From Deseret News archives:
Is Davis District liable for funds?
Feds probing fraud case may seek repayment
U.S. Department of Education officials said Friday they are "discussing possible administrative steps" with the Department of Justice and the Education Department's Office of the Inspector General in regard to the Davis case.
According to provisions in the General Education Provisions Act a recipient, or district, that "failed to discharge its responsibility to account properly for funds, shall be required to return funds in an amount that is proportionate to the extent of the harm its violation caused."
Moreover, according to rules stated in the Education Department General Administrative Regulations, the department is to base "the decision to require a recipient to return funds upon an audit report, investigative report, monitoring report or any other evidence."
Department officials would only say they are looking into the matter. But some Utah leaders say before the federal government can go after compensation they will have to prove the district was negligent in oversight.
Lear said there would have to be some finding to show the district could have figured out that the employees were defrauding the district of millions over a five-year period.
But in an audit, initiated by the school district after leaders found something was amiss, auditors found a number of areas where the district was deficient in financial reporting and internal controls that could have "adversely affect(ed) the district's ability to record, process, summarize and report financial data."
Auditors also recommended "if funds are found to be misused, federal funds will be recovered or be replaced with non-federal funds."
Former state Title I and No Child Left Behind specialist Laurie Lacy, who is currently Title I director in Salt Lake District, said there have been a few incidents in Utah where a district has been required to repay the federal government for misuse of federal funds. But those cases weren't criminal and only involved a few thousand dollars.
The Davis case is unprecedented in the state, but the potential that the district will be responsible for some of the money "very definitely exists," Lacy said.
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