Audit Committee Meeting Last Week

I missed Part 1 of the responses to the State Audit by the staff at the last Audit and Finance Committee meeting. Each issue has a number. They started at A5.16 (if you are keeping up). I am disappointed to have missed their explanation on a couple of the previous ones like:

A3.1 - District staff was not aware of state law on the use of capital project money or the guidance provided in the Schools Accounting Manual.
Staff in Accounting, Budget and Payroll attended a one-day workshop in July. Training for other staff started in August, 2010. The district will have to pay back $1.2M from the General Fund to the Capital Fund.

Well, if the words "staff was not aware of state law on the use of capital project money" doesn't scare you, I don't have much left until Halloween. These are the people spending your tax dollars on our school buildings. Also, this is not some obscure area of capital spending. I'll have to try to get the minutes from this meeting but I would love to hear what was said like where we find $1.2M in the General Fund to move to Capital and when it might happen.

Actually this whole story is quite odd and I'm still trying to figure it all out. All I can tell you is that a modest program to give help to small/minority businesses trying to do business with SPS morphed into a nearly $1M a year program with 40 classes. Why would anyone up the food chain have okayed this kind of spending when we are nearly a half-a-billion dollars in backlog maintenance (95% of which is capital maintenance)? The kind of thing that makes you go, hmmm.

Other items of interest from the previous meeting:
  • the district not reporting enrollment reporting based on actual weekly minutes of instruction (apparently SPS doesn't have the right kind of data system)
  • personal service contracts; "district policies and procedures are violated when work begins before contracts are approved by appropriate staff." Apparently this is an ongoing problem (despite telling all the central managers about the issue). It seems that they can't get things done in time to have a final contract with say the City or UW so they start the services before they finish the contract. They need "revised processes, training plan and accountability measures." Oh, that's all.
  • there are numerous payroll issues and I believe some of the payroll staff went to Chicago this summer for training. More on this later.
Attending the meeting were Carr, Maier, and DeBell with auditors from the state observing and various staff.

So at this meeting they started with Peter Maier backtracking to A5.12 on the credit cards. This may be somewhat specific to the Superintendent's "let them eat cake" retirement party because he said that the Auditor had said that the district had no policies on food/beverage (I think it was around parties and banquets but I'll have to check.) Peter says there is one and wanted to note that (but offered no evidence).

One fun one was that A5.16 was about fuel cards and "unreasonable" charges. Staff says that sometimes gas cans are used (for example by landscaping staff for mowers) and that could be it. Hard to say if gas cans could explain all of it.

A5.18 - fuel cards' PIN numbers being shared by staff. This one got Sherry's attention. She said at Boeing "that would be a fireable offense." Not much response there. Staff claims this practice has ended because cards can have multiple PINS so people don't have to share. (I know, sounds odd to me.)

A.5.19 - Hey, the Auditor made an error here. It turns out that when they thought staff was getting gas at 1 a.m., it was 1 p.m.

A5.20 about rental revenue was interesting because again, the difficulty in understanding how our district runs as it does. Apparently the Events Coordinator was holding checks in an unsecured folder for up to a week at a time. Now someone will monitor that the Events Coordinator does this. Apparently the district staff got voluntary training on these issues (like handling money?) but now it will be mandatory. There were actually several rental revenue issues like creating petty cash funds which the staff isn't supposed to be doing.

Sherry reported that she and Duggan Harman, a senior classman in central adm, visited Northshore and Bellevue school districts to see how they stay on the straight and narrow with the Auditor. They were both impressed with their systems in place already. Sherry said that Northshore has tight controls about checks and the flow of money and a huge emphasis on "cash management." Should this really be news to our district? Again, tick tock, it's 2010.

A5.25 was another interesting one, this about records retention of building rental and ASB records. Staff tried to say that sometimes when a building is being rebuilt, they move out, things get lost or misplaced. Sherry said yes, she got that but if there is a law about records, then the Capital side staff should have a safety net policy in place for those high importance items. She suggested a "checklist" of work between move out and move in. (C'mon! They're killing me. A checklist? The district has NEVER thought of this?)

A5.27 was about not having minutes of a public hearing for I-728 funds which is mandated by the state. Duggan explained he was there and there was one person testifying. (And so that would mean the "minutes" were about 5 minutes long.) Sherry, Peter and Michael all chimed in that this was the law. Michael said that we use the SPS website to put up minutes of Board meetings (well, sometimes). Someone (I didn't record which Director) asked if there was a policy about recording the minutes of their Work Sessions. (Their own Work Sessions and they have no idea if there's a policy?)

Then they moved to the "S" issues.

S1.1 was about the district not complying with Federal requirements for competitive bidding. The district says "effective September 1, 2009, instituted a process of competitive bidding and sole source documentation." Now they say that this item is not a candidate for the '09-'10 audit but I think I know one place they didn't go out for a competitive bid. Michael seemed concerned about this one for capital projects (and he would be right).

S2.1 - Here they get to the Native American program problems. They say they are still in the process of refunding money to the feds because well, they got their number of students wrong and took too much money from the feds. They also said they created the parent committee required by the grant in April 2010 (this is good except it's been part of the grant compliance for a long time so what was the problem in creating it sooner).

Here's where they stopped for the day. It's quite a slog. What struck me is that Michael DeBell complained to KUOW about the time and money wasted on the failed recall election. What about the time and money wasted in having to sit in meeting after meeting because staff doesn't know/follow the law, policies or procedures they are supposed to be upholding (not to mention the actual correction work?) It's a HUGE waste of time especially since (1) some of this was noted in past audits and (2) the Moss-Adams report, way back when, basically covered a lot of the same ground but apparently no one was listening. So when the district says they are doing things differently, there's a lot of past history to suggest otherwise.

The Board had Holly Ferguson, another senior classman in Central, drafted a Board resolution about their response to the audit that will be introduced at the next Board meeting. I will have more to say about this but I want to write the Board first. I would term the first draft "tepid." Michael and Peter both said it wasn't descriptive enough nor did not describe the scope of the work. Holly, who apparently will be gone most of October, expressed concern over getting it rewritten in time for introduction.

My suggestion to the Board: write it yourselves.

My takeaway from this meeting is that there are a lot of excuses here. But in defense of staff, you know what I think the real problem is? I think staff is overloaded with work (at least some of them are). I think they are so busy putting out fires and/or dealing with the latest directives from Dr. Goodloe-Johnson and Dr. Enfield, that they don't have the time or inclination to read about what they are to legally do and not do. The Auditor's office has said they believe the staff sometimes just does work and then waits to see if the Auditor says they did it wrong.


Eric said…
Hi, Here is the said policy under F13.00 regarding the retirement party.

You people should read the Policies. I know there's a lot to read, but I did it. And you'd be better informed if you did.

I mean I appreciate you pointing out the problems, but where are your SOLUTIONS!?
Dorothy Neville said…
Thanks Eric. Says that monetary awards cannot be given with public funds. So what about the three $100 gift cards?
Eric M said…
Hey, Eric. That true-ism about "well, unless you've got solutions, don't criticize!" You're ridiculous.That works for kids on a playground, but not for a billion-dollar a year mismanaged public trust.

Here's why.
a) We taxpayers PAY a lot of people at JSCEE a lot of money to find solutions. Bloggers here are raising obvious, glaring problems. FOR FREE. They're supposed to do everything??? Really? It is a full-time job for a phalanx of auditors to daylight SPS operations.

b) The solutions are, in the case of this audit, completely obvious. Learn, Know, and Follow the law, state and federal. Learn, Know, and Follow district policy. Prioritize the basics: compliance & counting, over pie-in-the-sky Central admin projects.

There, see. There's some solutions. So instead of everything being negative and nasty, it's sunshine and unicorns.

And I bet you haven't read EVERYTHING, either. No-one could.

How about this for a solution? Dump the Superintendent (it turns out, if she's fired, we only owe her one year, not 3, so a total bargain). Clean out her Broad minions. Then take a deep breath, and begin the work of restoring the damage she's wrought.
Charlie Mas said…
I caught the end of the Curriculum and Instruction Policy Committee meeting in the Board room on Monday, and there, on the whiteboard, was an outline of the Board response to the audit.

I gotta tell ya, it looked pretty good. If they really mean what they wrote on that board, then they are on the right path.

I couldn't write it all down - there was too much and it seemed inappropriate - but the focus was correct. It stayed on the governance side of the line but completely covered oversight. The part I liked best was about getting annual performance reports on all District programs. I spoke, briefly, with Director DeBell about the stuff on the whiteboard and told him how much I liked it. He said that it was the product of his and Ms Ferguson's work that day. I encouraged him to include academic programs in the list of annual reports. Sure, reports on transportation, nutrition services, and facilities, but also on the quality and efficacy of Special Education, ELL, and each of the advanced learning programs.

So, as far as solutions go, there are some on the horizon and, at least at this range, they look pretty good.
Anonymous said…
Brilliant Eric M, the solution is "hiring somebody better" as a superintendent? Wow! You mean, it's just the same solution we need for getting rid of all the crappy teachers? Incredible. It's all so simple!

AEIC said…
Anyone concerned that Holly Ferguson is tasked with this work? She is one who often tells the Board what to do, and last I checked, her educational background and experience is law. If the failures are around legal compliance, I have to wonder how much of that is over reliance on her and a misplaced belief in her legal knowledge.

Well thank you for that Eric. I'm such a slacker.

First of all, the district had the opportunity to TELL the auditor about this policy during the audit and didn't. My solution is for the district, as the audit points out, to know their OWN policies and procedures.

Second, is this key phrase "for certificated and classified school
employees." You may not have followed the whole story but you see there is an organization for retiring long-term SPS employees. They put on their own modest luncheon every year (which the district does not fund but SEA and PASS generally contribute). They pay their own way. They have invited the Superintendent for the last 3 years and she has never attended. For whatever reason (and I think it was because of Cheryl Chow retiring, the Superintendent decided to have a fancy party. She did NOT invite all long-term retirees. And, the district has stated that they will continue having parties but ONLY for certificated long-term staff who retire. I guess the classified staff don't count.

My solution, in alleged hard times, is what I told the Board and the Superintendent. Have the Superintendent attend the luncheon put on by the organized group, stand by the door and shake every retiree's hand and thank them for their service. That's probably worth more than a fancy party.

Charlie, they did that work on the white board after I left.
The First Arnold said…
"The district will have to pay back "$1.2M from the General Fund to the Capital Fund."

Melissa, I understood $1.8 million was taken from the General Fund to the Capital fund for the small business blunder. Are you saying there was an additonal $1.2 million dollars taken from the General Fund for inappropriate Capital Fund expenditures?
First Arnold, no, thank goodness, it's just $1.2M. The issue was raised by the Auditor around the $1.8M spent over the last two years on the program. The district could only identify $600K that benefited SPS projects so that was allowed but the rest has to be paid back.

Thanks for pointing that out.
Charlie Mas said…
Here is the result of some quick research on my part - the sort of research that anyone could do in a few minutes.

Policies regarding the annual reports on programs:

Policy B61.00
The Superintendent of Schools shall:
• Give leadership in the continuing development, operation, supervision, and evaluation of the educational program.
• Prepare and present reports on the educational program as required.
• Provide annual report on District programs.

Policy B46.00
The Superintendent shall be responsible for developing administrative procedures to implement policies adopted by the Board.

Policy C42.00
It is the policy of the Seattle School Board to provide for the continuous and rigorous evaluation of its educational policies and programs to determine (a) whether such policies and programs are being carried out, and (b) the extent to which they are successful in achieving intended outcomes.

Policy C45.00
It is the policy of the Seattle School District to develop and maintain a high level of effectiveness in each of its schools and programs as determined by multiple measures of improvement and in relation to established standards. A review of all schools and programs will be conducted annually using a process and criteria as approved by the Superintendent.

The Superintendent shall have responsibility for the equitable distribution of all programs in order to maximize academic achievement and enrollment.

Here is a quick version of the list of the annual reports that the Board should require:

Student Programs
• Academic Assurances
• Advanced Learning – APP
• Advanced Learning – Spectrum
• Advanced Learning – ALOs
• Advanced Learning – AP and IB
• Athletics
• Arts
• Bilingual Education
• Career and Technical Education
• Community Learning
• Early Entrance Kindergarten
• Family Support Workers
• Head Start
• Homeless Students
• Huchoosedah Indian Education
• International Programs
• Language Arts
• Mathematics
• Music
• Performing Arts
• Physical Education
• Pre-school
• SPI – Discipline
• SPI - Interventions
• SPI – Summer School
• SPI - Truancy
• Science
• Service learning
• Social Studies
• Special Education
• Traffic Education
• World Languages

Internal Programs
• Accounting
• Assessment
• Audit
• Budget
• Facilities
• Capital Projects
• Communications
• Community Engagement
• Customer Service
• District Improvement Plan
• Enrollment Planning
• Enrollment Services
• Environmental Health and Safety
• General Counsel
• Government Relations
• Grants and Fiscal Compliance
• Health Services
• Human Resources - Hiring
• Human Resources – Evaluation
• Information Technology
• Learning Assistance Program
• Library Services
• Nutrition Services
• Title I
• Transportation
• I -728 Student Achievement Fund
• Professional Development
• Program Placement
• Procurement
• Recycling
• Risk Management
• School-Family Partnerships
• Small Business Development Program
• The Source
• STAR Program
• Volunteers

There could be additions or deletions from these lists, but this is a good starting point.

While the lists look long, I don't think there is more here than the Board should be ready to review.
Charlie Mas said…
Oh! I totally forgot! The Board should also get comprehensive reports on the progress of the Strategic Plan - reports that update them on every single project, not reports that cherry pick.
AEIC, I would agree with your assessment of Holly Ferguson.

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