Wednesday, January 31, 2007

Audit turns up 'questionable' spending in Jersey City school district
Already beleaguered with reports of lavish spending on overtime for custodians and painters, now a state audit has turned up hundreds of thousands of dollars in "questionable" purchase orders and spending practices in the state-run Jersey City School District.

Auditors looked at a random sampling of 304 purchase orders, and had problems with 91 of them, or nearly 30 percent. The questionable purchase orders total more than a half-million dollars.

Their findings could be just the tip of the iceberg, as the district generates about 25,000 purchase orders every year.

The audit found employees who were paid after they died; employees paid after they were fired; employees whose birth date had them older than 99 or younger than 10; employees who had the same name, address or Social Security number as vendors; vendors who were paid more than their original purchase order; and tens of thousands of dollars paid to an Atlantic City hotel for a three-day retreat.

See the whole story in tomorrow's Jersey Journal.

Ken Thorbourne

Audits question $15M in school expenses
Of the 4 large state-run districts reviewed, Camden comes under greatest criticism

Wednesday, January 31, 2007
BY JOHN MOONEY AND KASI ADDISON
Star-Ledger Staff

Outside audits of four of New Jersey's largest and most troubled school districts found inadequate financial controls and raised questions about more than $15 million in expenses.

Despite years of state oversight in all four districts, the reports found Newark, Jersey City, Paterson and Camden schools all need immediate attention in areas including payroll, accounting and purchasing.

Among the findings by the state-hired auditors:

# In Camden, more than $13 million in expenses was "questionable."

# Purchases from an open account held by Newark superintendent Marion Bolden included figurines, decorations and a $1,795 jukebox.

# Jersey City administrators spent thousands of dollars for out-of-state and overseas trips.

# In Paterson, custodians could double their pay through overtime, and controls were so lax that more than 2,000 purchase orders exceeded their stated dollar amounts by a combined total of more than $6 million.

State officials said the latest audits, conducted by the accountancy firm KPMG, were about ensuring that the state's money is well-spent and the children are getting educated.

"There is definitely progress that has been made, but there are still things that need to be fixed and done differently," said Education Commissioner Lucille Davy.

"Catering bills, floral bills; there was one airfare to Houston with no people identified, nothing about what they were going to do," she said. "Some of this may have a good explanation, but bottom line is: This is public dollars, and the work has to be done and the paper in place to support the money being spent."

Although a state intervention team has been in place in Camden for several years, the auditors found few uniform procedures or controls there.

For example, auditors reported how, upon starting their review, they immediately sought the district's manual of standard operating procedures.

"It became evident after only a limited number of interviews that the procedures in the manual were simply words on a page and not applied in the course of district operations," read the audit's executive summary.

The report went on to list more than 260 questionable expenses out of the 330 reviewed.

Most appeared to be for services and supplies that weren't properly documented or documented at all. But there were also tens of thousands of dollars for staff trips and catered food, $5,000 for the former superintendent to lease a 2002 Volkswagen, and nearly $800,000 for mechanical work in the elementary schools when the board approved no more than $400,000.

Adding to Camden's problems are multiple scandals over finances and test cheating over the last two years. Auditors noted in their report that some of the missing documents had been subpoenaed in separate investigations -- and no one had made copies.

The results of the audits, commissioned by the Corzine administration, were released as Gov. Jon Corzine and his administration craft a new school finance formula that many predict will reduce state aid to the needy districts covered by the Abbott v. Burke school-equity rulings.

They are not the first troubling audits of the state-run schools; finances in Newark and Paterson schools, in particular, have come under scrutiny at various points in the last five years. The criticism has left the state second-guessing its takeovers and looking for an exit.

District officials said they welcomed the extra review, although some were critical of the tight schedule for contesting the findings or documenting "questionable" expenses.

In Newark, officials said the audit confirmed many of the internal controls already put in place as part of a management restructuring several years ago. And they disputed many of the $446,000 in items cited as questionable, including the jukebox. Officials said it was purchased for a planned student center on Broadway.

If you are talking about a little less than half a million dollars out of a budget of almost $900 million, you have to think the district is doing pretty good and the state is being nitpicky," said advisory board president Feliz Rouse.

Added business administrator Ronald Lee: "If this is the worst Newark has to offer, then they are doing okay."

Rouse also pointed at the state's own role in the district after taking control in 1995: appointing its superintendent and keeping its audit teams housed in the district.

"State control means the state is responsible for operating our district," he said. "They were really coming in and looking at themselves. If you are going to point the finger, who are you pointing the finger at?"

The reports came out of the latest court rulings in the Abbott v. Burke case last spring, when Corzine sought to freeze state spending in those districts. In making the request, the state agreed to audits of management in all 31 Abbott districts, starting with the four released yesterday.

According to the department's fiscal 2007 budget, more than $1.03 million was earmarked for the four audits, and $2.25 million was budgeted for the remaining 27 districts.

Jersey City's superintendent Charles Epps Jr., who is also an assemblyman, said nothing in the Jersey City audit surprised him. He has long been dogged by questions about his and his staff's outside trips, including to conferences in Germany and England.

"I think we have justified those," he said.

But overall, Epps said, the audit contained worthwhile advice.

"It's another eye to look at where we are," he said. "Based on that critical eye, we are already making some changes to improve things."

Paterson superintendent Michael Glascoe said he also expected the audit "wouldn't paint a rosy picture."

"There have been audits here for a decade and nobody has done anything about them," he said. "A lot of this we have begun to address, but we will put the necessary procedures in place."

Camden officials said they, too, would take the audit to heart. The time covered by the audit was under superintendent Annette Knox, who left under pressure last year over several mounting scandals.

"It is a comprehensive and detailed report that has great promise to help us to correct matters and to improve our district," said interim superintendent Leonard Fitts in a statement.

John Mooney may be reached at (973) 392-1548 or jmooney@starledger.com.