Under a new law enacted in Indiana, city officials and school board members who don’t use proper accounting rules to fix their debt, face possible misdemeanor charges and loss of office.
In an article published by TheStarPress.com concerning Muncie School System running years of overdrawn cash balances, the City of Terre Haute came up as another local entity severely broke and using improper accounting practices.
The State Board of Accounts (SBOA) has cited Muncie Community Schools every year for more than a decade for millions of dollars in overdrawn cash balances in multiple funds.
Under a bill enacted by the Legislature and signed by the governor this past week, public officers at MCS and other audited entities who ignore accounting guidelines/laws in the future could face prosecution to force them out of office.
Under that law, if state agencies, local schools, cities, etc., fail to correct audit findings, the audit committee of the Indiana General Assembly’s 16-member legislative council may take action including posting the failure on the General Assembly’s website and referring the matter to the inspector general if the alleged violator is a state agency or to the local prosecutor if the alleged violator is a local government unit.
Prosecutions would occur under one of two other state laws pertaining to accounting of public funds:
• A public officer found guilty of “failure to file report; interference with examiners,” commits a Class B infraction and forfeits office.
• A public officer found guilty of “refusal to adopt or failure to use” systems of accounting and reporting adopted by the state board of accounts commits a Class C infraction and forfeits office.
The Muncie school district is not the only form of local government in the hole, Joyce said. “There are others falling not far behind.” For example, the city of Terre Haute is “running close to being in a similar situation (as MCS).” As of Dec. 31, 2014, the city of Terre Haute’s general fund balance was overdrawn by $5.4 million. Transit, parks/recreation, fire pension, cemetery and other funds also were overdrawn more than $7 million.