Sunday, July 06, 2008

Theft prior to audit is just water under the bridge.

June 23, 2008
Dear [Anonymous],

Thank you for contacting our Office regarding your concerns about the Edmonds School District. You stated you believe the District was providing non-profit organizations with District space rent-free. You also stated a District Board Member, and his wife a teacher at the District, are violating Board Policy 1260. You also forwarded a concern that the District had violated state bid laws when purchasing land.

Space rental

You stated a non-profit organization working in support of District operations did not pay rent for its use of District space, which violated the agreement between the District and the organization. We determined the non-profit disbanded prior to 2007. Therefore, we focused our review on policies and procedures for rentals and leases and reviewed current leases and rentals.

We found the District does not have adequate policies and internal controls over the rental and lease receipting process. Its policies do not provide guidance on how to determine the type of rental or lease agreement, the rate to charge, or ensure proper monitoring of the agreements. Due to these issues, the District is not applying consistent rental and lease fees and is not obtaining sufficient information about tenants, such as their intended use of District space and whether it benefits the District, prior to deciding to rent to the tenant or draw up a lease. We recommended the District strengthen internal controls in order to decrease the risk of misappropriation, loss of revenue, or the ability to detect errors in a timely manner, and to ensure all rental and lease revenue is received.

Board Policy violation

You stated a School Board Member and his spouse are violating District Board Policy 1260, which bars the spouse or dependant of a member of the Board from being employed by the District. We reviewed Board Policy 1260 which states:

It is the policy of the Edmonds School District that non member of the Board, or any spouse or dependent relative of such member, shall receive or accept any compensation or reward for services rendered to the District or have any pecuniary [monetary] interest in any contract to which the District is a party except to the limited extent authorized by law.

RCW 42.23.030 (Interest in contracts prohibited—Exceptions) defines the exceptions allowed under state law and include:

…the letting of any employment contract to the spouse of an officer of a school district if the spouse was under contract as a certificated or classified employee with the school district before the date in which the officer assumes the office and the terms of the contract are commensurate with the pay plan or collective bargaining agreement operating in the district…

We confirmed the Board Member’s spouse began employment with the District on September 12, 1990, prior to her husband’s election to the Board in 2003. We also confirmed the spouse’s compensation was in accordance with the agreement between the District and Edmonds Education Association. The District appears to be in compliance with Board Policy 1260.

We also found that District Board Policy 6810 is inconsistent with the Policy 1260. Policy 6810 states that “No person shall be employed by the district who is the spouse of or dependant child of any member of the Board of Directors or of the superintendent.” We have recommended the District revise its policies to be consistent.

Purchase of land

You stated you believed the District paid more than the asking price for property that will be used for a new bus barn. The District’s original appraisal valued the land at $3.3 million. A subsequent appraisal valued the land at $5.6 million, which the District paid. We reviewed state law (RCW 28A.335.090) which states:

…(2) Any purchase of real property by a school district shall be preceded by a market value appraisal by a professionally designated real estate appraiser as defined in RCW 74.46.020 or by a general real estate appraiser certified under chapter 18.140RCW who was selected by the board of directors.

While the law requires an appraisal, it does not say the purchase must not exceed that appraisal. We reviewed the District’s purchase and discussed the matter with legal counsel and determined the final purchase price was negotiated by the District and the seller and went through the proper approval process.

Thank you for bringing your concerns to our attention. If you have any further questions or comments, please call Chris Kapek, Audit Manager at (425) 257-2137.



10 comments: said...

Powerful Partners did not "disband" they changed their name. They continue to use space in the ESC under this new name.

The District's lawyers claimed that the Nobles were not violating board policies. It would appear the State Auditor's interpretation of the English language is similar to mine.

Still laughing over the requirement to perform an appraisal but not acknowledge the value it establishes.

Are we a state of bumpkins and knuckleheads?

Anonymous said...

To avoid prosecution, assistant superintendent spends $65 and legally changes name to Darla Diller.

Anonymous said...

It wasn't water under the bridge when the bookkeeper did it.

Perhaps if she was a member of the board...

Anonymous said...

"the final purchase price was negotiated by the District" suggests the District is as good at negotiating as Sonntag is at auditing.

Anonymous said...

Has anyone asked for the email sent to all HR stating that Tracy Penney has resigned effective 070708 at 5:30 pm?

Anonymous said...

Thank God. A chapter closed, and an opportunity to change the face of the district. Finally!!!

Anonymous said...

Don't forget to hug all the "Squirrels" on your way out the door. Wait be careful.... I forgot that you don't do so well with animals, tame or not! I might be able to hook you up with a positive step in the right direction. There is an animal in Southern California that seems to do real well with people. Especially good with kids. Have you ever heard of Mickey Mouse?

Anonymous said...

If the resignation of Tracy Penney is true, I would hope that the District would carefully "screen" her replacement. When Nikki Bowman was out of the office to care for her husband, who was ill, Tracy should have stepped in to assist Nikki in every way possible. She called in sick instead of jumping in to assure Ms. Bowman that she shouldn't worry about her "work load". It would be my hope that the District find another Karen Hardesty to replace Tracy. Karen is a real professional!

Anonymous said...

It seems pretty clear to those of us who deal with ESC employees who knows how to work and who doesn't.

I second the motion to clone Hardesty.

Here's a novel idea: have the people who know how to work do the hiring. That way we'll get workers hired rather than goof offs.

Anonymous said...

Good idea; have the employees, such a Ms. Hardesty, at least, be asked to be included on the hiring committee. As we all know, in most cases, it is not WHAT you know, it is WHO you know! Sad but true. Karen Hardesty is an excellent example of how an employee should conduct themselves, both professionally and personally.