Donley: ACPS Fund Mismanagement 'Begins at the Top'
Alexandria vice mayor says the mismanagement of capital improvement funds by the school system doesn't inspire a lot of confidence.
Alexandria Vice Mayor Kerry Donley took the city’s school system to task Tuesday night over the mismanagement of funds related to its Capital Improvement Program.
In November, an audit of certain Alexandria City Public School financial records revealed that employees no longer with the system made inaccurate initial cost estimates and expenditure authorizations that exceeded the budget.
The mismanagement was related to approximately $4.1 million in vendor invoices that had not been processed for payment. The increased costs were primarily for the installation of modular classrooms at James K. Polk Elementary and a classroom addition at Charles Barrett Elementary.
Donley brought up the issue Tuesday as City Council formally moved to allocate about $6.35 million of preapproved funds for ACPS capital improvements. Roughly $2.8 million in the allocation that was supposed to be used toward improvements at Mount Vernon Community School, John Adams Elementary, Samuel Tucker Elementary, Minnie Howard and William Ramsay Elementary will instead go toward cost overruns.
“In any financial office where there’s accounting, it is not acceptable practice to authorize the expenditure of more money than you have,” said Donley, who is also an executive with Virginia Commerce Bank. “That is called an overdraft. … I think it’s unfortunate. You’re certainly within the overall CIP, but these five other school projects are going to be shortchanged because of the problems associated with the operation of the budget office in entering into a contract beyond which [ACPS] had budget authority.”
Deputy Superintendent Margaret Barkley Byess told council that the results of the audit prompted ACPS to significantly change internal controls involved in the management of CIP funds.
“It has had some profound impacts on personnel and on local businesses because of what happened,” Byess said. “I wish there was a way to go back two years, which is as far back as we need to go, and change all this. … The appropriate levels of approval were not in place. People were approving contracts that they should not have been.”
Donley said the mismanagement also would have broader implications in the budget process involving the city and the schools. He said the issues don’t “inspire confidence” and won’t make it any easier for council to commit more capital funds.
“Here we had the opportunity to peel off $2.8 million of that maintenance that [Superintendent Morton Sherman] at our previous work sessions just pleaded to us that we needed to spend more money doing it,” Donley said. “Here was $2.8 million where we had an opportunity and because really the lack of control and the lack of management—and quite frankly as far as I’m concerned that begins at the top—that’s the lost opportunity.”
Sherman is recovering from hip replacement surgery and was unable to attend Tuesday’s council meeting.
Council has a budget work session with the schools at 7 p.m. Wednesday at George Washington Middle School.
“Given [Wednesday] night is going to have a lot of conversations about capital, and I know there are going to be a couple of specific capital items where the schools are going be asking the city to provide additional capital resources, I think you can assume this issue is going to come up again in some form [at the work session],” Councilman Rob Krupicka said.
Gail G
10:25 am on Wednesday, February 29, 2012
Bravo, Councilman Donley. Somebody needed to say something.
matt tallmerq
3:10 pm on Wednesday, February 29, 2012
At last, Ms. Gordon and I agree on something.
Will Anderson
3:24 pm on Wednesday, February 29, 2012
Vice Mayor Donley and the Council must hold those in charge of our school system accountable for their actions. The mismanagement of CIP funds is but one of a series of questionable and very troubling financial practices within ACPS. Contracts to individuals and programs with ties to the Superintendent should be scrutinized by the Council. The recently unearthed, ethically questionable, and potentially illegal practice of providing significant contributions to sheltered tax annuity accounts for members of ACPS senior staff, including the Superintendent, should also fall under the glare of the Council. ACPS is a school system which is too small to justify such outrageous expenditures even if the funding were handled appropriately. It is about time Mr. Donley and the Council gave the school system a proper dressing down about it's finances and the direction in which our schools are headed. Potential candidates should also take note of the disorder within our school system and make it one of their top priorities to address should they be elected in the fall. As Mr. Donley stated, the "mismanagement begins at the top." It is time to finally address this and demand a change starting at the very top of the pile.
matt tallmerq
3:35 pm on Wednesday, February 29, 2012
There's a problem: while ACPS receives the vast majority of its funding from the City, it is not controlled by the City. Council has no say over how ACPS spends its money; only the separately elected School Board does. Council doles out out the funds but cannot control its expenditure. If you want to change that, go down to Richmond and convince the General Assembly to eliminate the elected School Board and go back to having the Council appoint the Board. Lots of luck with that.
Leslie Hagan
4:02 pm on Wednesday, February 29, 2012
As a former School Board member and a 20 year ACPS parent, I am truly horrified and dumbfounded that this situation was allowed to occur. Where on earth where was the School Board during all of this? Haven't they been receiving monthly financial reports? If so, have they been reading them? Who is running the school system? What was once a truly fine public school system seems to be now in very troubled waters . Although Mr. Donley and I have had our disagreements in the past, I am totally in concurrence with him on this issue. While I was on the Board, I firmly believed that the Board alone was the responsible party for managing the school system and the Board had very strict rules and oversight concerning the transfer of funds from one budget item to another, especially in the CIP. However the seeming abrogation of the current School Board of what should be their duties has led to a troubling forfeiture of those duties. There seems to be a major disconnect between the School Board and what is actually happening in our schools on a day to day basis. Attention must be paid.
Boyd Walker
10:27 pm on Wednesday, February 29, 2012
I just returned from the joint worksession between the School Board and the City Council, and the question about this money and payment of annuities into tax free shelters was not answered adequately if at all. The new Chief Financial Officer for the Schools said safegurads and new practices were being put in place. Art Peabody siad that the School board must take responsibility for thes failures, but pointed out that the school board went from budgets that did not "track" (meaning that numbers were not consistent) to budgets that now get commodations from several ratings agencies, and that independent agencies hae looked at the discrepancies in voucher payments for constructions. Charles Wilson said that the annuity payments are contractual and part of contracts that are negotiated with senio administration and save money (33%) as opposed to straight salary. I hope they are part of smart negotiations, but I do think that the whole issue should be looked into further by council, and determine if any of the allegations are true. I do also remember hearing that these payments started under Rebecca Perry and they are at the discretion of the the Superintendent. Any conerns should be quickly addressed and cleared up, which they were not this evening.
Donna Schmidt
8:38 pm on Friday, March 2, 2012
The TSAs under Perry were for $1000, not in contracts, and not every year. That's very different from the TSAs received now.
Andrea Naven
7:54 am on Thursday, March 1, 2012
Let us not forget that ratings agencies also gave high ratings to subprime mortgage bonds. The nod of a rating agency should not be the lone gauge of whether the practices within ACPS are ethical within the confines of a public agency. And these "independent agency" reviews cost us even more money on top of any discrepancies. What is the justification for providing the annuity payments for only senior staff? If it is a cost saving venture, then why not offer these annuity payments throughout the district? If it is a matter of attracting employees, again, why not offer it throughout the district? Are we to believe that ACPS only wants to attract top-notch administrators with these practices but do not feel they should seek to attract top-notch teachers who actually work daily with our students? And what have these payments produced? Are the ends justifying the means? The Superintendent is paid a base salary of just over $244,000. The Superintendent also receives an annuity payment of $40,000 and a monthly car allowance of $650. That is $291,800 spent on one position within a PUBLIC school system which has only one high school, a high school which continues to fail to make adequate yearly progress under the current Superintendent! Increased responsibility and accountability within an agency merits a higher salary, what it does not merit is an entirely different payment system unavailable to others within the agency. If Council's hands are tied, hand it to voters.
matt tallmerq
8:11 am on Thursday, March 1, 2012
Ms. Naven & Mr. Anderson: If you want to change the current situation, the solution is theoretically simple -- convince the members of the General Assembly representing Alexandria and the City Council to propose reinstating an appointed school board. Getting it through the General Assembly may be a bit more difficult, since the Council and other elected officials seem to spend much of their time bashing the Gov., Lt. Gov., and Assembly Speaker -- all of whose support they need to pass legislation. That may be a reason much of the City's proposed legislation went down, and has historically gone down, in flames.
Leslie Hagan
1:14 pm on Thursday, March 1, 2012
Please keep in mind that even an appointed School Board is a state board, not a local one. Council could add or subtract the school system's budget bottom line but would still not have a line item veto so to speak.