Official statement released by Scottsdale Schools on latest Segal report

Mohave District Annex is at 8500 E. Jackrabbit Road in Scottsdale. (photo by Melissa Fittro)

The Scottsdale Unified School District has released an official statement acknowledging a preliminary report presented on the evening of Tuesday, Jan. 30, alleging former Chief Financial Officer Laura Smith’s conflict of interest.

Gust Rosenfeld attorney Susan Segal presented district officials and the Scottsdale Unified School District Governing Board with her preliminary findings on an internal investigation reviewing Ms. Smith’s ties to Mesa-based financial firm, Professional Group Public Consulting, Inc. The presentation was at the tail-end of a special meeting and executive session held at Mohave District Annex, 8500 E. Jackrabbit Road.

“Of note, she confirmed a conflict of interest existed with Ms. Smith, in violation of state statute,” the 10 a.m. Jan. 31 press release states.

“Ms. Segal confirmed, per an outside expert, that Dr. Birdwell would not have been aware of these actions, nor was she directly involved, adding it would have been unusual for these matters to be reviewed in the Superintendent’s office.”

The press release goes on to state Ms. Segal confirmed Superintendent Dr. Denise Birdwell had specifically cautioned against and instructed Ms. Smith not to approve change orders or payments to the company with which she was financially affiliated.

“A year ago, the board identified the need to fix our broken systems in order to change the status quo,” Governing Board President Barbara Perleberg said in a prepared statement.

Barbara Perleberg

“Those systems have plagued SUSD for decades. We chose to focus on the classroom and academic achievement first. While there have been strong gains in those areas, this investigation highlights the needs that exist in our back-office systems, as well. We will continue to strive to meet the challenges of serving the 23,000 students of SUSD with integrity and accountability each and every day.”

The press release states that Dr. Birdwell and the Governing Board will reiterate to staff that any and all requisitions for payment to vendors must comply with all internal control policies and industry standards.

“The Superintendent and the Governing Board regret the distraction and distrust this may have created, and look forward to moving forward in a positive and transparent manner,” the press release states.

Ms. Segal expects to deliver a full report on Ms. Smith to the Governing Board, she said in the Jan. 30 meeting.

The CFO’s conflict of interest arose following the district entering into a monetary agreement with Professional Group Public Consulting, Inc. — also known as PGPC — of which Ms. Smith is named president and director.

In her preliminary report Ms. Segal claimed Ms. Smith is one of four shareholders of PGPC; Ms. Smith signed off on five change order requests that increased the amounts of underlying purchase orders to PGPC totaling $16,072.40; and Ms. Smith signed off on six purchase orders to PGPC totaling $43,766.35.

Ms. Segal believes Ms. Smith is in violation of Arizona Revised Statute section 38-503, which covers conflict of interest, and Governing Board policy.

Ms. Smith arrived at SUSD in February 2017.

The former CFO was placed on administrative leave Wednesday, Jan. 24, pending the ongoing investigation. She officially sent her resignation to Dr. Birdwell on Friday, Jan. 25. The Governing Board accepted her resignation unanimously on Jan. 30.

Within her resignation letter Ms. Smith states that she mistakenly signed two change orders regarding purchase orders to compensate PGPC for services. She called it an inadvertent mistake.

The Arizona Attorney General’s office also has an ongoing investigation into the Scottsdale Unified School District, it confirmed in November 2017.

Northeast Valley News Services Editor Melissa Rosequist can be e-mailed at mrosequist@newszap.com or can be followed on Twitter at twitter.com/mrosequist_.

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