Tuesday, July 27, 2010

Thank You, Lynne

So finally, someone at the Times read the tea leaves, the writing on the wall, the liner notes and the Auditor's report. That someone is Lynne Varner and she wrote about it in her editorial column. Her frustration is palpable and I think she hits the right note in saying this is the public's money and the district needs to have a more careful and respectful attitude about it.

From her column:

The latest state audit of Seattle Public Schools didn't tell me anything I didn't already know: The district is stuck in a culture of lax indifference when it comes to taxpayers' money.

Despite the last decade's phalanx of highly paid budget and money managers overseeing the district, few inroads have been made in transforming this culture.

Interesting to note:

The shoddy reporting and bookkeeping gets worse. Employees charged $250,000 in gas, not necessarily a problem considering the size of the district and the many employees who travel between schools. But employees are required to note how many miles were driven between fill-ups so usage can be tracked. Few did so. Some scribbled in one mile, others took wilder guesses. They might as well have written "none of your business."

Officials also cannot explain why in a 30-day span, nearly a quarter of fuel purchases charged to district credit cards occurred between 1 a.m. and 4 a.m. Auditors look at personnel records and found no employees working at those hours. Kennedy wonders if the gas pump time clocks were off. That would be some coincidence.

Here's a bit of my comments from the Comments section:

The most damning part of the audit, however, is this:

"The State Auditor found that the School Board completely failed in their duty to enforce laws and policy and completely failed in their duty to oversee the superintendent."

That the people who are elected to watch over the district aren't really doing that job is deeply troubling. The Board has issued no real statements on the audit and their silence is troubling. Their legally defined duty is to oversee the Superintendent and yet they are not.

I started this statement by saying the Auditor's office is frustrated. You can hear it in Lynne's written voice that she is frustrated. I'm sure city leaders and business leaders are frustrated. We are all frustrated because no matter how you feel about the Superintendent's public engagement or her initiatives, we would all hope for at least a well-managed district. She brought in staff she had in her previous post and so you would believe that is because she felt they would do a good job. Don Kennedy, the COO/CFO, is directly responsible.

29 comments:

Eric M said...

Today, Mr. Kennedy assures all SPS staff in a district wide email that all is well, and nearly all problems are resolved! Phew!

Wait! Maybe we should get a second opinion? Maybe we'll have an auditor come in and...

Oh.

That just happened, and the state found a big flaming
pile of _ _ _ _ on Don Kennedy's doorstep.

Remembering this, I find ANYTHING with Mr. Kennedy's email in my inbox, well, kind of sketchy.

Swampland, anyone?

Melissa Westbrook said...

Really, Eric?

They say that after EVERY audit and yet the Auditor keeps saying "we told them this in 2007, 2008, 2009, etc." How can that be?

Did he say, in specific, what has been done or what will be changing in how the district manages itself?

Wait! I'll ask him myself.

Eric M said...

It says a lot that this dude
is still working ANYWHERE,
let alone still working at Seattle Public Schools,
LET ALONE BEING IN CHARGE OF FIXING THESE HUGE SYSTEMIC PROBLEMS,

doncha think ?

Eric M said...

You'll be pleased to know that when teachers spend money for classroom stuff, our reimbursement forms are carefully (microscopically) scrutinized and itemized.

Anonymous said...

Four legs good, two legs bad.

kprugman said...

The public's money is sacred. And the indifference shown by school dictators (with no apologies) will cause public anger and frustration to boil over onto them. They don't even defend their actions with 'I'm stupid, you elected us, so you're the responsible party' defense as another equally idiotic, school board member once claimed (and later resigned).

Charlie Mas said...

Is this a true copy of the email:

From: Kennedy, Donald R
Sent: Tuesday, July 27, 2010 4:53 PM
Subject: Information Regarding State Auditor's Report

To all Seattle Public Schools staff:

I want to take this opportunity to inform you of the District's ongoing efforts to improve our operations and ensure that we are the best possible stewards of public resources. You may have seen recent media coverage regarding the Washington State Auditor's Office annual Accountability Audit of Seattle Public Schools. I'd like you to know how the district has already remedied many of the issues that were raised, and how we are taking corrective action for items emphasized in the auditor's report.

The current audit covers the 2008-09 fiscal year (September 1, 2008 through August 31, 2009). Specific actions have been taken over the past year that address many of the issues raised. We expect the positive impact of these actions will begin to be reflected in the audit for 2009-10 (which will cover the period September 1, 2009 through August 31, 2010) and be further strengthened in 2010-11. Some of the actions we have taken include:

Organization and reporting changes were made in summer 2009 to improve controls and accountability;
An executive and director-level team is being appointed to address issues and report back on a regular basis; and
The School Board's Audit and Finance Committee will establish additional measures to ensure issues are corrected and progress reported to the School Board and to the public.

During summer 2009, I strengthened the reporting structure for all functions related to finance. As a result, all functions with primary responsibility for establishing and monitoring the effectiveness of internal controls are under one organizational umbrella, reporting to the Executive Director of Finance. These changes include the following:

* Payroll was moved from Human Resources to Finance and an additional resource was added to payroll management to concentrate on payroll systems;

* Budget functions that were housed within specific departments were brought back under the Executive Director of Finance, including budget for capital programs; and

* Responsibility for grants management was moved from the Learning and Teaching Division to the Finance area.

In addition, these changes were made to ensure increased accountability and oversight:

* The District's grants manager was given responsibility for compliance on all grants; formerly, that responsibility was shared among program managers;

* An information technology governance model was adopted to oversee implementation of business systems;

* The District's internal auditor developed an internal risk assessment process to identify potential financial and internal control risks; and

* Balanced scorecards were created for each central office department to improve accountability.

(continued...)

Charlie Mas said...

( ...continued)

I also want to share with you the specific actions we have taken to correct issues raised in the Accountability Audit:

Payroll: The finding related to payroll overpayments was contained in the Financial and Federal Audit issued May 24, 2010. As of May 26, 2010, Seattle Public Schools had already recovered $71,281 (more than 21 percent) of the overpayments and employee payment plans are in place to recover an additional $145,609, for a total of $216,000 (61 percent of the total overpayments). The District is taking additional steps to recover $61,600 due from individuals who are no longer employees. SPS has implemented adjustments to payroll processing systems and has put additional quality measures in place to prevent further errors.
Other corrective action is also complete for findings related to School Board meeting minutes, the Open Public Meetings Act, personal services contracts and District credit cards.

In addition to the corrective measures already put in place, we are assigning a senior level staff member to oversee the audit response project team, which will be charged to:

* Develop issue-specific corrective action plans for each finding or area of concern;

* Identify and recommend to the School Board any policy changes needed to strengthen internal control and accountability;

* Design and implement a robust training regimen to ensure all appropriate staff understand and are able to follow all policies and procedures related to internal controls; and

* Monitor progress and report monthly to the Seattle School Board’s Audit and Finance committee.

I take the information contained in this audit very seriously, and it is a top priority to implement appropriate control and accountability measures, with specific consequences, for situations in which policies are not followed.

Sincerely,

Don Kennedy

Chief Financial and Operations Auditor

kprugman said...

You just want to send these folks over the falls in a barrel;Q Every time I read this c... sticks in the mud and golden pennies.

Charlie Mas said...

Leave it to Lynne Varner to pretend that the problems identified in the audit were the failure to inventory assets, failure to record mileage and misuse of credit cards.

Forget that stuff, the auditor reported that the Superintendent and staff act without regard for laws or policies and that the Board is totally useless. That's what she should be mad about.

This appears to be an effort to make it seem that the issues found by the auditor were all small potatoes.

Michael said...

@EricM: "You'll be pleased to know that when teachers spend money for classroom stuff, our reimbursement forms are carefully (microscopically) scrutinized and itemized."

Are you sure about that?

dan dempsey said...

Lynne Varner returns to her usual clueless state with THIS.

No Race to the Top money, no surprise.

The column from Lynne is no surprise either.

Eric M said...

Well, Micheal, yup, I'm sure. I'm a bit baffled by your question. Been a teacher for 25 years. Have run several enormous projects, outside of normal class hours with a combined project budget of perhaps $200,000. Electric cars, robots, observatories, NASA balloon experiments, etc. Every nickel that I spent and got reimbursed for was checked and rechecked.

Is that good enough? I know teachers are considered to be morons by the rest of the electorate, but some of us can actually tie our own shoes.

The point I was making is that teachers are held to a high standard of accountability for every nickel & dime (we really are, and I frankly don't begrudge it, and have worked with some VERY competent fiscal staff in schools here), but administrators and managers...

You've seen the audit. Everyone accountable, except if they're not the folks doing the work in the trenches.

Melissa Westbrook said...

"The finding related to payroll overpayments was contained in the Financial and Federal Audit issued May 24, 2010."

"I take the information contained in this audit very seriously, and it is a top priority to implement appropriate control and accountability measures, with specific consequences, for situations in which policies are not followed."

Okay, and by specific consequences, will anyone who took the overpayments lose their job? It is difficult to believe that so many employees saw their paycheck was larger than normal (for a period of time) and said nothing. Maybe some did and they were ignored. There needs to be a full accounting on this issue as it was not just a policy being ignored/overlooked but a number of people who had the opportunity to do the right thing and did not. That goes to trust.

As a member of the public, I'd like to see their action plan. According to OSPI, they are required to create such a plan and give it to OSPI for review for "adequacy". (Now sadly, they have cut the position at OSPI to half-time so it may not get reviewed for months. Still, it should be available to the public.)

B8tes said...

I think that a big pile of blame needs to be put on the general counsel, who was also in charge of HR when the hundereds of employees got overpaid.

Melissa Westbrook said...

Over in the comments section of the editorial column, Charlie said (and he said it less forcefully here) that he thought maybe Lynne only brought up the smaller issues to tweak the district and show the Times does call them out sometimes.

At first I thought, "Gee Charlie, for once she says something practical and to the point." But upon reflection, I think he's right. Because unless she only skimmed the audit, you can miss the overarching two-fold issue of the district not following policy/regulations/laws and the Board not doing their oversight duty. That is the big picture and yet all she talks about is the gas and the credit cards and the loss of equipment. Those things to me may be small in dollar amount but it comes down to trust and people doing their jobs.

But if her goal was to lightly call out the district and the Board but NOT tell folks how damning this audit was to the authority of the top administrators and elected official in the district, then mission accomplished.

Chris said...

ah HA! Mystery solved. "reader" is really Lynne Varner! OK, I know that's not true, but they think alike, no? Focus on the small change and it's no big deal.

Charlie Mas said...

Yes, like damning with faint praise, Ms Varner is praising the district with faint condemnation.

Next she can write a "follow up" editorial about how promptly and effectively the District addressed each of these tiny errors (taken directly from Mr. Kennedy's e-mail) and gush some more about how wonderful the District staff are.

All of this while dodging the main problem: the total lack of oversight, the total lack of enforcement, and the total lack of concern and compliance that grows in the absence of oversight and enforcment.

Meg said...

I agree that the piece soft-pedalled the findings a bit.

Even so, I think Lynne was right when she said that the audit uncovered "worrisome mistakes that seem less like incompetence and more like an ingrained comfort with spending other people's money without accountability."

For all of the justifiable frustration with the lack of oversight from the board, it's important to note that the audit dings the school board AND district management. It takes lack of oversight from the one and lack of proper management from the other for an audit to have 13 findings - in fact, to have, as the auditor noted, findings in every single area that they examined. 13 findings in a single audit (and financial and accountability audits used to be combined, so you could play rough and say that, really, it's 20 findings) is the most that the district has had. Ever. In fact, it's the most findings for any school district in the state. Again, all caps: EVER. (Well, okay, at least as far back as 1997, which is as far back as you can look online).

I've been harping about the $3,800 for a catered banquet for retiring employees because as an example, it highlights many of the long-standing problems in the district.

David Westberg said...

This afternoon I posed a question to Harium on his blog that included the following text:

The credit card expense of $ 3,802.25 for catering by “Jewel Hospitality” that turned up on the superintendent’s credit card has several heretofore unmentioned aspects;

In an earlier time of accountability and eyes on the bottom line, the Chief Finance Officer wrote the following to the Senior Leadership Team on March 9, 2004;

“As we continue to look for ways to save on costs, expenses on food, muffins, coffee, lunches, and snacks should be curtailed. In tight budget times, we need to save our limited resources to protect services to students, not expend them on meals and food for staff. Therefore, buying food for staff with district funds (grant or non-grant) should be stopped”

This was sent out to augment the “Guidelines for Catering Services” which had been negotiated with District Food Services (Catering Department) employees giving “Nutrition Services priority for providing all catering services both in the JSCEE building and in school sites for non-district and District sponsored business activities, during all operation hours including weekends…………..Catering requests for all District sponsored business activities must have the approval from the accounting manager to use grant or district funds, including self help funds before Nutrition Service will accept orders.”

The policy goes on to say;

“All bills received from outside food vendors will be double checked for proof of approval from Nutrition Services. If bills cannot be reconciled to pre-approved documentation, the bills will not be paid. Un-approved food orders will become the responsibility of the individual ordering the food.”

KING 5 is correct that these functions are held yearly but are normally paid for by the Seattle Schools Veterans Association. Last years was held at the Lake City Elks and was paid for by the Association.

This affair was something different.

Melissa Westbrook said...

Thank you Dave for pointing out that, for whatever reason, the district, the Superintendent ignored the union issues involved in such an event. Maybe it's coming from a non-union state like South Carolina threw Dr. G-J and Mr. Kennedy off but that's really no excuse.

ParentofThree said...

King 5 news picked up the story on the audit and also focused on the credit card:

by MEG COYLE / KING 5 News
KING5
Still millions of dollars in the red, Seattle Public Schools is apparently finding reason to celebrate.

In this case, the Superitendent herself spent $3,800 of the district's dollars on a catered retirement party last June, in the midst of massive cuts and school closures.

That party and its price tag first came to light in a state auditor's report that condemns the school district for financial mismanagement on virtually every level.

It may not sound like much when you consider Seattle Public Schools has a billion dollar budget, but plenty of parents and teachers say they can come up with all kinds of ways that money could have been better spent.

Meg Diaz is a former strategic business consultant and current parent with two children in Seattle Public Schools. The superintendant's own credit card statement outlines her expenditures.

"That $3,800 maybe could've saved a drama program or financed a reading program. I just don't think spending money on a retirement party while you're closing five schools and slashing programs is a good use of taxpayer money. To see the Superintendant's name on the receipt? It's a very bad example by someone who's supposed to lead by example," says Diaz.

The party hosted 70 people. It honored teachers and staff who retired at the end of the 2008-2009 school year. The district defends the expenditure, calling it a small token of its appreciation for staffers who devoted their careers to Seattle Public Schools. Similar parties, they say, are held every year.

But the audit specifically singled out that retirement party as an "inappropriate use of [procurement] cards." The report cites the district's own policy that only allows for $1000 per procurement card transaction.

The district declined comment today.

Sahila said...

Marian Goodloe Johnson complains that we dont come to her with our concerns:

http://www.mynorthwest.com/category/news_chick_blog/20100728/Goodloe~Johnson-responds-to-critics/?page=0#comments

ParentofThree said...

"This fall she'll get feedback from a group of high school students and will begin holding meetings with parents. She'll use the "coffee chats" to respond to parents' concerns and questions in person."

Cannot wait to attent a coffee chat this fall.

David Westberg said...

Melissa

Its really not so much a union issue as it is one where the institution had been down the same "golden toilet seat" style of procument over time and recognized that by spending their funds INSIDE the institution, those monies don't get funneled into private profits.

Its what the military used to do before Haliburton et.al. took over supplying them.

Its a better use of precious dollars and fully utilizes the capital facilities (such as the District's huge Central Kitchen) as studies have repeatedly recommended.

Senior staff USED to recognize the logic.

wseadawg said...

And it just keeps coming...

We already pay administrators and MGJ's salary, retirement, car allowance, and for many other perks. At 260k per year, she can pay for her brown-noser's retirement party out of her own Go**amned wallet, not mine.

I want her to pay that money back from her salary. It's a matter of principal for any trustee of public funds. At what point do they get off the dole and stop stealing money from the classrooms?

wseadawg said...

To clarify for the record:

In a year of crippling budget cuts, THEY THREW THEMSELVES A PARTY that our children paid for.

Open wide and eat cake everyone.

Charlie Mas said...

Not only did they throw themselves a party during austere times, they threw themselves a de luxe party at a cost of no less than $54 per person. This wasn't standing around sipping fruit punch from dixie cups and sporking 2 inch square pieces of sheet cake off of paper plates. At $54 per person (if not more), this should have been a catered dinner.

I wonder. Was there no wine with this meal? Is there a policy regarding using District procurement cards for alcoholic beverages?

I can't wait to learn what Meg finds on that bill.

For a deal this big I wonder if it didn't require a deposit, which would have been an additional charge paid at at different time and might have been in addition to the $3,800 already reported.

kprugman said...

Going by previous methods - more than likely they have a line item for booze as an entertainment expense in the sup's personal budget.

This was the case in ****. That sup also used a Del Mar bookie's restaurant as a caterer for monthly ASB officer meetings. It wasn't against the law either, but it did cause a few chuckles from the lawyers, enough so as the judge had to shut them up.