Well, I attended the meeting to see the latest exciting developments in how our $700-million budgeted school district is managed. Remember, this blog focuses on fiscal and management control issues, and not teaching or program issues. Here are some details:
- Public Disclosure of Personnel Issues and Unpaid Leave - There was a separate Board "workshop" earlier in the day, where the hearing regarding an HR manager accused of harassment was postponed. You have probably read about it in the papers. My only comment on this process is that the Superintendant put the manager on upaid leave, which I think is the wrong message. Until the due process procedures are completed, the employee hasn't had a chance to provide their side of the story, and the accuser's statements and factual situations have not been explored, so his wages should have been continued. I think the person should have been put on paid leave. As it is, all employees get the message that someone can accuse you of something and managment could immediately terminate your wages without completion of the due process phase. That is not a positive morale builder. Also, it is amazing that the Superintendant and others told details to the press. I don't know the Florida laws well, but in my prior location of California, that alone could have cost the District lots of money because of defamation in public without due process. That is apparently why after all those public disclosures, cooler heads on the Board and the Board attorney advised everyone in public not to say or discuss anything again. That is what the Superintendant and the HR staff should have known before the original disclosures about a personnel issue.
- Student Achievement Progress is Tracked, but what about Resource Management? There was an impressive presentation on how the math curriculum and student knowledge has improved at many schools. I am sure that before the laws regarding student skills measurement, this type of report was never developed, but now they are measuring growth trends from year to year and showed a 3-year history of improvements. I mention this, because performance measurements are now being used on the the teaching side to measure teaching, but if you look at the reports on the website regarding operations, construction, etc. there ARE no performance measures. So I was really happy to see this example as a baseline to indicate it is possible for a school district to measure performance. I have briefly reviewed the budget and the online 155+ page financial reports and did not detect any emphasis on performance measurements. Instead, it was all about standard accounting reports where you can't tell trends in costs or performance in non-teaching areas. Since about half of all the 4,000 employees work in non-teaching areas, this needs further examination.
- Examples of Resource Management Achievement at the Florida State Dept. of Education - To further support the above issue, go to this webpage http://www.fldoe.org/arm/default.asp and see how the Florida Dept. of Education has lots of information about "Accountability" in education of students and "Improving Student Achievement", but we can't find any similar section locally or on the FL website regarding management accountability for resource management - i.e. how efficient are they in using school buses, school floor space, indicators of improved trends in costs, staff ratios, etc.
- Lack of Cost Impact for Board Agenda Items - Keeping the above in mind, the board keeps getting transactions from the District to approve that seem minor. They spent maybe 15 minutes on a proposed HR consultant and the Superintendant could not provide any estimate of the costs. If you look at the board agendas for "consent" items, you see many items to be approved, but absolutely no cost impact is listed. In the case of the HR consultant, it took several back and forth discussions between the Supt. and the Board to finally agree that a limit of $8,000 should be set on the proposed contract. Clearly, the Board is frustrated at the lack of concrete information on these things, and perhaps they need a policy that ALL items on the public agenda should clearly state the cost impact, and that no open ended approvals should be requested (like this one).
- Internal Audit Budgeting Account Confusion - One agenda item was the postponed issue of how the budget for the new internal audit function should be handled. Apparently, there are separate accounts for Board expenses (including internal and external audit), and for District expenses. All the budget for internal audit (including external audit, which is the CPA firm that does an annual (?) financial audit) was approved earlier this year at $430,500 plus another $25,000 for a clerical position for a total of $455,500. This total covers both the internal audit salaries plus funds to pay the external auditors. The external auditors are now under the control of the internal audit committee and work must be approved by the internal auditor. According to one Audit Committee member, it seems that the external auditors did work without much "control" by the Board because they were paid through the Superintendant's fiscal services department. That is why the budget needed to be clearly located under the Board (which was not really clear during the meeting.) So, the problem that was discussed for almost 30 minutes at the board meeting was that after the original budget was approved, the funds for the external auditors were moved to a District (not Board) account number. This is playing games. We heard the Superintendant say the law required that, but as in many instances, even though this was an agenda item, there was only a verbal statement and no printed evidence to support that statement. As far as I could tell, the discussion seemed to be the Superintendant just trying maintain control and to refuse cooperation. So, the board had to discuss and turn down Superintendant Anna Cowin's recommendation to leave the budgets as is, then the board had to initiate their own resolution to move the funds back to the Board controlled account, which will apparently require a formal amendment to the earlier approved budget. Hopefully, future situations like this can be handled internally in a reasonable process by a cooperative Superintendant without heated Board discussions.
- Confusing Title Descriptions for Audit functions - Some terms need to be clarified regarding "auditing" in the School district. Apparently, before the Board created the separate Internal Audit function, there was a "District" auditor in the Fiscal Services department mostly working on "auditing" school accounts. This is what I would call an "accounting quality control" position, and not auditing. I am told the function is mostly done by internal accounting staff now. If the District fiscal services department hires another "auditor", they should call them an "accounting control" technician, or accounting quality control, and not auditing. The role of the new, independent Board Auditor would be to periodically review the work and processes of the accounting control person for verification of work done, but not to do it. Responsibility for the accuracy of school accounts should be a standard internal accounting control position, not the responsibility of an internal auditor.
- Proposed Workshop on Internal Audit Direction - Outgoing Board member Becky Elswick gave an impassioned talk about how the direction of internal audit was confusing, and that there was a need for a Board Workshop (separate meeting) for the Board to hash out and agree on the direction of the internal audit department. Some of the Board agreed, as well as the Audit Committee member in attendance. So, expect to see such a workshop to clarify expectations of the audit function, even though an annual audit plan has already been decided (I haven't seen it yet). It seems that the normal duties of an independent audit function as defined by professional associations (and my experience) may conflict with some Board member's expectations that Internal Audit is primarily to verify implementation of Board policies by the Superintendant.
- Board Support of the Internal Auditor and Reasons why the Superintendant May Really Want to Support the Program also - After the above discussions, most of the Board were vocal in their support of the independent Internal Auditor, and expressed support of Lisa Myles, the auditor. Of course, as a political observer, we have to wait and see if actions match verbal statements, but the tones seem very supporting. The issue is whether the Superintendant will cooperate in allowing the auditor full access to information. By taking information from an audit report and implementing it, any manager or official can build a trend of positive action and reduced risk that could make them look more professional. By constantly fighting audit efforts, a manager or official risks looking like they are hiding something or unwilling to accept positive improvement recommendations. I have seen managers promoted three levels (over several years) by implementing audit and management control recommendations, and I have seen managers lose their jobs or be demoted after constant refusal to cooperate. For instance, there was the payroll manager who refused to implement "time consuming" standard manual accounting procedures (called batch and "cross footing" controls) to reduce errors in Union timecards. Finally, after more errors and incorrect paychecks, the union listed the issue as a reason for a strike, and the payroll manager was fired after verifying she still had not implemented audit and management recommended improvements. The choice is up to the Superintendant and staff!
Speaking Agenda for Oct. 23 Lake County School District Board Meeting:
At each Board meeting, I turn in a "Public Input Card" to furnish a fast "3-minutes" of input. That is one reason I created this blog, because there are many issues that cannot be covered in 3-minutes, but they need coverage. As part of that, I create a "talking points" page and give it to the Board while I talk - here is yesterday's talking points:
- Audit Committee Budget – Remember that normal budgeting for new audit departments is usually 1 auditor per $100-million in expenditures. (The budget of the School District is now $700+ million and they only have the one new auditor).
- Comment about Sole Source – comments at the board meeting have been made saying “going to bid is costly” as a justification for sole sourcing. I recommend the District get a copy of the Lake County Purchasing guidelines, which are reasonable, and where sole sourcing rules are specified. Officials must remember that government entities are not subject to market competition like businesses, so requirements for public bid notices and and RFP process are intended to provide some fiscal constraints on a tendency to award contracts to “friends and supporters”.
- Postings to Fiscal Rangers blog
o Two recommendations on posting open meeting notices for Audit Committees
o Another article on a school district fraud, the 2004
Miami-Dade School district fraud claimed to be over $100 in losses. Much of the problems were from the construction program led by the facilities department.
- Follow up on earlier posting about hotlines – apparently the State Dept. of Education has a Fraud, Waste & Abuse reporting hotline, and if the County School District doesn’t provide one, members of the public or staff can be referred to that hotline. I will post its website address on the blog later this week. (Update - I checked http://www.fldoe.org and have not been able to find a hotline link yet - more later...)
Contact: Vance Jochim - [email protected]
That's enough for now!
vj
