Consultants find $4.1 million overstatement in district carryover; board approves bond note and amended revenue budget

Consultants reviewing the district's books told the Appoquinimink School District Board of Education on Oct. 7 that a financial position report submitted in May overstated the district's discretionary carryover by about $4.1 million and left the district short of the required carryover.

The consultants, Chuck Longfellow and Scott Kessel, said the May submission listed a projected discretionary carryover of $7.9 million when the actual discretionary carryover was $3.8 million; the required discretionary carryover was $4.2 million. "On that report, there was a projected discretionary carryover balance reported of $7,900,000. The actual carryover was 3,800,000," Longfellow reported. "That report was overstated by $4,100,000."

Why it matters: carryover and discretionary balances affect the district's ability to fund payroll and operations early in the fiscal year. The consultants said the misstatement stemmed from mixing discretionary and nondiscretionary funds in budget reports, underestimates of salary and non-salary lines, and manual spreadsheet transfers that introduced errors.

The consultants presented six major observations and 24 recommendations to tighten controls, separate discretionary from nondiscretionary accounts, restore routine cash-flow and salary-tracking reports, and improve procurement and contracting procedures. They described immediate steps already taken: closing discretionary purchase orders where possible, tightening purchase controls, and recoding some expenditures to correct classifications. "The result of those efforts was that we were able to avoid the need for the Delaware Department of Education to appoint a financial recovery team to come into the district," Longfellow said.

Board action and next steps: After the presentation the board approved two formal budget items related to capital and revenue. The board voted to adopt a bond anticipation note for $5,507,741 to cover the district's local share of fiscal-year 2026 capital projects, and approved an amended preliminary revenue budget that reflects the district's revised receipts projections for the start of the year. Finance staff told the board the October receipts will be substantially lower than a typical year because New Castle County had not yet issued the reassessment tax bills; staff projected October receipts of about $13.2 million versus a normal October expectation of roughly $77 million. Administration said it would return next month with the detailed expenditure side of the amended budget and a timeline for implementing consultant recommendations.

Numbers and examples given: the consultants said the budget mixing showed a sample operating unit with a negative discretionary line of $1.4 million hidden by positive balances in nondiscretionary federal and state funds; budgeted operating amounts in the spreadsheet were roughly $2.7 million higher than they should have been in one example; the net effect across accounts explained the $4.1 million overstatement. The consultants also flagged a tuition-tax fund payable of about $1.5 million to Christina School District for FY25 that left the district's tuition fund effectively negative going into FY26; they recommended building a tuition carryover of about $4.5 million to cover payroll through October.

Board members asked for implementation milestones and public updates. "Can we get a report either at our finance workshop at the end of the month or our next board meeting ' stating how each recommendation will be implemented?" a board member asked; Dr. Burrows said administration would prepare those follow-ups. Consultants and administrators said training for senior staff and reinstating monthly cash-flow and salary-tracker reports would be priorities.

Ending: The consultants framed their report as a playbook for the new finance team and the board; Longfellow and Kessel urged clearer role definitions, multiple levels of review, and better software or automated feeds to replace manual spreadsheet transfers. The board adopted the bond anticipation note and the amended preliminary revenue budget and directed staff to report back on progress at the finance workshop and subsequent meetings.