An Anchorage School District internal audit released May 29 found weaknesses in controls over student allotment spending at the district's three correspondence schools and recommended clearer, district‑level guidance and improved tracking. Scott (internal audit presenter) told the Finance Committee that auditors identified inconsistent reimbursement practices, purchases from vendors whose sites referenced religious curricula, large reimbursements that “did not always appear to serve the public's interest,” and gaps in tracking nonconsumable materials.

The audit matters because the district paid roughly $5.6 million from student allotments in the 2023‑24 school year through reimbursements and requisitions, the report says, and inconsistent rules can allow large sums to accumulate at household and vendor levels. Meredith (internal audit presenter) told the committee that “as of November 2024, there are a little over 2,000 students enrolled between the 3 correspondent schools,” and that state regulations and current district handbooks left room for uneven interpretation.

Auditors described four main problem areas. First, reimbursement limits for technology and other items varied by correspondent school — one school offered $500 every three years while another allowed $1,500 in a single year — producing wide differences in total reimbursements for similar purchases. Second, auditors flagged purchases from vendors whose websites described curricula as “creation based” or Christian‑homeschooling; auditors noted the underlying textbooks sometimes appeared nonreligious but said vendor site content made permissibility unclear. Third, rules on fund transfers and rollovers differed across schools; auditors found examples where a household accumulated large allotments, including a family with seven students whose combined allotment reached $49,000 and $34,000 reimbursed in 2023‑24. Fourth, schools were not consistently requiring return or tracking of nonconsumable materials: examples included a $989 computer and cameras reimbursed but not tracked as district property.

The audit also identified procedural noncompliance: some reimbursements were submitted years after purchase (auditors cite submissions from 2020–2021 processed in 2023), some reimbursements were paid to a personal account when a business account made the purchase, and disallowed payment methods such as PayPal and other digital wallets had been used. Auditors said lack of a standardized reimbursement detail sheet contributed to errors and overpayments; they found two overpayments that were later corrected ($123 and $912).

The auditors recommended that the district create clearer allowable‑purchase lists, consistent limits on rollovers and transfers, a thorough curriculum list to clarify vendors and items that may not be bought with district funds, a policy and system for tracking nonconsumable materials, and enforcement of existing submission deadlines and payment‑method rules. Meredith said auditors would be willing to provide workpapers and links to the state regulations that guided their review.

District management responses recorded in the audit were generally responsive. Committee members and administrators discussed tradeoffs: several board members and the superintendent warned that tighter district controls could lengthen reimbursement turnaround and might push families to enroll in other statewide correspondence programs. The superintendent noted the district previously issued a district‑level change that reduced some private‑school allotment use and said that change led to a loss of roughly 800 students.

Committee members asked auditors to provide the specific legal citations and the auditors’ working spreadsheet so board members could see the criteria used when auditors concluded some expenditures may not be in the public's best interest. Scott said he would provide the state correspondence regulations and related workpapers to the committee. Management agreed to work with the correspondence schools to develop the recommended policies and training.

The committee did not take a formal vote; the item was presented for review and follow up. The audit presenters and staff said they would provide follow‑up materials (state regulations, workpapers, and recommended policy language) for future committee consideration.