hired the division’s current CFO, Larisa Harris.

Cramer and Maresh say Harris has, since her hiring, been inundated with sorting through the division’s finances and until recently lacked the assistance of a finance coordinator, another position in Harris’ department that saw a monthslong vacancy. Cramer said the division only recently promoted accounts payable technician Lacey Winner to the coordinator role.

Cramer noted the division’s nutrition department also saw a monthslong vacancy, but asserted he, as superintendent, ultimately bears responsibility for keeping the division in good financial order.

“The buck stops with me as superintendent,” Cramer said. “I vow to our community, to our staff, to the Board of Supervisors, to you our board, to our students that we will do everything necessary to ensure that we correct these mistakes. … There are no excuses; we must get this work done.”

Maresh also shouldered responsibility for the deficit.

“In my opinion, the School Board is overall responsible for the situation we’re in today,” Maresh said. “There is no doubt that the superintendent is charged with implementing the budget, but at the end of the day the board is responsible for the budget.”

Cramer has attributed the prior year’s deficit to a nearly $945,000 reduction in state funding coupled with overspending on transportation department and substitute teacher wages. He’d blamed Kepnes in August for allegedly allocating an insufficient dollar amount in the 2022-23 budget to continue bus driver raises the School Board had funded in 2022 with expiring federal Emergency and Secondary School Emergency Relief, or ESSER, pandemic relief money. Kepnes has denied the allegation.

Cramer and his staff initially attributed the state funding cut to a 2% decrease in enrollment from the 5,568 students IWCS had expected, but later acknowledged an ex-employee of the division’s finance department had mistakenly listed in a 2022 report to the Virginia Department of Education that IWCS would give tis teachers 2.5% raises rather than the state-mandated 5%. The error, which Deputy Superintendent Christopher Coleman certified without catching during his brief time as the division’s acting leader prior to Cramer’s arrival, shorted the division half of the $1.1 million state funding supplement it should have been able to receive for giving the full raise.