School board approves reconciliation memo to return legacy grant funds after state audit findings

The School City of East Chicago Board of Trustees voted March 24 to approve a reconciliation memo that identifies legacy grant balances the district must reconcile with state and federal authorities, in some cases returning funds cited by the State Board of Accounts.

Nathan, a financial consultant advising the district, told trustees the memo ‘‘is cleaning up fund balances, many of them that are a decade old’’ and that the work stretches across multiple grant programs. He said the district had worked to find allowable expenditures to lower amounts due and that ‘‘the state has told us to return funding’’ rather than leave the balances unresolved.

The memo, Nathan said, covers three categories: funds that must be returned to the Department of Education, state funds that must be reconciled with the education fund, and federal grants that need internal reconciliation. He told the board that some balances dated back to 2020 or earlier and that the state had cited the district in audits. Nathan said the figure the district was awaiting direction on from the state was $788,000, and he added that transfers would create an approximate $1.3 million impact on the education fund.

Trustees pressed for detail. VP Joelle Rodriguez asked whether the district had fully reconciled reimbursements and whether money previously returned might actually belong to the district; Nathan said staff ‘‘spent many days trying to go fund by fund to find any allowable activities’’ and that records for older funds were sometimes missing, making reconciliation difficult.

Attorney Harris described the board action as a necessary cleanup step and said the packet included the timeline and legal context for transfers and approvals. Miss Simmons, the executive director of business operations, said the auditor had listed dormant funds that would need to be closed and recognized that some items may reappear for board review if additional audit steps are required.

Trustee Diane Smith urged compliance: "I would rather send this money back," she said, arguing that returning funds and correcting the audit record protects future funding and district integrity. Nathan said he would continue seeking the state’s permission for a payment schedule and promised a further review with Miss Simmons before funds are sent.

The board restarted roll call after additional comments and approved the reconciliation memo by roll call vote (three in favor, two opposed). The board’s approval authorizes the district to proceed with the transfers and returns outlined in the memo and directs further staff work to refine the figures and, if feasible, seek a payment schedule from the state.

The board was clear that the decision was driven by audit obligations and the risk that not complying could jeopardize future funding. Nathan said staff will continue to reconcile individual funds and report back if numbers change.

The board did not adopt a payment schedule at the meeting; Nathan said he would request one from the state. The district did not provide a consolidated, line-item list of each fund and its final dollar figure at the meeting; Trustees asked staff to continue detailed review and return with any corrections before funds are transmitted.