NTF issue paper: ops98.doc. 12-20.

BACKGROUND. A previous NTF issue paper exposed 2 alarming audits of the Omaha Public School system. Additional audits by the same firm show substandard financial management in 2 more audits. This troubling financial behavior by an educational taxing entity is both embarrassing and unacceptable. OPS property taxes comprise about 55%-60% of local resident property taxes plus millions in state aid from state taxpayers. OP$ administrators, with negligent board member oversight, spend these tax dollars profligately and wastefully, with little care for sound financial accountability and management.

T HE PENSION AUDIT. The OPS pension system stands funded at only 59.55% (Seim Johnson Auditor’s Audit of OPS pension system, 8-31-20, p. 14). The audit firm identified a specific deficiency in internal OPS controls that the firm considered a significant deficiency (Seim Johnson Auditor’s Audit of OPS pension system, 8-31-20, p. 24). Seim Johnson stated that OPS pension system internal controls should allow employees to detect or prevent financial misstatements in a timely way. Because of issues with the OPS accounting system, the district was unable to complete a thorough review of its own financial statements for accuracy and completeness. A need for several audit adjustments and reclassifications to correct misstatements related to cash balances, investments, investment income, revenue accounts, and state contributions to accurately present basic financial statements and notes in accordance with Generally Accepted Accounting Practices (GAAP). The firm recommended that OPS review its financial statement preparation and reporting processes to detect, prevent, and correct these errors to produce complete and accurate financial statements (Seim Johnson Auditor’s Audit of OPS pension system, 8-31-20, p. 26).

AUDIT OF ESU 19. Educational Service Unit 19 is attached to the OPS school district, although we believe the entity superfluous and not deserving of taxpayer dollars. ESUs provide complementary services to school districts, like laboratory materials and equipment. Like the pension audit, Seim Johnson found a specific deficiency in internal controls that it considered a material weakness (Seim Johnson ESU 19 independent auditor’s report, 8-31-20, p. 39). The design and operation of the ESU 19 internal controls, said the firm, should allow employees to prevent and detect errors in ESU 19 financial statements on a timely basis. The firm identified errors in financial statements during the audit related to appropriate capitalization of assets and recognition of depreciation expenses that were not identified. The district maintains a separate management module within its accounting system that interfaces with the general ledger that is not utilized correctly. A software upgrade caused issues within the asset management module of the accounting system. Specific capital asset additions were not correctly entered into the OPS asset management module of its accounting system. The manual process used to recognize amounts not included in the asset management module resulted in errors neither detected nor corrected by internal controls. The firm recommended management review and bolstering internal controls over the financial reporting processes related to capital assets to ensure that all capital asset activity properly accounted for in OPS financial statements (Seim Johnson ESU 19 independent auditor’s report, 8-31-20, p. 41).

TAKE ACTION NOW. Sloppy accounting practices in OPS do not guarantee adequate stewardship of our local and state tax dollars. To safeguard your tax dollars, use the content above to lobby your OPS school board member to tighten the district accounting practices. Lobby your state senator to advocate legislatively closer state oversight of OPS finances. Email netaxpayers@gmail.com for school board and state senator contact information.

Research, documentation, and analysis for this issue paper done by Nebraska Taxpayers for Freedom. This material copyrighted by Nebraska Taxpayers for Freedom, with express prior permission granted for its use by other groups in the NE Conservative Coalition Network. 12-20. C

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