Scottsdale school board gets AG audit findings explanation

The Scottsdale Unified School District Governing Board hosted a special work session discussion on the recent findings of an Arizona Auditor General performance audit. (Independent Newsmedia/Terrance Thornton)

The Scottsdale Unified School District Governing Board hosted a special work session discussion on the recent findings of an Arizona Auditor General performance audit. (Independent Newsmedia/Terrance Thornton)

Scottsdale Unified School District Superintendent Dr. David Peterson says the buck stops with him.

A May 14 Arizona Auditor General performance audit revealed while Scottsdale Schools was on instructional pace with comparable Arizona educational entities in fiscal year 2012 — it’s administrative costs, transportation system efficiency and financial reporting practices were not.

Dr. David Peterson

Dr. David Peterson

The SUSD governing board called a special work session discussion Thursday, June 4 at Coronado High School, 7501 E. Virginia Ave., to discuss the audit results, and, in some cases, get an explanation of what one school board member calls “a lack of respect for peer district comparisons.”

The district, from fiscal year 2004 to 2009 reported millions of dollars in electricity costs as in-classroom instructional spending, which is in violation of the Uniform Chart of Accounts. In fiscal year 2012 alone the audit claims the district inaccurately reported $5.5 million of in-classroom spending.

In addition, the audit reveals while Scottsdale Schools plant operations were at a lower cost per square foot to its peer districts in fiscal year 2012 its cost per pupil was 8 percent higher, which resulted in the district spending fewer dollars in the classroom.

Superintendent Peterson says certain years of the inaccurate recording of costs occurred before his tenure and the out-of-whack administrative costs are due to the district having assistance principles at district schools.

“I can tell you when I assumed the role of CFO I contacted the Auditor General and I put a stop to this practice,” he said at the meeting of the inaccurate recording of electricity costs. “This started way before I came on as an employee of the district.”

Superintendent Peterson says he took on the role of chief financial officer for the district in fiscal year 2007-08.

Pam Kirby

Pam Kirby

Pam Kirby, SUSD governing board member, says according to her calculations the district may have falsely reported over $8 million in classroom spending over the period of time identified by the audit.

“So that was a two-year period,” Ms. Kirby said of knowingly reporting inaccurate electricity costs. “How many years do you get to have a hall pass?”

Superintendent Peterson says he is the person ultimately responsible for all SUSD administrative activities.

“I’ll shoulder that, I absolutely did that. Yep, we screwed up. We make mistakes,” he said in response to Ms. Kirby’s line of questioning. “People make mistakes, I see you smirking there Ms. Kirby. You can believe what you want to believe.”

Barbara Perleberg, SUSD governing board member, says she is getting two sides to the audit narrative.

Barbara Perleberg

Barbara Perleberg

“From my understanding in talking with the Auditor General, in an annual review they couldn’t get into that detail to identify this,” she said. “This type of detail wasn’t there. It wasn’t until they did a performance audit they would have even known about the coding. It was your perception that other school districts were doing it as well.”

Ms. Perleberg says she is under the impression district officials were aware of the inaccurate financial cost coding.

“I struggle with the characterizations of these things,” she said. “When you decide to code millions of dollars incorrectly, again, I am having questions of intent. I am concerned that this dialogue and the coding shows a lack of respect for peer district comparison. Where the truth lies, I will give you that, it’s somewhere in the middle.”

Changes to continue

In fiscal year 2012, Scottsdale Schools was an “A” district, according to the Arizona Department of Education A-F Letter Grade Accountability System.

During that same period of time Scottsdale Schools did operate an efficient food service program, which was provided at a lower cost than its peer districts, the audit shows. But administrative costs per pupil were 11 percent more, which equates to $687 per pupil compared to the $620 peer group average while transportation costs were significantly higher, the audit shows.

During that year SUSD was operating four of its 31 SUSD bus routes with seven or fewer riders.

“We have buses that are empty in the morning but that are full in the afternoon,” Superintendent Peterson said of the high transportation costs described in the Auditor General review. “But we did not spend more money than we received for transportation. We spent less than we actually received compared to other districts.”

Since the time of the audit, Superintendent Peterson says the district has consolidated stops, re-evaluated purchasing practices and reduced total routes from 166 to 144.

“We purchased 84-passenger buses and we shouldn’t have,” Dr. Peterson admitted but pointed to a reduction in cost-per-square-mile for SUSD transportation from $4.31 to $3.96 over the last three fiscal years.

“We have made changes, and we will continue to make changes.”

This snapshot in time reveals Scottsdale Schools operated its administrative organization and facility management less efficiently than its peers while instructional achievement remained in-line with its fellow public school systems, the Auditor General conclusion states.

SUSD’s peer districts include locally the Mesa Unified School District and Phoenix Union School District, according to the fiscal year 2014 Auditor General District Spending Report, which is presented annually to the Arizona Legislature.

Since 2003, the Auditor General’s office has been empowered by the Arizona Legislature to conduct random performance audits of Arizona School Districts.

Bonnie Sneed

Bonnie Sneed

Despite the criticism leveled at the district by the report, SUSD Governing Board president Bonnie Sneed says she was assured there was nothing “alarming or unusual” within the findings, and that the Auditor General will conduct a follow-up per general practice in about five months.

“I asked him as a school board member, what should we do. He had one response: Promote your district,” she said but pointing out she is not ignoring the audit results.

“I am dealing with the realities and at this point we have to go along with what we are hearing,” she told her fellow board members. “We have to sign a budget in what? A few weeks?”

George Jackson, SUSD governing board member, says he doesn’t understand why the audit is topic of conversation.

“This is a practice that Dr. Peterson put a stop to. I don’t understand how this is relevant at all,” he said. “Like Mr. Peterson said, ‘mistakes happen.’ I think this is dangerous, and I think it is irrelevant.”

Ms. Kirby has a different perspective.

“It wasn’t just one year of miscoding $3,000 dollars. This is over the course of 11 years and over $8 million falsely reported. It is a pattern and I have trouble believing the explanation being offered here.”

Northeast Valley Managing Editor Terrance Thornton can be contacted at tthornton@newszap.com

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