Follow-up: Scottsdale Schools implements 2 of 9 Auditor General recommendations

Top district officials last June discussing the results of an Arizona Auditor General's audit results. (File photo)

Top district officials last June discussing the results of the Arizona Auditor General’s audit results. (File photo)

The Arizona Office of the Auditor General last year issued a report showing that while the Scottsdale Unified School District was on instructional pace with comparable Arizona districts in fiscal year 2012, its administrative costs, transportation system efficiency and financial reporting practices were not and were in need of improvement.

Six months later, the Arizona Office of the Auditor General says two of its nine recommendations to bring out-of-whack financial reporting and inefficient operations in line with the Uniform Chart of Accounts have been implemented by leadership at Scottsdale Schools.

An official at the Arizona Office of the Auditor General believes the district is “more efficient” today than when the first audit was released last May, however, steps still need to be taken to reduce excess building space and to improve overall transportation operations.

The May 2015 audit revealed that between fiscal year 2004 and 2009, the district reported millions of dollars in electricity costs as in-classroom instructional spending. In fiscal year 2012 alone the report claimed the district falsely reported $5.5 million of in-classroom spending, records show.

The audit states while SUSD 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.

The Jan. 29 follow-up report coming out of the Arizona Office of the Auditor General shows SUSD leadership has yet to provide a review of what it intends to do with excess building space — a significant metric of cost impacting the bottom line at Scottsdale Schools.

The school district was also asked to examine administrative costs that showed SUSD was spending 11 percent more per pupil — which equates to $687 per pupil — compared to the $620 peer group average.

Scottsdale Unified School District Chief Financial Officer Daniel O’Brien says administrative cost swings are the results of staffing assistant principles and principles now present at every school site.

“The district was very transparent through the override process and it was very clear from our stakeholders that assistant principals and principals at every site were a priority,” he said in a Feb. 3 written response to e-mailed questions.

“We have brought back seven assistant principals and one principal because that was what was approved by our voters in the maintenance and operations Override. Administrative costs are always under review and we continue to monitor and adjust positions to assure that they facilitate and support learning.”

Transportation costs were shown to be significantly higher at SUSD compared to the peer districts during the time of the audit. SUSD was operating four of its 31 SUSD bus routes with seven or fewer riders, the audit shows.

Mr. O’Brien says the school district is constantly trying to improve transportation efficiency.

“We follow the state formula and within that there are some complications because we have some short rides and long rides going around mountains and canals,” he said. “We continuously work with our transportation department to ensure our students are safe.”

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

The implementation

“SUSD has begun implementing all of the recommendations,” said Scottsdale Unified School District Governing Board President Bonnie Sneed in a Feb. 3 written response to e-mailed questions.

Bonnie Sneed

Bonnie Sneed

“A few are recognized as implemented, but in the testing phase or scheduled for follow-ups. The transportation recommendations are being addressed by a new director of transportation and a systems merger. Changes in bus routes and stops are best implemented during summer break, so that they don’t adversely affect the students and parents. I’m confident that a follow-up visit will show increased efficiencies.”

To read more of Ms. Sneed’s comments on this issue go here

Governing Board member Pam Kirby says she doesn’t know much about the progress of the implementation of the Auditor General recommendations.

“Of the seven recommendations ‘still in process,’ the board has discussed the progress of one of those recommendations: Disaster recovery planning,” she said.

Pam Kirby

Pam Kirby

“Unfortunately, since the board has had no discussion in the past six months on the remaining six ‘in process’ recommendations, it’s difficult to comment on true progress made against them.”

Ms. Kirby says the upcoming budget process will shed light on the financial impacts of the recent audit.

“I’m hopeful we see SUSD’s plans to address these opportunities through the upcoming budgeting process as they all have financial impact,” she said.  “Clearly, building usage and excess capacity is the most challenging recommendation because of the visioning, long-term strategic planning and courageous leadership required to properly address.”

A two-year process

According to Arizona Auditor General Audit Manager Mike Quinlan, the follow-up process will ultimately be a two-year process.

“Clearly as part of that process, we have a lot of discussion with the district folks so that we can help them in anyway with our recommendations,” he said in a Feb. 2 phone interview.

“We conduct them each six months for 24 months. Sometimes we are done before then. We stop when the district has done all of the recommendations.”
Mr. Quinlan says the purpose of the audit is not necessarily about compliance.

“I try to get folks to look at these audits as different from compliance audits,” he said.

“The reason I look at these differently is because these are steps the district can take to improve efficiency to operations. But it is up to the district if they and how they go about implementing the recommendations.”

Mr. Quinlan points out the Auditor General does not expressly offer solutions to problems and does not rate the level of significance of certain issues brought to light because of the audit.

“We don’t tell them what it is they have to do. We found that Scottsdale has a lot of building space,” he said. “This is something you really need to address because that accounts for a lot of your expenses. We have talked to them about options. But our purpose is not to tell them what to do.”

Mr. Quinlan explains, from his view, SUSD is becoming more efficient.

“They have made some progress on all recommendations,” he said. “We do often get questions about which of the recommendations are the most significant. That really is not what our findings are about. We don’t really look at what was significant. That being said, when you look at that report there are certain things that stand out.”

Those things appear to be excess building space, expenditure codings impacting classroom spending levels and significant inefficiencies in the transportation department, the follow-up report states.

“They have made significant improvements in terms of transportation costs and the options we presented them with,” Mr. Quinlan says.

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

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