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Thursday, September 09, 2010

Board Meeting Part Two: Audit Actions

At the last Board meeting, COO/CFO Don Kennedy presented a action plan for the district's response to the State Auditor's report.

Now this isn't the district's first attempt. They did put out a reply in July 2010 about some actions taken but boy, were there some whopper statements in it. Here's one:

“Because we are deeply committed to being good stewards of the public’s resources, we take the information in this audit very seriously,” said Superintendent Maria L. Goodloe-Johnson, Ph.D. “We acknowledge the need to take specific corrective actions noted in the report. It is a key priority to implement appropriate control and accountability measures, with specific consequences, for situations in which policies are not followed.”
Okay, Dr. Goodloe-Johnson, since you want to be a good steward and follow policies, how about refunding the money you spent on the retirement banquet? It's already been termed "gifting of public funds." Or, at least, commit to not doing it again AND attending the annual luncheon that already occurs for long-term SPS employees who are retiring?

And this one:

Seattle Public Schools has a complex financial system that involves more than half a billion dollars in annual budget and more than 8,000 employees,” said Superintendent Goodloe-Johnson. “While errors can occur in any system, we are committed to having internal controls in place that catch errors and correct them quickly. We also will develop and implement additional accountability measures.”

This is fine except that very little of what was in the Auditor's report was about "errors". It was about many staff and Board members who did not familiarize (the audit's word) themselves with policies and laws and/or did not follow them. I would not characterize that as an "error".

And this:

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.

Mr. Kennedy actually addressed this in saying that none of the roughly 83 people who got overpayments ever reported them. However, he said he did get 10 phone calls from employees who said they DID report it to HR. Obviously, HR did nothing or it would have been caught internally and not by the audit.

So Mr. Kennedy said there were 5 steps:
  • internal control responsibilities (CFO and employees),
  • corrective action plan,
  • internal control team,
  • appointment of an ethics officer and
  • audit liaison.
The Internal Control Corrective Action Team will be led by Accounting with Kathie Technow from the Accounting office as part of the team. I don't find this good news as she was called out a couple of times by the audit for not following policies. Apparently she will look for benchmark best practices (whatever that is) and organize employee training. There was an all staff e-mail sent on August 26th (and I have but haven't read yet). I love the line here on the Powerpoint that says, "Employee Compliance - Everyone."

The Corrective Action plan will list each specific issue/condition and the staff response/corrective action. There will be current status reports and ongoing updates at the district website. It also says that there will be posts on the district's website but I have my doubts on that one.

Mr. Kennedy spoke about "access points for public or staff to report issues and a process that is easily known." Director Maier said the district needs to do better on this.

The Ethics Officers is Noel Treat our new General Counsel (and husband of former SPS employee, Carol Rava Treat). Harium asked who the Ethics Officer would report to and Mr. Kennedy said he wasn't sure. Hairum said it should go to the President of the Board and/or the Chair of the Audit and Finance Committee.

Michael concurred about the need for a code of ethics. (And I would hope, as a good example, that Dr. Goodloe-Johnson would be the first public signer.)

Steve said something to effect that they need to know who the General Counsel reports to but that it should be understood that state law says the Board is responsible.

Audit Liaison is now Duggan Harman, Executive Director of Finance. They promise "better organizational alignment with internal controls responsibilities."

Director Carr said that she would like to know what other districts are doing in the area of governance to guide the response. She also announced that there would be separate meetings in the future for the Audit and Finance Committee to track these issues. She said to keep watch for which item - Audit or Finance - will be discussed at which meeting. She said at the Board retreat that they would be talking about a code of conduct for employees about ethical behavior.


Board Comments

Peter - going to try for a weekday community meeting but wouldn't start until October

Kay - going to have quarterly community meetings. She referenced a couple of speakers from the public testimony (good for her).

Sherry - mentioned the ribbon-cutting at Hamilton.

Steve - said that he had been the Board rep for the teachers contracts and that both sides had worked very hard and the Board is happy for the agreement.

Harium - said that he has been working on the students rights and responsibility handbook and there was a lot of interest in it (some because of the cyberbullying issue).

2 comments:

SP said...

Melissa,
Thank you so much for both attending and also writing up this important information! Just because we do not respond directly, doesn't mean that we are not reading & digesting this information for actions down the line.

Does the audit & response have it's own section now on the SPS website as mentioned yet? ("there will be current status reports and ongoing updates at the district website"). If so, I haven't been able to find it. Who would we ask about this, on the district level?

Note that the 7/06/10 News Release about the initial audit response directly mentions that the School Board's Audit & Finance Committee "will establish additional measures to ensure issues are corrected and progress reported to the School Board and to the public." How and when will this happen?

Thanks agsin for all your extremely hard work.

Arnold said...

You can tell that people are losing interest in this topic, even though it is an extremely important topic. I hope I am wrong.