An independent audit has found the Alexandria school system’s oversight of its repair budget “dysfunctional,” citing millions of dollars worth of unpaid bills, unauthorized change orders, poor financial controls and monitoring failures by managers.
The audit, released late Thursday night after the School Board was briefed on it in closed session, said some upper-level managers were aware of the problems before they became public in late September but failed to correct them.
Superintendent Morton Sherman blamed the problems on two “renegade, rogue” employees who ran the school district’s facilities-management division for years and on two higher-level managers who “should have known” something was awry. All four have lost their jobs.
“Clearly, the [former] director and assistant director of facilities were the key players in this whole series of events and had been for years,” Sherman said. “There is no issue of personal gain or benefit here. . . . They simply decided not to comply with our policies.”
He said he would submit the audit to the commonwealth’s attorney for investigation of whether any crimes were committed.
Problems with the capital improvement budget became public last fall when contractors began calling City Hall to complain that they were not being paid for work that included building modular classrooms, replacing boilers and installing ceiling tiles. An internal investigation found stacks of unpaid invoices piling up in a folder on the facilities director’s desk, work billed to the wrong projects and payment of cost overruns that were never approved by proper authorities. In November, Sherman hired the CPA firm Robinson, Farmer, Cox Associates to conduct an external, independent audit.
Its findings included an observation that while the School Board and superintendent were in the dark about the fragmented procurement procedures, “some of these issues had earlier been brought to the attention of certain upper-level management” but that no corrective action was taken. In addition, a staff member whom Sherman identified as the former assistant director of facilities ran his own contracting firm on the side and had both worked for a company that now undertakes school projects and hired that firm to work on his own residence.
Sherman said the school system’s chief financial officer, Jean Sina, should have raised concerns to him, the schools’ attorney or any School Board member, but Sina said nothing before he resigned in January. Deputy Superintendent Margaret Byess, who supervised Sina and the facilities division and who reported to the City Council on the matter as recently as 10 days ago, also “should have known” about the financial irregularities, Sherman said. She submitted her resignation a week ago, effective at the end of May.
Sherman, who has led the system for three and a half years, defended his own actions, saying that when he learned about the problems, he stopped all work on capital improvement projects and froze payments to vendors. About $3 million remains to be paid after an outside engineering firm verifies that the contracted work was completed.
The audit said that the schools’ facilities and budget staffs kept separate spreadsheets to monitor accounting and did not reconcile them, nor did they match up with the budget controls kept in City Hall. While the schools control the budget that the City Council appropriates, school officials have to abide by limitations, such as a certain amount being set aside for particular projects, city officials said.
On one project, the audit said, the facilities director requested a $1.25 million budget transfer from the City Council, which authorized it, but the bill never went through normal school channels and the School Board was left in the dark.
Contracts for capital improvements were not reviewed by lawyers before they were awarded, and there was no formal process for approving change orders. Several invoices were recorded in the wrong fiscal year.
Vice Mayor Kerry Donley (D), who is vice president of Virginia Commerce Bank, said Friday that the audit recommendations should be made a top priority.
“This is pretty basic stuff, and I find it disconcerting that the ACPS . . . didn’t have basic controls in place to ensure we didn’t have these problems,” he said. “It calls into question the confidence the council will have on either operating or capital budgets.”
The school system did not exceed its capital improvement budget, Sherman said, and all major projects will be completed, although some work may be delayed until summer.