vs. ) CASE NO. 82-2734
LLOYD R. DAY, )
Respondent. )
This matter came on for hearing in Madison, Florida, on December 14, 1982, before the Division of Administrative Hearings and its duly appointed Hearings Officer, R. T. Carpenter. The parties were represented by:
For Petitioner: J. David Holder, Esquire
For Respondent: John D. Carlson, Esquire
1030 E. Lafayette Street, Suite 112
This matter arose on notice of charges and petition to discharge Respondent from his position as Director of Finance for the District School Board of Madison County. The petition alleges that Respondent willfully neglected his duties by failing to invest idle funds so as to obtain the maximum safe return on investment in violation of Sections 230.33(12)(j) and 236.24, Florida Statutes, and District School Board Rule 6GX40-7.02. The parties submitted proposed findings of fact which have been incorporated herein to the extent they are relevant and consistent with the evidence.
Upon consideration of the oral and documentary evidence adduced at the hearing, as well as the observation of the demeanor of the witnesses, the following facts are found:
Respondent, Lloyd R. Day, has been employed by the Madison County School Board in the position of Finance Officer since May, 1971. He has been continuously employed in this position through a series of one-year contracts. On April 2, 1982, the School Board, upon recommendation of Petitioner, reemployed Respondent for the period commencing July 1, 1982, and continuing through June 30, 1983.
Petitioner, Randall M. Buchanan, became Superintendent of Schools in Madison County in 1977. His duties are defined by law and rules promulgated by the School Board of Madison County. As part of his duties as Director of Finance, Respondent invested the idle funds of the Madison County District School Board following his employment in May, 1971, and continued to perform this function until approximately October, 1980.
At the time Petitioner became Superintendent, he requested that employees write down their current duties to assist him in learning their functions. He retained this information in his own office files. This informal job description established that the finance officer was responsible for investment of all idle funds. Two other job descriptions for the position of finance officer also existed, one in the personnel office, which assigns responsibility for the investment of idle funds to the Finance Director, and one filed with the Public Employees Relations Commission, which does not include this specific function but contains an "other assigned duties" clause. The School Board has not adopted an official job description for the position of finance officer.
This evidence, the testimony of Petitioner and Respondent, as well as the accepted practices within the school system established that Respondent was responsible for this function. He exercised his duty to invest idle funds of the Madison County District School Board from January, 1977, until approximately October, 1980, and did an excellent job investing during that period. His efforts enabled the Madison County District School Board to construct a half- million dollar football stadium with interest earned on such investment of idle funds in the Board's capital outlay account.
During the fiscal year commencing July 1, 1979, and ending June 30, 1980 (1980 fiscal year), Respondent made 102 separate investments of idle School Board funds in certificates of deposit and repurchase agreements. As a result, the Madison County School Board earned interest income of $245,862.51. Respondent was criticized, however, in the audit report prepared by the Auditor General's Office for his investment practices during the 1980 fiscal year due to his failure to follow-up investments made by telephone with written confirmation or documentation. Respondent was so angered and upset with the auditor's criticism of the manner in which he made investments in the 1980 fiscal year that he told the auditor he would leave the School Board's funds in a passbook savings account rather than comply with the auditor's recommended investment procedures.
With the exception of three certificates of deposit and one repurchase agreement, Respondent did in fact leave the funds in a passbook savings account at the Bank of Greenville, which paid a rate of 5.25 percent. As a result, interest income in the 1981 fiscal year (which ended June 30, 1981) totaled only
$104,976.52, approximately $140,000.00 less than that which was earned in the 1980 fiscal year. In the report of the Auditor General for the 1981 fiscal year, the auditor noted on page 4, paragraph (13),that the Madison County District School Board lost approximately $92,000.00 in interest income as a result of failing to invest School Board funds in accordance with State Law.
Section 236.24(2) , Florida Statutes, effective July 1, 1980, provides that a District School Board may invest funds not needed for immediate cash requirements in savings accounts only if the interest rate received is not less than prevailing US. Treasury Bill rates. Respondent was knowledgeable of that fact, having attended the Summer Conference of the Florida School Finance Officers Association in Orlando, Florida, in June, 1980. Following his return
from that meeting, Respondent prepared a memorandum to Superintendent Buchanan dated July 8, 1980, in which he stated:
At a meeting held in Orlando, Florida, by the Department of Education, recent
legislation was discussed and explained to us. One Bill (CSSB 559)(Chapter 80-103, effective July 1, 1980) pertained to the subject of investment of public funds. The explanation given us at this meeting was that we are precluded from investing in time deposits unless the rate of return equals US.
Treasury Bill rates.
Respondent's memorandum went on to indicate that the Florida Bankers Association's interpretation of the new law was in agreement with that of the Department of Education. Respondent concluded his memorandum by stating "future investments must yield at least US. Treasury Bill rates or we must invest in US. Treasury Bills.
By memorandum dated August 25, 1980, Respondent advised Superintendent Buchanan of the investment of School Board funds in two certificates of deposit. in addition, he advised the Superintendent that on August 25, 1980, he talked to personnel at the Department of Administration, Local Government Surplus Trust Fund, to request a quote on the amount of funds which he was putting up for bid. Respondent notes in his memorandum that when he received the response from the Local Government Surplus Trust Fund, they quoted rates substantially higher than the rates quoted by local banking institutions. Acting on this information, Respondent prepared an agenda item requesting that the Madison County District School Board authorize investments with the Local Government Surplus Trust Fund. At its meeting on September 4, 1980, Respondent appeared before the Board and explained the request to them. The Board voted to authorize investment of funds in the Local Government Surplus Trust Fund unless the Hoard obtain a rate of interest from a local banking institution of within one-half percent of that paid by the Fund.
Although he received authorization by the Board on September 4, 1980, to invest funds with the Local Government Surplus Trust Fund, Respondent took no further action to initiate any such investments and, in fact, made no investments with the Fund until after the Madison County District School Board received the official audit report for the 1981 fiscal year from the Auditor General in June, 1982.
Respondent claimed that the idle funds were not invested in other investment forms due to workload, lack of direction and a preexisting directive by the Petitioner not to place funds out of the county. These assertions are not credible and are rejected. Rather, Respondent left funds in passbook savings because of the audit criticism over his failure to confirm and document verbal fund transactions.
Because of Respondent's failure to properly invest idle funds, the School Board lost approximately $92,000.00 in the fiscal year which ended June 30, 1981. Petitioner claimed that he was not aware of either the problem or its magnitude until after receipt of the final audit in June, 1982, one year later. However, in October, 1981, auditors from the Auditor General's Office met with Petitioner and Respondent and criticized the manner in which funds had been invested and the revenues received from such investments. The testimony of an
employee of the Auditor General established that he told Petitioner of the problem and that he acknowledged it. In January, 1982, a second auditor meeting with the Petitioner took place, this time with School Board member Albert W. Waldrep present. Again, Petitioner was told of the problem and its magnitude in terms of dollars and cents. School Board member Claude Pickles, on his volition, met with representatives from the Auditor General's Office on January 26, 1982, and was similarly informed.
Petitioner took no disciplinary action against Respondent until after the audit criticism was reported in the local newspaper in Madison County in June, 1982. In April, 1982, Petitioner had recommended the reemployment of Respondent and the School Board renewed his contract. At the time of Respondent's reemployment, the Superintendent and at least two of the five School Board members were aware of the audit criticism relating to the investment of funds. Still it was not until the newspaper reported the audit criticism that Petitioner or the School Board acted to discharge Respondent. There was no evidence of any prior disciplinary action against Respondent, nor had he ever received a written performance evaluation during his employment with the Madison County School Board.
CONCLUSIONS OF LAW
Section 231.36(6)(b), Florida Statutes, provides that any member of the District administrative staff may be suspended or dismissed at any time during the term of his contract based on immorality, misconduct in office, incompetency, gross insubordination, willful neglect of duty, drunkenness, or conviction of any crime involving moral turpitude. Petitioner has alleged that Respondent willfully neglected his duties as Director of Finance during the
1980-1981 fiscal year in that he failed to invest idle funds of the School Board in compliance with State Law and School Board rules.
Section 230.33(12)(j), Florida Statutes, provides in part:
The Superintendent shall cause to be invested at all times all school moneys not immediately needed for expenditures pursuant to the policies of the School Board.
Section 230.23(10)(k), Florida Statutes, requires School Boards to adopt policies pertaining to investment of school funds not needed for immediate expenditures. It states:
The adopted policies shall make provisions for investing or placing on deposit all such funds in order to earn the maximum possible yield under the circumstances from such investments or deposits.
On July 1, 1980, Chapter 80-103, Laws of Florida, took effect. That statute, Section 326.24(2), Florida Statutes, provides as follows:
(2) The School Board shall have the power
at all times to invest District School funds which the Board estimates will not be needed for its immediate cash requirements in time deposits or in savings accounts, for such a period of time as the Board may determine, in
such banks or savings and loan associations located in the state as will pay rates established by the Board at levels of not less than prevailing US. Treasury Bill rates.
This statute, considered in pari materia with those statutes cited above, requires that School Boards invest idle funds at US. Treasury Bill rates or better. In his memorandum to Superintendent Buchanan, dated July 8, 1980, Respondent advised the Superintendent of the effect of the new statute, and that the interpretation of the Department of Educationist in agreement with the interpretation of the Florida Bankers Association that all future investments by the School Board would have to yield at least US. Treasury Bill rates or the Board would have to invest in US. Treasury Bills.
The Madison County District School Board acted at the request of Respondent to adopt a policy consistent with the requirements of this new law. On September 4, 1980, the Madison County District School Board authorized Respondent to invest in the Local Government Surplus Trust Fund or in local banking institutions provided that local banking institutions paid a rate of interest within one-half percent of that paid by the Fund, provided that the rate of return equalled or exceeded US. Treasury Bill rates.
It was Respondent's duty to comply with the statutes cited above and the School Board policy adopted on September 4, 1980. Rule 6GX40-7.01 of the Madison District School Board Policies states:
The District Superintendent is directly responsible for all non-instructional operations of the school system. The administration is delegated through the assistant five officers in accordance with the organization chart: Director of Finance, Food Service Supervisor, Purchasing and Warehousing, Transportation, Maintenance and Operations.
Responsibilities and duties-non- instructional: the Superintendent's responsibilities and duties for
non-instructional operations are
set forth under Section 230, Administration. They are those statutory duties which are designed as those of the Superintendent under 230.33(12) and are accordingly delegated by the Superintendent to designated non-instruc- tional departments as shown on the organization chart.
The Superintendent's duty under Section 230.33(12)(j), Florida Statutes, requiring the superintendent to invest School Board funds was delegated to the Director of Finance in accordance with the above-quoted provision.
Rule 6GX40-2.02(2), Madison District School Board Policies, provides as follows:
Duties and Responsibilities. The duties and responsibilities of the following business and non-instructional County-wide department heads shall be those assigned to them by the Superintendent in accordance with the Madison District organization chart and job descriptions as set forth in administrative procedures. The directors of these departments shall be directly responsible to the Superintendent for the administration of the functions and responsiblity of the departments under their direct authority (Section 200) and the policies and procedures adopted for these departments under Section 700 for business and non-instructional operations.
One of the "policies and procedures adopted for these departments under Section 700," for which the Director of Finance was "directly responsible,"to the Superintendent was the duty to invest idle funds of the School Board as set out in Section 700, specifically 6GX40-7.02(7)
Respondent contends that it was the legal responsibility of the District School Superintendent, not the Director of Finance, to invest idle funds on behalf of the School Board, citing Rule 6GX40-7.02(7). Contrary to Respondent's assertion that this duty has been reserved to the Superintendent, Rule 6GX40-7.01 delegates this and other responsibilities to the Director of Finance.
The evidence established that Respondent was in charge of and actually invested idle funds on behalf of the Madison County District School Board as Director of Finance. Through his neglect of this responsibility, his employer lost approximately $92,000.00. Accordingly, Respondent is guilty of the charges against him and is subject to disciplinary action.
Petitioner had ample notice of Respondent's neglect of duties prior to his April, 1982, contract renewal, and saw no need for any disciplinary action whatsoever at that time. Its proposed discharge of Respondent from employment is now inappropriate.
That Petitioner suspend Respondent without pay for a period of one year.
DONE and ENTERED this 11th day of March, 1983, in Tallahassee, Florida.
R. T. CARPENTER, Hearing Officer Division of Administrative Hearings The Oakland Building
Filed with the Clerk of the Division of Administrative Hearings this 11th day of March, 1983.
"Petitioner had ample notice of Respondent's neglect of duties prior to his April, 1982, disciplinary action whatsoever at that time. Its proposed discharge of Respondent from employment is now inappropriate."
that Respondent be suspended without pay for a period of one year.
4, Based upon a complete review of the entire record in this matter by each Board member, this Board concludes that Respondent should be dismissed from his position of employment as Finance Director and his contract with the Madison County District School Board canceled.
DONE AND ORDERED by unanimous vote of the Madison County District School Board on this 9th day of May, 1983, in Madison, Florida.
PAUL C. BRASWELL, BOARD MEMBER
CLAUDE W. PICKLES, BOARD MEMBER
I HEREBY CERTIFY that true copies of the above and foregoing Final Order have been forwarded by US. Mail to Lloyd R. Day, Route 4, Box 170, Madison, Florida 32340; John D. Carlson, Attorney for Respondent, Suite 112, 1030 East Lafayette Street, Tallahassee, Florida 32301; and J. David Holder, Attorney for Petitioner, Post Office Box 1694, Tallahassee, Florida 32302, on this 9th day of May ,1983.
RANDALL M. BUCHANAN
