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Education Department Takes Over Money Management for Career and Technical Education Board

July 16, 2007 — Citing accounting problems, the Department of Education has taken over management of funds for the Career and Technical Education Board, putting it into a financial bind, according to testimony at a Senate Finance Committee hearing Monday in Frederiksted.
CTE Board Chairwoman Lena Schulterbrandt conceded there was inadequate record keeping and said the CTE Board was working to improve. But she said the board was unable to pay an array of vendors and could not pay out the scholarships it oversees as a result of Education assuming control.
Acting Education Commissioner Donna Frett-Gregory said her department was not holding back funds, but paying vendors directly upon presentation of proper invoices. She characterized Education’s actions as that of a third-party fiduciary.
“We sent notice to the chairperson and when we got no response, we began an audit,” Frett-Gregory said. “The results were alarming. … Operating funds were commingled with their scholarship funds. We had some students issued checks who were unable to cash them. That is one area of concern. I don’t want to go further while it is still being looked into.”
Schulterbrandt said her board was acting in good faith and doing its best.
“Notice was sent to the St. Thomas board, not us, and it stayed there,” she said. “As soon as we received it in November, we immediately started to put the documents together.”
In acknowledging problems, she said poor record keeping long predated her tenure and that it must be corrected. But in the meantime they need funds to operate, she said.
“We could not find all the receipts and things like that,” Schulterbrandt said. “I personally went to the bank and made copies of all the statements and took it to them myself, which their audit doesn’t note.”
Numerous vendors have not been paid in months, she said.
“I took my personal money and paid the phone bill here in St. Croix,” Schulterbrandt said. “That is how we were able to keep the office running.”
Frett-Gregory said Education authorized Finance to make payment as soon as there was proper documentation of the bill.
“Some of these vendors had no leases since 2000,” Frett-Gregory said. “I asked for signed leases so we could make legal payments to the vendors.”
The financial problems will sort themselves out as proper documentation gets cycled through the system, she suggested.
“It’s a matter of timing,” Frett-Gregory said. “Until we have clean records, we cannot authorize payment. And some of their requests have now been approved, but are waiting on Finance to release the funds.”
Sen. Juan Figueroa Serville expressed concern about the propriety of Education controlling the funds.
“It seems out of order for money to be channeled through Education to the vocational education board,” he said. “To have Education, the agency being regulated, control the flow of money to the regulating entity seems to create a conflict. But I understand they have some issues of fiscal control that must be corrected.”
Sen. Louis Hill disagreed: “Wherever government employees and officials recognize that things are being done that should not be, they have a right and a responsibility to stop it.”
Later in the day, Gov. John P. deJongh Jr. sent out a press release on the subject.
“The deJongh Administration fully supports the position Acting Education Commissioner Donna Frett-Gregory has taken as regards the Vocational Board's ability to administer certain funds,” wrote Jean Greaux, the governor’s spokesman. “While the board has the authority to administer certain funds, by law … there is no language which authorizes it to issue its own checks, as some board members have suggested. Therefore, board payments should go through the Finance Department per the usual government procedure for payment.”
The Career and Technical Education Board submitted a budget request for $797,000. The governor’s budget recommends $409,000. Most of the $388,000 difference arises from the governor’s budget having no funding for a CTEC-Hovensa training partnership. The program trains millwrights, electrical and instrumentation specialists to work at the refinery.
The board certified 32 students last year. Hovensa paid to start up the program, but the government must provide $300,000 to keep the program running. It was not clear whether the $300,000 was intentionally omitted as a policy, or was an oversight. The budget proposal will now proceed to further hearings, where it will be debated and amended before inclusion in the fiscal 2008 omnibus budget bill.
Last year the board was allotted $350,000 for operating expenses and $40,000 for the Albert Ragster Scholarships, and $18,600 for the James Petersen Scholarship. According to Schulterbrandt’s testimony, the board awarded 56 study scholarships from the preceding two funds. It has certified 182 vocational and technical teachers.
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