- Another factor that may have contributed to decisions by employees not to take their concerns to the Board was the communication protocol developed in conjunction with the Board and instituted by Superintendent Goodloe-Johnson. The communication protocol was intended to streamline requests for information between the Board and District employees and was not intended to cut off employees’ access to the Board. Although the policy explicitly encouraged employees to bring concerns relating to activities that were not in the best interest of the District to the attention of management and promised no negative repercussions for doing so, some employees, including the internal auditor, believed the policy prohibited employees from having direct contact with the Board or the Superintendent. (bold mine)
- We also discovered that the Superintendent plays no active role in the budget
formation and instead relies on CFOO Kennedy to develop an appropriate budget for the Board’s approval. As she explained, she delegated budgeting responsibilities to CFOO Kennedy and trusted him to manage the process.
- In Feb. of 2007 (before MGJ and Kennedy came), the Risk Manager had warned Fred Stephens about his concerns verbally including fraud. He had also sent a memo to Gary Ikeda. Based on interviews with the individuals who had knowledge of the Memo, it
does not appear that anyone investigated or further pursued the fraud concerns or other issues in the Memo.
- Stephens claimed the issues in the memo indicated "sloppy" work, not fraudulent work. He claimed he verbally reprimanded Potter but Potter's personnel file doesn't reflect that reprimand.
- Interestingly, Stephens and the SPS legal department were looking into a suspect contract and they hired the Sutor Group to review the RSBDP's SWR contracting practices. But, that scope did not include personal services contracts or looking for "kickbacks" or other fraud. It was Stephens who dictated the scope of the investigation.
- Apparently MGJ, Kennedy and Stephens met in Jan. 2009 to talk about the Small Works program but no one remembers what was said and there are no notes. Two days later Stephens sends an e-mail to Kennedy with the "finalized" Sutor report. It said, in part, "If I understood you correctly, you and the Supt. didn't want us to hand out the report." I think he means to the Board. But he goes on to worry that the SAO could have it as well.
- Stephens makes it sound like after the Sutor report that he wanted to get rid of Potter. However, the investigation could not find anyone or any document to back up that claim. Stephens also did not include the Risk Manager's memo in addition to the Sutor report in trying to get rid of Potter. "We note that, regardless of whether Stephens actually proposed Potter's termination, the fact that he recalls doing so illustrates the severity of the Sutor Group findings and should have resulted in additional oversight of Potter by Stephens."
- I get very upset at pages 10-11 which outline the RSBDP budget. Potter hired 3 FTE to work as "counselors." At least one was a friend and roommate. All had personal relationships to Potter and most of them were unqualified to the point where Potter hired someone to train them to be qualified. He did this during a "hiring freeze." Some of them got absorbed into the Capital projects area after the program shut down. I find this highly objectionable and told the Board so months ago.
- Potter did not, when creating the vendor roster of contractors, pre-qualify firms or check references.
Information provided by SPS5 indicated that the RSBDP budget and expenditures were as
follows in the years 2007 to 2010:
• In 2007, the RSBDP budget was $582,614, and the program spent $657,057. Of
that expenditure, $540,560 was spent on personal service contracts.
• In 2008, the RSBDP budget was $850,871, and the program spent $761,796. Of
that expenditure, $494,555 was spent on personal service contracts.
• In 2009, the RSBDP budget was $984,251, and the program spent $1,082,323. Of
that expenditure, $557,929 was spent on personal service contracts.
• In 2010, the RSBDP budget was $848,451, and the program spent $579,303. Of
that amount, $287,463 was spent on personal service contracts.
You'll note that in 2007 he went over his budget by over $100k. He did it again in 2009. How this get miss or why did people look the other way?