State audit slams top-heavy JCPS bureaucracy

This from the Courier-Journal:

Jefferson County Public Schools has a top-heavy bureaucracy, with too many administrators who are paid too much — robbing resources that could be used for classroom instruction, a major state audit has found.

JCPS Supt Donna Hargens

A 260-page report released Wednesday by state Auditor Adam Edelen found that the school district pays 369 administrators more than $100,000 a year —more than the 281 in Kentucky's entire executive branch.

Comparing Jefferson County with five similar school districts across the United States, the audit found that Jefferson County spent the least on instruction and the most on administrative costs. The district also had the lowest percentage of employees who were teachers — 43 percent — and the highest percent of administrators, at nearly 10 percent.

The audit also found that the district board members do not generally have the "depth of understanding required to actively examine or question the budget effectively without significant reliance on JCPS staff," which it said is "not conducive for proper oversight."

"This report paints a picture of a bureaucracy that benefits itself and keeps the board in the dark rather than supports excellence in the classroom and a public mission of transparency and accountability," Edelen said in a statement.

In a written response, Superintendent Donna Hargens said the district had already taken a number of steps recommended by the audit, including freezing central office staff and administrative salaries in 2012-13, increasing instructional spending, starting a review of policies and plans to revamp internal auditing.

"Your recommendations will better our operations," Hargens wrote, noting the board will provide a full response within 60 days and present the board with a plan to implement changes.

School board member Debbie Wesslund said the board has been "focused relentlessly on improvement."

"We have invested in multiple audits over the past few years, and they have helped the administration streamline significantly and target resources to schools," she said. "The key is that they have been constructive and supportive of our school system, building us up. An attitude of support is key to our success."

In the office's largest review, Edelen's staffers had spent much of the last year examining the administration of state's largest school system, which serves more than 100,000 students on a budget of nearly $1.2 billion.

DATABASE: Look up JCPS salaries

RELATED: Read the full report

MORE: Audit makes 45 findings

Conducted at the request of the Jefferson County Board of Education at a cost of roughly $125,000, the review covering 2011 to 2013 wasn't meant to focus on any allegations of "waste, fraud and abuse" or on individual schools, Edelen said, and no criminal wrongdoing was uncovered.

Instead, the audit focused on the district's central office and administration, in part by comparing it with similar school districts in Austin, Texas; Baltimore County; Charlotte-Mecklenburg, N.C.; Cobb County, Ga.; and Pinellas County, Fla.

The report said one of JCPS' weaknesses was that the district failed to test itself against its peers.

The audit makes 45 findings and 200 recommendations in areas such as spending, policies internal auditing, contracting and board oversight.

It found JCPS ranks at or near the bottom in categories involving teacher staffing and expenditures for instruction, while ranking highest in the categories of school administrators, support staff, and instructional aides.

The district had the second-highest student to teacher ratio, and ranked the lowest in instruction spending, at 53 percent of its budget (four of the other five were 60 percent or higher), while ranking highest in administration and operations spending, at 31 percent of its budget.

"The number of school administrators and support staff as a percentage of total staff is nearly double the rate of one of the benchmark districts," Edelen said in a statement. "That indicates that much of the administrative bloat exists at the school level, not in the central office."

In comparison to three peer districts, JCPS central department employees are paid a higher average salary and have more employees, earning over $100,000 annually. Employees working for the central departments exceeded the next highest average at Cobb County School District by $5,866 and the lowest reported average at Charlotte-Mecklenburg by $18,551.

It also found that JCPS students face more restrictions on access to textbooks and other classroom resources than many other Kentucky districts. Compared with its peer districts, and had the lowest textbook budget — mostly because the state provides no funds. More than half of teachers said students couldn't take home textbooks.

In addition, central office provides on limited monitoring of textbook funding, decided by individual schools — which get textbook funds of $20 per elementary and middle school student, and $40 per high school student.

Nearly half of teachers surveyed said their school provided inadequate instructional resources for all students, according to a survey of more than 1,500 of the district's 6,400 teachers. Partly as a result, more than 90 percent of teachers spent personal funds to supplement classroom resources.

"Most spend hundreds of dollars a year," Edelen said in a release. "A teacher should have the prerogative to use personal resources for the classroom, but no teachers should feel they have to due to a lack of funding."

When it comes to governance, the audit found that Board of Education members generally lack "a depth of understanding" to question the budget effectively without significant reliance on JCPS staff, the report found.

Edelen noted that some board members admitted to not knowing what some budget line items really meant, and were not regularly revisiting the actual spending in comparison to the budget.

It also lacks a committee structure to provide a detailed level of oversight of financial and audit matters. The audit recommends adding two "at large" board members to the seven-member group, along with better training for board members and creating a budget subcommittee.

"The Board that may be too small to effectively oversee the District's finances and operations," the report said, noting that he board "has not actively examined or questioned staff" in budget matters.

The audit also found a lack of monitoring and oversight from the central office of district contracts, which numbered over 1,700 during the review period. The district does not maintain a central database of those contracts. Edelen called it "unacceptable."

Auditors also identified contracts that are allowed to renew an unlimited number of times without reporting to the Board, including some as high as $146,000. Instances also were noted of payments made for invoices and construction change orders that did not comply with contract terms or lacked required supporting documentation, the report said.

"The practice of unlimited renewal opportunities for public contracts, coupled with the practice of non-periodic reporting of these renewals or continued contracts to the Board in a public open meeting of the Board does not lend itself to transparency and good public governance," the report said.

Further, it found poor documentation and lax oversight led to $5,561 in over-payments for capital construction change orders. The district spent $154 million on capital projects in the review period.

Edelen's report says the district could save $3 million a year by scrapping a costly and outdated system of six centralized warehouses that act as an unnecessary middle man in getting supplies to schools. Instead, a vendor could deliver such supplies at a cost savings, the report said.

The audit also took issue with a range of policies governing spending by employees, including purchasing card purchases that didn't have easy-to-access supporting documentation, and travel reimbursement guidelines were vague and lead to inconsistencies.

While a review of 287 travel reimbursements found most had proper approvals and documentation, some charges "seemed to accommodate personal comfort" such as extra leg-room fees and valet parking charges.

In addition, JCPS has not developed written procedures documenting the assignment process and allowable usage of JCPS owned vehicles taken home by staff, nor did it have a proper procedure for assigning phones.

But oversight is lacking in some areas. For example, the internal auditors - who examine school activity funds, attendance and other areas - report to the superintendent, and not the school board, as Edelen recommends. The audit also found inadequate policies to "to investigate, monitor, or report hotline complaints."

"No serious abuses or waste were found at the central level, but it doesn't mean it didn't occur in the past or that it couldn't occur in the future," Edelen said. "When you don't have adequate and consistent controls over things like travel, credit cards, leave time, take-home cars and cell phones you are increasing that risk."

More than a dozen findings centered around information technology, including those involving "security vulnerabilities and describe a situation where students and employees may be potentially exposed to the inadvertent loss or intentional theft of private, confidential data."

Edelen has conducted audits in a number of other school districts as Dayton Independent, where the former superintendent was found have received $224,000 in unauthorized benefits and payments. Other audits found excessive travel and resulted in resignations.

In 2012, auditors hired by the JCPS board found problems including inadequate curriculum at middle and high schools but called the district fiscally sound. Experts who conducted an organizational review in 2011 said they found problems such as overpaid administrators.

Hargens has since reorganized district administration.

Edelen said the 200 recommendations in his audit could save taxpayers tens of millions of dollars, reduce the risk for fraud and abuse and increase transparency.

In a statement, JCPS Board Chairwoman Diane Porter said the review would "further empowers this board to confidently guide JCPS on its road to becoming the best urban school district in the country."