Today is the planned District workshop and Board meeting. So I thought I would write a recap of some of the District Fiscal Fiasco issues in the last two weeks.
Two weeks ago, I attended a Board meeting of the Lake County (FL) School District. At the meeting, I submitted a white paper on what the board should do to finally take a stand to fix the financial mis-management by Supt. Anna Cowin. The paper is at "A", below.
The next day, the Daily Commercial had a screaming headline saying that a community leader in a group called VOICE (I think they are Democrats, because their pictures are on the Lake County Democrat website) calling for Anna Cowin's OUSTER. That article is at "B", below. Her lack of management skills and stubborness for allowing transparency now are the subject of continuous letters to the editor and articles in local papers.
During the recent period, there also erupted at least two articles and a response opinion letter where Anna Cowin was using a public records request demanding that Board member Cindy Barrow provide copies of all emails she sent out to supporters. Barrow is a Democrat and was involved with the VOICE group before she was elected to the Board. Barrow was apparently sending out an opinion update newsletter via email to supporters, and Cowin felt that information should be public so Cowin would know what was being said about her. Barrow said copies of all such emails were always sent to her public District email so it was transparent (not confirmed or refuted by anyone so far). Normally, sane politicians would ask privately for such information and Barrow doesn't seem antagonistic. Cowin, at least in press reports, has not provided info to refute Barrow, or cited damaging information. Thus, it seems that it is a petty squabble started by Cowin, and is similar to the statements she makes in District meetings when a Board member asks something Cowin doesn't like. An example is the recent Board workshop where one of the Board started asking a District manager at the speaker rostrum for an opinion on a discussion topic. Cowin exploded, saying the Board member was usurping her administration authority by asking the manager for information not discussed "in other meetings". Another example of a less mature method of communication. This results in the Board members soft pedaling almost any statement, which means they need to start gathering forces and standing up to Cowin by not approving budget changes, etc. until desired management improvements and behaviors are implemented.
Strong's Stand - District Board member Scott Strong periodically asks fiscally sound questions regarding spending issues, and, he argues his point further, rather than relying on a sound bite. Examples would be asking staff why a spending item on the agenda was recommended to a sole source, or why staff wanted to pay thousands to consultants when they should be capable of doing the work themselves. These are the types of issues that would RARELY reach higher management of a corporation of $700-million because staff managers themselves would ask the same questions and resolve them, and describe the issue in any justification document going to senior management or the Board. Now, recently, Strong is asking even bigger picture questions, like why pay the County $3-million in fees to "collect" impact fees. Keep going Scott. Sadly, he has to ask these questions because Cowin and staff do not.
March 22nd - A Sentinel article (item "C" below) says that finally, the external financial auditors for the District issues a preliminary summary of their annual financial audit. The headline reads "Auditors: School Finances are OK" but describes staff delays and poor cooperation as reasons why the auditor, Purvis Gray, had to charge an additional $9,000 for their total audit fees of $93,000. I will be reviewing these reports later and tracking the length of time for the "management" response and quality of the response. However, readers should understand that this is only a financial audit, which means that receipts exist for all spending, that approvals follow regulations, etc. It is also known as a compliance audit to ensure government reporting methods are followed. So, now we know properly authorized receipts exist, which in fraudulent organizations could have been created during all those delays - that is why professional auditors get wary about delays in getting records during audits. But this type of audit doesn't really tell us if spending was efficient, economical or effective. We don't know if the District is paying twice the normal cost for School buses or fuel, or consultants. That is the subject of operational or performance audits conducted by internal auditors or other audit engagements (such as the State Inspector General). So, this audit basically means paperwork is properly documented and approved for spending.
March 23rd - The Daily Commercial opinion section contains a well written commentary by a Trent Gibson in Fruitland Park. He described the apparently simple process for the School Board to request an operational audit of the District by submitting a letter approved by the Board to the State Attorney General. Cowin could also request such an audit, which won't happen in our lifetime, but the Board could, and should approve and file such a request. I have reviewed State "performance audit" reports online, and they aren't as tough as corporate audits, but it is a start. I would prefer that the Board approve a contract with the government services group of one of the BIG 4 consulting firms like Accenture or Bearing Point, KPMG or Price Waterhouse Coopers to review the efficiency and effectiveness of the District, covering a new area each year. They should start with the $200-million in construction spending, reviewing the programs for possible waste, fraud, conflicts of interest, etc. They should also be asked to develop performance benchmarks for each major spending group based upon best practices databases (Accenture has these) and recommended quarterly tracking reports showing how the District compares to industry as well as best practice School Districts or organizations.
More to be added by tomorrow, along with the articles mentioned above.
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Fiscal Rangers White Paper on Action Recommendations for School District Board
Lake County
http://webworks.typepad.com/lakecountyfiscalrangers/
By Vance Jochim - [email protected]
Recommendations:
- Priorities: The Board should establish that financial oversight and controls are a priority and refuse to fund or move forward any of the Superintendent’s projects such as Magnet schools until a new CFO and a new Internal Auditor are in place.
- Benchmarks: The Board should issue and strongly
demand implementation of a policy requiring timely, monthly monitoring of
District financial activities by requiring monthly performance benchmarks
be established for all non-instructional activities and actual benchmarks
be published in a monthly report. Ideas for performance tracking benchmarks should be solicited in an
open workshop, and the Fiscal Rangers will supply some of them. The
Lake
County
School District
- Internal Auditor: The new auditor position be revised to
be at the Director level, with offices for at least four people in the
main District building. Internal
Audit is a priority and a lower priority work unit should be moved to
Dabney
School
- Internal Audit Secretary: A permanent position be filled at the level due a Director. No temp workers should be used.
- Responses to Internal Audits: The Board should devise a quarterly report of all planned, in progress and completed audit reports of the District from any source, and the due dates of responses. Responses should be tracked in the number of days late, and the Board should review and act on all overdue audit responses each quarter.
- Professionalism: District management does not appear to support professionalism in the staff, based upon the lack of support for the CFO and Internal Audit functions. The Board should request an inventory of all non-instructional first level supervisors and above to determine the relevant education, professional certificates and continuing education taken by staff. The Board should then write a policy implementing a budget, and fast track plan to establish goals for professional certification and attainment of relevant professional degrees and continuing education for all supervisor and above positions.
- Transparency: The above benchmark reports and all performance tracking reports for each non-instructional work unit be published on the website within two weeks of the end of a month. The annual audit plan and all audit reports (internal and external) should be added to the website within one week of issuance.
- Construction Program: The District is spending about $200-million on construction programs this fiscal year. Monthly progress reports should be developed for all construction programs and posted and retained on the website within two weeks after issuance. These reports should also show the complete authorization history of each project, including original estimates, change orders and relevant cost tracking ratios, such as cost per square foot and industry benchmarks from other Districts. The current “status reports” given verbally at the Board meetings are not adequate and need more detail and should be published on the website.
- External Risk Assessment and
Operational Audit: We believe
that the District has a high risk of losses due to the lack of support for
fiscal oversight. The Board should
engage an outside firm, such as the government audit unit of one of the
Big 4 Accounting firms to perform an operational and risk assessment of
the construction program and selected District operations to identify both
financial and operational risks. This engagement should be initiated within two months, and financed
by removing funds from a non-instructional program. This audit should not
be confused with
Florida
State
- Incentives: If possible, Anna Cowin’s payroll check should be withheld if the approved actions are not implemented in an aggressive timeframe set by the Board.
- Public Notices: All District public meetings, including Board meetings and workshops should be disclosed on the website in clear wording. Currently, the Board issues a restricted copy of a press release and pays for ads that cannot easily be found. This is not adequate notice of meetings, which should all be disclosed on the website.
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