Three Malheur County school systems and a recreation district have not filed required financial reports with the state intended to promote local government transparency. They now risk losing state funding.
The Oregon Secretary of State’s Office lists as delinquent the Ontario School District and the Ontario Recreation District for not filing state-required financial audits.
The audits were due by Dec. 31, approximately six months from the close of the fiscal year, according to the state secretary’s website.
Amy John, the municipal audit manager with the Secretary of State’s office, said that without the annual reporting law for local governments, taxpayers and governing bodies would be unable to gather financial information about local governments, including counties, cities, and school districts.
“By requiring annual reporting, the public has access to the information about where their local government’s money is coming from and how it’s being spent,” John said in a recent email.
The Ontario School District, the county’s largest school district with 2,158 students enrolled in 2024, has not submitted the required audits since 2021, according to the Secretary of State website. The state’s website notes the district is missing audit reports for 2022 and 2023.
State officials at the audits division made attempts to contact the Ontario School District twice in 2023 and two times in 2024. John has no record of a response from the school district.
Ontario also is required to send its independent audit reports to the Oregon Department of Education by Jan. 2, but district officials have not responded to state education officials, according to Peter Rudy, public affairs specialist with the state education agency. He said the state Department of Education is now withholding more than $2.2 million in state funding for January until the Ontario district files its independent audit. State school funds are allocated based on student enrollment. Superintendent Nikki Albisu, Devin Collins, the district’s finance manager, Bret Uptmor, school board chair and Taryn Smith, the district’s communications manager, didn’t respond to requests for an explanation.
Rudy said Juntura, a rural school district an hour southwest of Ontario that had seven students enrolled in 2024, also did not file its most recent independent audit by the Jan. 2 deadline. As a result, the state is withholding approximately $20,000 in school funding until the Education Department receives the audit report, according to Rudy.
According to the Secretary of State’s office, Juntura submitted its report with the state’s audits division.
Another rural school district, McDermitt, located in southeastern corner of the state in Malheur County with a population of about 60, also did not file an independent audit by the deadline, according to Rudy. The district was not scheduled to get a state school fund payment, according to state education records.
McDermitt, according to state records, filed its audit with Secretary of State’s office.
Kristia Simmons, an employee with the Malheur Education Service District who handles the Juntura audit, said the audit was sent to the state Department of Education in an email but without an attachment. She said it has since been sent, and she received a confirmation from the state education agency on Tuesday, Jan. 7.
The Ontario Recreation District, a special district that was formed by voters in 2018, has also not submitted an independent audit since 2021, according to the state Audits Division. The recreation district is missing audits from 2022 and 2023, records from the state’s Audits Division note. Laura Kerns, communications director with the state secretary’s office, said the audit division reached out by mail three times in 2023 and twice in 2024.
As of December 2024, Kerns said the audits division had not received a response.
Under state law, districts like the Ontario Recreation District could be dissolved by the state for failure to file reports for three consecutive years, according to Kerns.
The general process, she explained, would be for the state to notify the county of the delinquency and request the county start the process of terminating the district. From there, she said, it’s up to the county to follow through on the dissolution. Andrew Maeda, executive director of the recreation district, didn’t respond to a request for comment.
John said an independent audit reviews a local governing body’s yearly financial reports. During the review, an independent auditor ensures the organization adheres to the state’s municipal audit law. She said the review also examines whether financial reports comply with accounting and reporting standards. John said an auditor also reports when an organization didn’t comply with accounting or reporting standards.
She said only a licensed municipal auditor can perform such an audit.
John said Oregon has fewer licensed municipal auditors due to people retiring and others leaving the financial industry. John said staffing shortages at local government entities and auditing firms have contributed to late audit filings. However, she noted that technological improvements and the pandemic increased the opportunity to work remotely. John said this makes it possible for local governments to work with firms in other areas should they run into issues in finding a licensed auditor.
John said an audit is not aimed at identifying fraud or poor management decisions within an organization. However, she said, an audit reviews processes, verifies accuracy and helps to ensure the resulting financial reports are reliable.
She added that an audit could provide a “deterrent for bad behavior” and a “mechanism” to identify and report risks to local governments.
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