Schools CEO Andres Alonso Defends Financial Management to Parents, Staff

Baltimore schools CEO Andrés Alonso sent out the below email addressing the findings of the Office of Legislative Audits and defending his role in the school system’s financial oversight. -The Eds.

Dear City Schools Colleagues, Staff, Partners and Friends,

I am writing to share with you the results of the state’s 2012 audit of Baltimore City Public Schools. Conducted by the state Office of Legislative Audits (OLA), the audit is part of a regular schedule of state audits of Maryland school districts that focus on systems and controls, and the degree to which they allow districts to operate in the most efficient and fiscally sound manner possible. The OLA’s first audit of the district was released in 2006. Today, the office released its second audit of City Schools. Please read it here.

While the state restricted the district from commenting on the audit and any of its findings until today’s release, you may have heard about it as part of The Baltimore Sun’s recent coverage of a set of “discussion notes” between OLA and City Schools that are from last spring. As the auditors’ assessment was refined, some of those early notes made it into the actual audit report while some did not. I want to share with you some information about the audit that was released today and what we as a district have done since the audit was conducted—and continue to do—to address the audit findings and recommendations.

But first, let me state that we take the audit recommendations extremely seriously. We also welcome them, in the same way we welcome the many internal and external audits that are conducted each year on City Schools. They provide feedback that helps us get better at providing the best possible education to 85,000 students.

The 2012 OLA audit, which focuses on transactions in 2009-10, points out ongoing progress in City Schools’ systems and controls since the last OLA audit in 2006, which focused on 2003-04 transactions. The 2012 audit contains 26 findings, compared with 46 findings in the 2006 audit, 9 of which were repeat findings from the first audit. The 2012 audit asserts that the district “satisfactorily addressed a number of the prior audit findings” and references “significant improvement with regards to compliance over federal grant programs since our prior audit.”

To give a bit of context, it’s worth noting that the number of findings in the 2012 audit for City Schools—26—is in keeping with the number of audit results for other large Maryland districts in the first round of OLA audits (e.g., Prince George’s County had 72 findings, Anne Arundel County had 30 and Howard County had 22)

In addition to the 26 findings, the 2012 OLA audit for City Schools includes 26 detailed recommendations for improvements in a variety of areas, including payroll, procurement, transportation and facilities—all based on what the auditors saw in their review of transactions in 2009-10 during the last two years. Throughout the audit process, City Schools has been working on many of these 26 recommendations, as part of its ongoing efforts to improve the way the district works. As the City Schools responses in the report appendix describe, we have already taken measures to resolve 10 of the recommendations, and steps to address another 15 are now underway. (As is common in this process, there is one recommendation for which our practices do not agree with the OLA recommendation.)

Again, I encourage you to read the 2012 audit—both OLA’s findings and recommendations, and City Schools’ responses—to see what steps we have taken and currently have underway. Here are a few examples:

• The OLA audit of City Schools notes the need for stronger internal controls in the areas of payroll and procurement. For example, the report notes 45 amounts, totaling $336,000, that were past due from former employees who were issued payroll bonuses but who left the district before fulfilling their commitments to earn those bonuses (such as committing to teach a full year at a certain school). At the time of the finding in 2010, none of these debts had been referred to a collection agency. Since then, all of them have been collected or referred to a collection agency, and new billing processes have been put in place to collect such debts in a timely fashion.
• The audit report recommends changes in City Schools’ overtime documentation. While supervisors have always approved every overtime expense in the official payroll system, the accompanying paperwork was not always current. Since the time of this audit finding, City Schools has streamlined the approval and confirmation process to ensure tighter controls. A random spot check of records in September 2012 by the district’s Finance Office found no discrepancies between time sheets and approvals in the payroll system.
• The audit recommends that City Schools strengthen its ethics policy and establish an ethics panel. City Schools has taken both steps.
• The OLA audit highlights a repeat finding that calls for a facilities plan that considers “facility conditions, capacity and space utilization, and an analysis of future school facility needs.” As you know from various communications from me in recent months, the process to develop a 10-year buildings plan that will tackle this difficult challenge is now underway and we expect to have a plan in hand by year’s end. This is a critical body of work, and one where the leadership of the mayor and other state and city officials and key partners gives us confidence that we will be able to move our 85,000 students out of substandard school buildings and into modern buildings that support 21st-century learning over the next 10 years.