Fiscal Rangers

Los Angeles School District Payroll System Screwup costs $37-million MORE

Ok, this is the School District that spent over $100-million on a new school without testing for Radon, and had to tear it all down (see earlier posts). Now LAUSD (Los Angeles Unified School District - which covers most of Los Angeles County) screwed up a new payroll system design that cost $95-million, and now it will cost another projected $37-million to fix it. During the last payday, there were over 4,000 paycheck errors. The system is based upon German developed SAP software, implemented by big 4 consulting firm Deloitte & Touche. Apparently the District has over 1100 payroll classifications and it was "too difficult" to modify the SAP system to handle them. This reminds me of a similar situation at ARCO Oil when they tried using a canned payroll system to pay union workers on the company owned tankers, and they had a massive quagmire of payroll classifications that wouldn't work with the standard ARCO corporate payroll system, so they hired a project manager, purchased an HP computer and developed a payroll system from scratch just for the unions. The lesson learned here is that you can't force a complex, union payroll system into a canned software package without... Read more →

Fort Worth School District averts purchasing fraud

Here is an example where a student obtained purchase order forms from the Fort Worth School District and a vendor contact, and tried to order almost $10k in items, but was stopped by the alert vendor representative. The article quotes a School District official who said "our controls worked" but it was actually the vendor who was suspicious about the new shipping address. Note that the Fort Worth School District does have a hotline to report waste, fraud & abuse, which the Lake County School District does NOT. vj ============================================ Fort Worth school investigating how $9,833 order was made By Alex Branch and Diane Smith Star-Telegram staff writer FORT WORTH -- The order form and fax cover sheet were from Dunbar High School. But whoever tried to buy almost $10,000 worth of computer equipment this month wasn't shopping on behalf of students and teachers. Police and the Fort Worth school district are investigating how someone got the school's purchasing forms to place the fraudulent order, and whether they have done it before. No arrests have been made, but school district investigators suspected a former student whose mother works at the school, according to a police report. The telecommunications company to... Read more →

El Paso School District FBI Public Corruption Case kills $150-million contract

Update: 12/20/2007 - Here is a link to several articles on the El Paso school district corruption case - I added some of the articles at the bottom of this document. vj A Health Care Administration Provider in El Paso lost a $150-million contract with two school districts in the area after an FBI public corruption investigation found that the President of the Provider saved the job of the son of a District Trustee who voted for the contract. There aren’t a lot of details in this article, and the case is ongoing with other indictments, but the trustees son apparently worked at the Health Care Provider and was absent a lot and doing a terrible job. But they kept him on because his father, the Trustee, voted for the $150-million five year contract. vj From http://www.elpasotimes.com/publiccorruption/ci_6408323 By Tammy Fonce-Olivas / El Paso Times El Paso Times Article Launched:07/19/2007 12:00:00 AM MDT Details in a court document filed Tuesday provide a deeper insight into an FBI public corruption investigation implicating an Ysleta Independent School District trustee in an apparent plot to exchange his vote on a multimillion-dollar health contract for a job for his son. The document filed by Assistant... Read more →

Ohio School District Investigates Disability Claim Fraud

This School District had a school bus driver who filed a false disability claim and collected her full salary while not working. The District staff was tired of large increases in disability claims and started investigating whether the claimants were truly disabled. They took videos of the bus driver lifting heavy objects and jumping on and off a truck and fired her for filing an unjustified disability claim. Kudos to the staff for starting the investigation. We don't have any facts on the situation regarding disability claims at Florida's Lake County School District, but this is a good example of District Management initiating their own investigation in Springfield, Ohio. vj From Springfield Ohio News Sun http://www.springfieldnewssun.com/hp/content/oh/story/news/local/2007/08/13/sns081407collier.html District justifies firing of former driver By Lucas Sullivan Staff Writer Tuesday, August 14, 2007 Springfield City Schools officials say they did not target former bus driver Brenda Collier, as she has charged. Instead, they fired her because Collier attempted to take advantage of the district, which faced financial hardship in recent years, school officials said. Prior to her firing, the district investigated Collier for fraud after officials received a tip that she was performing duties that violated her disability claim. Her firing came... Read more →

$649,000 Charter School Fraud in DC area

In this case, a manager supervising a bunch of charter schools in Washington, DC funneled over $400,000 in no-bid contracts to friends plus stole another $203,000. Both articles below quote the prosecuting attorney... "Prosecutors say Belton's crimes grew more brazen as the Board of Education and public school system dozed". The Florida Lake County School District has 11 charter schools, and an audit being released tomorrow (Augu 13, 2007) reports various weaknesses in procedures related to 3 of the 11 charter schools. (The others seem ok, according to the CPA firm that did the audit.) vj District's Ex-Charter Schools Chief Admits Fraud By Carol D. Leonnig Washington Post Staff Writer Friday, August 10, 2007; A01 Brenda Belton had some gall, by her own admission. As charter school oversight chief for the D.C. Board of Education, she repeatedly stole from the school system, arranging about $649,000 in illegal school payments and sweetheart contracts to herself and her friends. Yesterday, she pleaded guilty to four felony counts of cheating the low-performing schools system over three years and trying to avoid taxes on her ill-gotten gains. The former schools executive revealed numerous instances of the system's supervisors failing to catch on to what... Read more →

College Cashier embezzles over $300,000 due to poor accounting controls.

Here is another example of an employee in a Salt Lake City, Utah College who embezzled $300,000 because the college had poor accounting controls. One upcoming audit from the Lake County School District (to be issued in late August, 2007) indicates that there are weaknesses in internal and cash controls over student cafeteria cash collections. vj Snow College School cashier sentenced to year in jail, probation The Salt Lake Tribune Article Last Updated: 08/09/2007 01:06:34 AM MDT A former Snow College cashier who embezzled more than $300,000 from the school over a 10-year period was sentenced Wednesday to probation and a year in jail. Vickie C. Murray, 57, of Ephraim, was charged in Manti's 6th District Court with 23 counts of communications fraud, all second-degree felonies which are punishable by up to 15 years in prison. She pleaded guilty to eight of the counts, and the rest were dismissed. Murray was employed by the college from April 1984 to April 6, 2007. Sanpete County Attorney Ross Blackham said Murray was the head cashier, but worked at the counter taking student payments and cashing checks in addition to supervising other cashiers. "She skimmed from what was coming in, a little at... Read more →

Detroit Area School District Manager Caught in $200,000 Fraud

So this purchasing manager in a Detroit area school district purchased goods for the district at inflated prices from a company he had an ownership interest. Then, at the end of the article, they talk about an earlier incident where school principal in the same district siphoned off $400,000 through the day care program for the district, and was sent to prison. In addition, they mention: " Deldin said Chippewa Valley has implemented a number of new measures to reduce the district's exposure to theft including a fraud telephone hotline that employees or parents can report suspicious activity; the hiring of an independent auditor to regularly review accounting procedures; and performing credit checks on all new administrators." Lake County doesn't currently have an internal auditor, but is in the process of hiring one. Also, Lake County does NOT have a hotline for people to report suspected fraud. Neither does the State of FL Education Dept. Kinda makes you start to believe in better accounting controls and procedures, doesn't it? vj Ex-school official charged with fraud Chippewa Valley administrator accused of buying furniture for district at inflated prices By Mitch Hotts Macomb Daily Staff Writer Two years ago, James Edward Tague... Read more →

School District Super Cowin Irks Me AND a local columnist

I attended an evening workshop of the School Board this week. Their agenda was only two topics, 1) Approve the proposed millage rate for school district property taxes, and 2) Approve spending for Discretionary funds and specialist staff for School Principals . But it was better than one of those reality shows where teams are racing to climb a mountain to find a clue to treasure! During public comment that was allowed BEFORE the millage rate vote, I was the only one talking about the proposed millage rate and down below are the comments I submitted - notice that was before everything else I will tell you about. After I spoke, this is what happened: - Apparently the CFO's office of the School District published incorrect data in the required publishing of the budget and millage rates that were to be voted on. So at least two of the Board members and the CFO spent part of the day trying to find out if they had to republish the info. Fortunately, the key number that was wrong was higher, which meant the new number was lower and that was ok. If the ad had used a lower tax rate than... Read more →

Example of Left Coast County Govt. Mismanagement costing billions

California County government approaching bankruptcy because politicians RETROACTIVELY increased sheriff pension contributions 50% when money was easy during earlier real estate price runup. (this is called buying votes...) In Orange County, California, they were getting tons of extra property tax income during the recent property value increases. So, the Sheriff Deputy's union pushed through a spending bill that promised them a 50% increase in the fixed pension funding they did have and now, after the real estate bust, that bill has resulted in a $2-billion UNFUNDED liability for future pensions just for the Sheriffs. Below is the email newsletter I get from one of the County Commissioners (because I used to live there), and related newspaper articles as he pushes a lawsuit to try and reverse the costly pension benefit. It is important to mention that most corporations stopped giving fixed pensions years ago, and only some governments still try to increase future taxpayer costs with unfunded liabilities like this instead of using 401k programs where the employee must contribute a percentage of their salary. The lesson to be learned here is that the public must demand proper and accurate forecasting of such spending bills, and not let them be... Read more →