June 8, 2016

VIA EMAIL DELIVERY

Ms. Carol Alford, Chair
(Carol.Alford@FCTC.edu)
First Coast Technical Center
2980 Collins Avenue
St. Augustine, Florida 32084
Re:

Report of Financial Findings at First Coast Technical College

Dear Ms. Alford:

By letter dated May 3, 2016, we notified the Board of Directors of First
Coast Technical College (FCTC or School) that it appeared that the School was
experiencing a deteriorating financial condition as defined by Florida Statute
1002.345. District financial staff then began an in-depth investigation of the Schools
financial condition and management. As a result of that investigation, by letter dated
May 26, 2016, we notified the Board that a financial emergency within the meaning of
Florida Statute 218.503 now exists at the School. The purpose of this letter is to
further summarize the results of the Districts investigation.
The investigation has uncovered five major areas of concern:

The Schools overall financial condition;

Misuse of the in-house payroll account;

Failure to comply with federal wage reporting requirements;

Lack of internal controls; and

Deficient administration of the purchasing card program.

Overall Financial Condition

As explained in my May 26 letter, the Schools financial condition has further

deteriorated into a state of financial emergency as defined by Florida Statute 218.503.
Due to lack of funding, FCTC has failed and will continue to fail to transfer the
amounts necessary to meet its payroll and payroll-related obligations.

Ms. Carol Alford

Page 2
June 8, 2016

The FCTC Boards Financial Condition and Activity Policy 1.07 prohibits the
School President from allowing the School to expend more funds than have been
received in the current fiscal year, use any long-term reserves and fail to settle
payroll and debts in a timely manner. FCTC Boards General Executive Boundary
Policy 1.01 mandates that the President may not permit financial conditions that risk
fiscal jeopardy. Contrary to those policies, Ms. Raburn-Fortner allowed the School to
expend $ 517,917 more than it received during the first nine months of the 2015-2016
year ending March 31, 2016.1 In February, she liquidated the Schools $260,000
reserve account at TD Bank and used it to pay bills. She cashed in the Schools
$200,000 CD at Harbor Community Bank on March 31, three months prior to
maturity. She used those funds to pay bills.
Contrary to Policy 1.07 and Section 4.D. of the Charter, Ms. Raburn-Fortner
also failed to ensure that the School would timely settle its payroll obligations,
allowing it to fall two and sometimes three payrolls behind in transferring to the
District the funds to cover the Schools payroll. To date, the School is three payrolls
behind (April 29, May 13 and May 31).
By the end of March, the School was left with very little cash to properly
operate, and without nearly enough to stay current in reimbursing the District for the
FCTC payroll. In fact, by May 10, the administration had drawn down the main cash
account to only $64,018. Projecting forward, the School will be in a negative cash
position of $497,726 as of June 30, 2016. Clearly, financial conditions that risk fiscal
jeopardy have been allowed to develop in contravention of FCTC Policy 1.01, and
Florida Statutes 1002.345 and 218.503.
Executive Boundary Policy 1.08 requires the President to ensure that the
Board is adequately informed in a timely manner of relevant trends [and]
material external and internal changes, particularly any changes in the assumptions
upon which any board policy has previously been established, and to report an
actual or anticipated noncompliance with any policy of the board. Policy 1.01 states
that the President may not knowingly provide untimely, inaccurate or misleading
information to the board or College constituencies. Although the School was
experiencing serious cash flow difficulties in January 2016 or even earlier, it does not
1 It should be noted that the FCTC Board approved the budget for 2015-2016, which
contemplated that the School would need to use about $160,000 of its reserves to start
up new programs. Even taking that into account, expenditures for the year to date
through March 31 still exceeded revenues by $357,081.

Ms. Carol Alford

Page 3
June 8, 2016

appear that the President alerted the FCTC Board to the Schools deteriorating
financial condition, much less the impending financial emergency and resulting
noncompliance with the financial condition policies set forth in Chapter 1.07, which
prohibit deficit spending, use of reserves and failure to stay current with payroll and
other obligations.
Furthermore, Ms. Raburn-Fortner did not timely alert the District to the
Schools financial difficulties. In late April, she submitted the March 2016 financial
statement to the District without explanation or comment. Moreover, when staff
questioned her about the statement, she admitted that she knew it was not accurate. At
the April 26 meeting, she also submitted the inaccurate statement to the FCTC Board.
In-House Payroll Account
The School uses an internal in-house payroll account, ostensibly for temporary,
seasonal or substitute employees. However, the School used the account for other
purposes, in violation of the Charter and applicable Florida Retirement System
(FRS) and wage and hour rules.
Ms. Raburn-Fortner used the account to pay herself additional compensation
without the Districts approval or knowledge. Since she was appointed president of
FCTC, the District carried Ms. Raburn-Fortner on its FCTC payroll and paid her an
annual salary of $95,700, together with FRS and District medical benefits. However,
in August 2013, after the FCTC Board approved an extension of her contract with a
10% salary increase in the amount of $9,570, she directed the FCTC payroll staff to
pay her the increase from the in-house payroll. Since that time, FCTC has been
paying her $9,570 a year out of the in-house payroll, with FCTC rather than the
School Board as the employer of record. Evidently, she handled the increase in that
way to conceal it from the District. While it is clear that the FCTC Board approved
the increase, it appears that at least some of the Board members were unaware that she
was being paid in-house.
It should also be noted that although Ms. Raburn-Fortner is an FRS employee,
neither FCTC nor Ms. Raburn-Fortner paid FRS contributions on her in-house
compensation as required by applicable law and the FCTC Charter.
Turning to the Human Resources provisions of the Charter, Section 8.A.
requires that all FCTC staff (except substitutes) are to be employees of the Sponsor,
subject the Sponsors delegation and the Schools assumption of employment
responsibility to them. It provides that as public employees, FCTC staff will be

Ms. Carol Alford

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June 8, 2016

covered by the Florida Retirement System (FRS). Section 8.B. guarantees that they
will have the right to bargain collectively as members of the District collective
bargaining units (the St. Johns Educational Association for instructional and the St.
Johns Educational Support Professional Association for support staff). Section 8.D.
entitles FCTC staff to participate in the Districts health and medical benefits plan. It
appears that the FCTC administration uses the in-house payroll to circumvent those
provisions of the Charter.
Ms. Raburn-Fortner uses the in-house account to pay employees in regularly
established positions outside of the District payroll, in order to avoid paying FRS and
other benefits, and to deny such instructional and support staff the benefit of union
representation. While employees who are employed temporarily, or on a part-time as
needed basis, are not subject to FRS, employees who work part-time in regularly
scheduled positions are subject to FRS. FCTC pays dozens of regularly scheduled
part-time employees and some who qualify as full-time employees out of the in-house
account without contributing its employers FRS contribution or deducting the
employees corresponding 3% contribution from their paychecks.
Likewise, the employee and employer Social Security contributions are not
made as required by law for employees in regularly established positions who are paid
out of the in-house account. Nor do such employees receive the District medical and
collective bargaining benefits FCTC staff are entitled to under the Charter.
Internal Controls
FCTCs internal controls are deficient.
These deficiencies hinder
managements ability to prevent or detect mismanagement of funds in a timely manner
in the normal course of performing assigned functions.
The School does not complete monthly reconciliations of the in-house payroll
checking account and its money market account. In addition, the School cannot
document that bank reconciliations are completed for the other bank accounts in a
timely manner and cannot document the review and approval of these reconciliations.
Funds are expended at the School without proper regard for budgetary or
purchasing controls. Even when a budget is utilized, that budget does not appear to
take into consideration the availability of funds or the appropriateness of the purchase.
The Schools largest expense is salaries and benefits, and it appears that employees are
hired and paid without consideration of budget. Even though the Schools revenues
continued to decline over the course of 2015-2016, staff expenditures were not cut, but

Ms. Carol Alford

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June 8, 2016

in fact appear to have been increased from the prior year. This is evidenced by the
almost complete drawdown of FCTCs investment accounts.

When the President was questioned regarding expenditures exceeding revenues

for the period ending March 2016, District staff was informed that the current year
budget in TERMS was actually the same from 2014-2015. The President explained
that FCTC had utilized the 2014-2015 budget because the state had not released its
budget. However, nine months into the fiscal year, this issue still has not been
corrected. Furthermore, there is no indication that the administration alerted the
FCTC Board to the status of the budget.
FCTC also lacks appropriate policies and procedures with regard to travel.
There is little documentation of prior approval of travel or final approval of payments
to employees or other related vendors.
Federal Wage Reporting
The W-2 file in the 2015 calendar year was not submitted to the Social
Security Administration in a timely manner. This was confirmed by School staff,
which has started the process to correct the situation and properly file the W-2 file.
The W-2s were finally filed on May 14, 2016, 44 days after the normal deadline.
The Purchasing Card Program
District financial staff spoke with Veronica Raburn on May 5 regarding the
purchasing card procedures. According to Ms. Raburn, the purchasing card procedures
are as follows: Each cardholder is responsible for reconciling their own purchasing
card statement. All statements are submitted to Ms. Raburn-Fortner along with the
supporting documentation and receipts. Once the statements are reviewed, they are
filed in the business office.
However, the District investigation has revealed:

There are no controls in place in the issuance of purchasing cards;

The purchasing card statements are not signed and approved by either the
cardholder or manager;

Ms. Carol Alford

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June 8, 2016

The purchasing card user guide is extremely vague and provides minimal
rules; and

Some purchasing card statements are missing documentation and receipts.

The District team found that purchasing card charges were, at best, wasteful
and at worst, abusive. For example:

Travel purchases such as meals, gas, tolls and taxi fares did not comply
with the guidelines contained in Florida Statute 112.061;

Meals were purchased for possible personal use;

Gas gift cards were purchased, with no documentation of the purpose for
the purchase, or that the card was delivered to the proper recipient; and

Personal charges missing proof of repayment.

Conclusion

Unfortunately, FCTCs financial condition has deteriorated into a financial

emergency in contravention of the requirements of Florida Statutes 1002.345 and
218.503, FCTCs Executive Boundaries Policies, the Charter and generally accepted
principles of fiscal management.
Contrary to the duties of the President as prescribed by the Executive
Boundaries Policies codified in Chapter 1 of FCTCs Board of Director Policies, the
Schools spending has been allowed to far exceed its revenues, deplete its reserves and
to prevent it from timely making its payroll in violation of Policy 1.07. The
administrations mismanagement put the School at risk of fiscal jeopardy contrary to
Policy 1.01 and ultimately created a state of financial emergency within the meaning
of Florida Statute 218.503. Meanwhile, the President failed to apprise the Board and
the District of the Schools increasingly serious financial difficulties in violation of
Policies 1.01 and 1.08, and failed to take preventive or corrective action to avoid
insolvency.
The administration used the in-house payroll to circumvent the requirements of
law and the Charter to avoid paying for FRS, Social Security, and medical benefits to
regularly scheduled employees who were otherwise eligible for such benefits. The
administration used this arrangement to deprive otherwise eligible employees the
benefits of membership in the District bargaining units. Such failure to follow the law

Ms. Carol Alford

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June 8, 2016

was a breach of Policy 1.01 and Section 1.E.(c) of the Charter. The President also used
the account to conceal her on-the-side employment by FCTC and additional
compensation from the District, in violation of the Charter.
Finally, the lack of internal controls and other instances of mismanagement
detailed above were contrary to the requirements of Board policy and the Charter, and
undoubtedly contributed to the Schools current insolvency.
Sincerely yours,

Joseph G. Joyner, Ed.D.

Superintendent of Schools
ccs (via email delivery):
FCTC Board Members:
Steven J. Blalock, Vice Chair
Dana Jones, Director
John Browning, Director
Michael Curtis, Director
William Garrison, Director
Declan Reiley, Director
Robert Graden, Director
Victor Morris, Director
Brandon Beardsley, Esq.
Sandra Raburn-Fortner
Renee Stauffacher
Ben Pulone, Comptroller
St. Johns County School Board Members:
Patrick Canan, Esq., Chair
Tommy Allen, Vice Chair
Beverly Slough
Kelly Barrera
Bill Mignon