Fox Audit Response Review

6 Jun

I would like to review some of the responses that the Fox district submitted as part of the state audit of the school district. Pat Martin said in the June 2 Leader that he’s never seen an audit where “the responding entity was in such complete agreement with the criticisms offered by the auditor.” However, there were a few places where Fox disagreed or at least was not very enthusiastic with the auditor’s recommendations. And there were some deflections of blame.

  • The District believes that most of the irregularities regarding former Superintendent Dianne Critchlow’s contracts identified by the audit findings resulted primarily from acts of Dianne Critchlow and acts or omissions of persons holding the post of Chief Financial Officer, namely James Berblinger, or his successor Mark McCutchen. Fox C-6 Board of Education expects staff to properly implement all Board decisions. The Board of Education disapproves both the acts or omissions that (1) increased Critchlow’s compensation without Board action and (2) compensated Dianne Critchlow greater than provided within her approved contracts. Critchlow, Berblinger and McCutchen are no longer employed by Fox C-6 Schools. (page 14)

The disapproval language was repeated several times. Yeah, they expect staff to do their jobs, and they disapprove of the bad acts, but as we have seen, there was little oversight. The board does not acknowledge this in its response. This is despite the state auditor’s statement that “Checks and balances were not in place. There was no accountability and no oversight by the board.”

  • It is worth noting the significant resistance toward strengthening the provisions of the anti-nepotism policy. Due to active opposition to appropriate anti-nepotism practices, it required three separate progressively strengthened versions over many months to attain the current strong anti-nepotism policy. (page 26)

I suspect this was put in there by the district because the first nepotism policy change took place in June 2013 while Critchlow was still superintendent (and her husband was principal and board member David Palmer’s wife was director of nursing). This was after board member Linda Nash’s daughter-in-law was hired as food service director despite questionable qualifications. The change was declared by district critics to be watered down.

It appears that Critchlow drove the wording of this policy change. “[Then-board member Steve] Holloway said the new policy was a carefully crafted compromise by the board based on research by Superintendent Dianne Critchlow of other district’s policies. He also said the board believed barring the hiring of all relatives would be too restrictive.”

The nepotism policy was tightened further in November 2014, after two more board members were replaced, when Jim Wipke was named superintendent.

  • In reporting that the district will spend up to an extra $5.6 million in interest costs due to not having open competition for bond sales, the auditor recommended that competitive bidding in future sales. The board responded:

The District agrees with the intent of pursuing open competition in bond sale transactions; however, the District holds the opinion that it is preferable and financially advantageous when open competition is structured to take place when the bonds are sold into the financial markets versus sealed bid sales to a reselling underwriter/broker which must factor in the cost of market risk of time between the date of the bid and the eventual availability of bonds several weeks later. (page 30)

To which the auditor responded: “The in-depth analysis of GO bond sales practices conducted by the State Auditor’s Office (referenced above) provided evidence that the potential savings the district could achieve via competitive sale outweighs any timing issues.”

In a dispute such as this, I would trust the auditor ahead of the district that was doing it wrong all these years. This may be moot though, because one would think Fox voters are unlikely to trust Fox with a bond issue in the near future (but who knows).

  • The audit noted several concerns with the way petty cash accounts are handled throughout the district. The district responded: “In August 2014, appropriate policy and procedures were developed regarding petty cash funds…The District acknowledges that all schools did not follow the policy.” (page 40)

In fact, the auditors checked five schools (Fox High, Seckman High, Ridgewood Middle, Antonia Elementary, and Rockport Heights Elementary) in December 2014 and found that none of them were following the new procedures. This was after Critchlow had departed from the district.

  • The auditor recommended “Consider appointing an internal auditor to conduct audits of district operations and activities,” stating that the savings created by an internal auditor could exceed the cost of the position and also enhance the annual external audit. The district said merely that it would “take this under advisement.” (page 56)
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