Thinking about thinking about changing. That’s Richmond.
How many years have we been talking about the Richmond school administration’s wasteful and potentially corrupt procurement division? It’s been compared to everything from a cesspool to a black hole. Now another audit, this one conducted by the school board’s own auditor, confirms (one more time) the waste and abuse by the department, and the serious lack of oversight by high-ranking school officials.
In short, if this is a “re-do,” it looks like Richmond Public Schools has failed the test again.
If you’ll recall, “Auditors were denied access to detailed procurement records” during a 2007 investigation of the schools. Despite the in-house stonewalling, the final version of this report by the City Auditor detailed a system where fund allocation was largely unsupervised (that’s your money, by the way). It also made numerous recommendations for change.
More than a year later, after much teeth-mashing, the city finally released a full audit of the Procurement and Accounts Payable division. As was predicted by many, the April 2008 report uncovered a host of irregularities and outright scandals.
First of all, the auditor was kind enough to explain why examining and closely monitoring school procurement practices is necessary:
Traditionally, procurement and accounts payable functions are targets for fraudulent activities. According to the Association of Fraud Examiners, 71.4% of the total number of instances of occupational fraud committed involved billing, expense reimbursement, check tampering and wire transfer frauds.
Looking at the school’s procurement policies and performance, the report found:
- The internal controls for following procedure and ensuring lawful practices in the procurement and accounts payable processes were “significantly weak.”
- There were “significant non-compliance with RPS policies and the Virginia Public Procurement Act provisions.”
- School officials paid $18 million for purchase orders that were not authorized.
- Richmond Public Schools buys more textbooks than it has students [this will be news to teachers in several city schools who complain about not having enough books to go around]. Moreover, RPS has higher textbook costs per student than localities with more students, such as Henrico. It also has no record of what is done with used textbooks, who sells them and for how much.
- The RPS staff may have skirted regulations for emergency and single-source purchases. Moreover, the School Board’s approvals for most of the emergency purchases were not obtained as required by the School Board bylaws.
- Looking at 52 competitively bid purchases, 96 percent did not comply with such requirements as documenting bids. The purchases were for more than $1 million.
- School officials awarded a $104,000 contract to a firm barred from doing business with the federal and state governments because of unethical business practices.
- Two RPS employees were related to contractors who provided services to RPS. One was a purchasing officer responsible for construction procurement. The Auditor’s office identified that “one of the construction firms utilized by RPS is owned by a family member of this purchasing officer. And a Plant Services employee’s immediate family member performed construction services for RPS. This is of concern since construction projects are handled by Plant Services. During the audit scope, both contractors received a combined total of approximately $357,000 from RPS.”
- “On at least two occasions, staff members were instructed to backdate contracts.”
- RPS has no little control over its vendor data input. “Staff could add, change and delete vendors without any supporting documentation.”
- There were approx. 300 vendors that had duplicate names in the RPS database. Little wonder that Dalal and his staff found duplicate payments on 59 invoices totaling $121,073.
- RPS balances its bank account haphazardly. “Basically, RPS personnel reconcile the bank balance with outstanding checks and relevant adjustments. This means that, as long as the list of outstanding checks reconciles with the bank balance, any errors in the general ledger balance will not be detected by this process.”
- There was no proper documentation concerning expenses charged to credit cards issued to RPS management and former School Board members. “The charges on two former School Board members’ credit cards included the following: $485 in gasoline purchases in the Richmond area with no receipts or explanations. The business purpose of these charges is unknown… $10 for one on-line charge to an inappropriate website…. $175 for a Western Union money order. The payee and the reason for issuing the money order are not known.”
- Two interactive, computerized classroom projection systems are missing. These cost a total of $7,000.
There’s more, a lot more. This devastating report, which came complete with detailed recommendations for improving the department, should have been enough to get the school administration cracking down on their procurement policies immediately.
But, no, Richmond schools had to wait one more year, and endure one more embarrassing procurement scandal — a $291,000 school elevator job awarded without proper bidding— before the school board began its own audit of the school’s accounts payable division.
In other words, RPS began thinking about thinking about doing something.
Now this latest study has arrived. And surprise, surprise… there are problems within RPS’ Accounts Payable and Procurement Department!
The Richmond school system’s payroll department is overstaffed but has been unable to detect overpayments, accurately track time off or collect money it is owed by employees, according to a report released yesterday by the schools’ internal auditor.
In addition, an audit of the system’s human resources department, also released yesterday, showed a department operating on the fringe, with out-of-date policies and procedures and ineffective management. Neither department has seen updated guidelines since the mid-1990s.
“We have a lot of concerns with policies and procedures,” internal auditor Debora R. Johns told the School Board’s Audit Committee.
Her review of payroll information, covering the period from July 1, 2006, to May 31 of this year found a number of problems, including:
* Overpayments to 19 employees, totaling $50,356.96. The biggest was $10,050 to an employee who was paid while on education leave. While that employee has agreed to repay the money — in $50 increments over 201 pay periods — four other employees may have gotten away with keeping $1,710.64 in overpayments, according to the report.
* Employees taking off time but not recording it, leaving time off on the books that had been used. There were also problems with the awarding, tracking and use of compensatory time off, with no single way of recording such time.
* Sloppy record-keeping. A spot review of 30 employee files became a review of 29 files when one employee’s file couldn’t be found. Of those files in place, all were missing certain forms, including copies of photo identification, Social Security cards and internal paperwork used to prove job status.
“It’s deja vu all over again,” as Yogi Berra might say.
So what is RPS’ response to this latest latest audit? Immediate adoption of the report’s recommendations? A tearful mea culpa for ignoring the last audit’s recommendations (and the one before that)? A pledge to begin a campaign of no-excuse housecleaning? A concentrated bout of unequivocal fat-trimming?
Girlfriend, please. [Emphasis mine]:
“This is the cumulative effect of long-term problems,” said Superintendent Yvonne W. Brandon. “These are bigger issues than any one person.”
The payroll department has nine employees, and the audit recommended eliminating two positions. While Brandon agreed with most of Johns’ findings, she balked at the idea of cutting two of the payroll employees.
She did, however, agree to an aggressive time frame for correcting the problems, with a September target for fixing many of the problems. “We can’t afford to wait,” she said. “Even if we don’t hit the target on all of them, we can’t wait to start.
“I welcome audits. They help us identify strategies toward improving.”
I’m happy to hear that there will be “aggressive” action taken. Problem is: RPS has “waited to start” for years. They have disregarded and thrown excuses at previous studies that either hinted at, or pointed directly to, the same kind of findings. Now, as she “welcomes” the latest findings, the superintendent of schools is appearing to resist common sense remedies that would help to improve and streamline the department.
See you in September, as they say.
Let’s not kid ourselves about the message that all of this sends. These latest revelations (and the superintendent’s less-than-definitive response to them) will resonate with area parents more than any glossy door hanging or slick advertising slogan. Yeah, it’s all well and good to initiate expensive public relations campaigns designed to convince people that everything is OK at Richmond Public Schools. But wouldn’t it have been more beneficial and honest to work on the reality first?
This latest audit of RPS is scandalous stuff, sure. But it is hardly surprising and it’s certainly not breaking news.