A third of Mississippi school districts are behind on submitting completed annual financial audits to the state Department of Education.

Without that information, state education officials are in the dark about current finances at 47 of Mississippi’s 138 public school districts, including any pending financial emergencies.

State Education Department leaders hope to crack down on schools with late audits in the near future, agency officials said Thursday during a state Board of Education meeting. They introduced a plan that would impose stricter sanctions on delinquent districts, including withholding funds as punishment. 

Audits are how the state Education Department monitors its schools’ finances. Districts are required to hire accounting firms approved by the state auditor’s office to perform these annual audits, which it approves.

But in 2011, the state auditor’s office lost a significant number of its staff, education officials said. While the auditor’s office caught up on audit reviews, schools had up to four years to submit late audits without being docked on their state accountability scores, two more years than before. 

Districts also received extensions to complete their audits during the COVID-19 pandemic. The deadline reverted back to March during the 2022-23 school year, and many districts missed it because of the earlier due date and staff shortages at accounting firms.

The state Board of Education held districts harmless for violations that school year, but previous violations still applied and accumulated toward the districts’ records. 

So the audits have snowballed. 

“It’s just a bad situation,” State Superintendent Lance Evans told Mississippi Today this week. “We have fewer auditing firms than we had, and districts have to have the same audits done every year, and it’s just …  it’s turned into an issue. Something’s gotta be addressed.”

The pile-up can mask emergencies, such as the financial situation in Okolona that led to a state takeover last month.

In late October, Okolona Municipal Separate School District officials contacted the state Department of Education because the district did not have enough money to meet the November payroll. Education Department officials discovered that the district hadn’t had a financial audit since 2021 and had been outspending since fiscal year 2023-24. 

At an emergency meeting in November, the state Board of Education voted to take over the district, dissolve its school board and replace its superintendent. So far, the agency has loaned $1.5 million of its school district emergency fund to Okolona and dismissed 19 staff members, including teachers. The high school has absorbed the middle school. 

At the Thursday meeting, Board of Education president Matt Miller called it an “atrocious situation.”

“The adults in the room did not act like adults,” he said. “We need to make sure you’re getting your audits done. School districts cannot function without the financial piece.”

Education officials proposed a tiered process to address the situation. After the agency identifies a missing audit, the district has time to explain why it hasn’t submitted the complete information. From that point, if the district doesn’t have a sufficient response or remains noncompliant, the state Education Department would escalate sanctions. As a last resort, department officials would suspend funding to the district. 

The Commission on School Accreditation must sign off on the proposed policy changes before the state board can approve them.

Miller emphasized that the proposed policy change is a board directive, and the state Department of Education is not an “enemy” of school districts. Instead, he said, the proposed policy is an effort to avoid future takeovers because the state’s funds are limited — the school emergency relief fund is a few million dollars. 

“The department is very in tune with the fact that it’s not like districts are walking around not wanting to have their audits done,” Evans said. “We are very sensitive to the fact that it’s a shared problem … and we’re trying to help them work through it.”