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New SAB Subcommittee Hears from OPSC Staff, School Districts about Revised Audit Procedures

By Jeff Hudson - August 14, 2009

The State Allocation Board’s new Audit Subcommittee held its first hearing on Tuesday at the state capitol, with the goal of “defining the scope of OPSC (Office of Public School Construction) Audit Authority.”

Over the course of three hours of testimony, the hearing produced a good deal of talk about a “new day” featuring better cooperation between school districts and the OPSC – and a bit of static stemming regarding the OPSC’s procedures and attitude toward local districts.

Sen. Alan Lowenthal (D-Long Beach) began the hearing by referring to what some districts have regarded as the “onerous process” of an OPSC financial review.

The first speaker was California State Auditor Elaine Howle, who said her independent agency had looked at the State Allocation Board’s recent effort to establish a three part accountability plan for projects as they are reviewed through the OPSC, including “up front planning, in progress accountability, and then follow-up accountability . .. We thought the program was structured very well,” Howle said.

Rob Cook, the OPSC’s executive officer, told the committee that the OPSC has been making changes.  “Our old approach could drag on for three years, back and forth with the district,” Cook said.  Cook said that in the past, “We had paper reviews (of projects), those were not audits.”  He said the OPSC has moved over the last two years toward “generally accepted government auditing standards” and “hired experience auditors from entities that have a breadth of experience.”  He said the situation is “substantially superior to when I took over (as executive director) in June 2007,” with the OPSC now following new and smoother procedures when field audits are done, including an entrance interview.

Dennis Mehl, OPSC audit supervisor, said that in the past, the OPSC had been conducting “desk reviews” rather than true audits.  “We are moving to a real audit function where people go out and look for supporting documentation,” he said.  “That’s what voters want, money being spent on their school buildings, not going into a slush fund somewhere.”

Subcommittee member Kathleen Moore, who is director of the School Facilities Planning Division at the California Department of Education (CDE), expressed surprise at several statements by the OPSC staff.  “I know that districts felt that the desk reviews (in the past) were audits,” she said. “How many districts know about this new process?”

Mehl responded that ‘the field audits started in the last month or two, we have only touched four districts this far. It is an evolving process. We’re just getting started.”

Moore remarked asked “What do districts know about this process, what guidance documents can they refer to? Yet we’ve started the program. Districts need to know how the system is going to work.”

David Doomey, past chairman of the Coalition for Adequate School Housing (CASH) and retired deputy superintendent with the Capistrano Unified School District, likewise expressed surprise after hearing the OPSC staff testimony.  “I learned today that we never had an audit with the OPSC . . .  I’m shocked” Doomey said.  “We submitted forms and expenditure reports, they were reviewed and monitored.”

Doomey added that over the course of 30 projects, his district “never had a conflict with OPSC,” but Doomey hastened to add that “I don’t know of any school district that has a slush fund.”

Subcommittee member Scott Harvey, who is chief deputy director of the Department of General Services, said “I agree with you that ‘slush fund’ was probably not an appropriate term.”

Mamie Starr, director of operations with the San Joaquin County Office of Education, also said “in the past . . . with OPSC investigators digging through the boxes. . . (OPSC reviews) certainly did feel like audits to us in the field.” She added that recently “the OPSC project guide just appeared on the website” at one point. “Did we get a letter or anything?” Starr asked.

Lettie Boggs, CFO with Colbi Technologies and a former assistant superintendent for facilities with the Anaheim City School District, said that “the audit process that districts are experiencing now has changed with little notification.  The process that you heard about today is new, really new, and districts don’t know how it’s changed.  One of the four districts (OPSC) audited is a client, and we got a panic call. . . Only people who are very informed of the process are aware that this was changing.”

Boggs also said that facilities projects involve “multiple years and multiple funding sources, and each funding source has a different nexus,” including state and local funds, making the audit process very complex. “Yet it is one project, and to be managed well, the dollars have to be managed as a whole.”  Boggs then embarked on a lengthy description.

Lowenthal tried to summarize Boggs’ remarks: “You said districts are trying to do a good job, but don’t know what OPSC is going to consider a good job. Are you saying that there really is a culture in which there is a lack of trust, that districts feel the goal is to find something the matter with them?”

“That’s what it feels like at the district level,” Boggs said. “I am encouraged by the statements today that they’re working on the communication piece.  If people have more opportunity to line up their reporting in a way that it’s going to be communicated and received, that’s going to be a better audit experience.  What’s difficult is that there’s no way to know how to prepare. . . (Procedures) can be changed, (districts) don’t know there’s a different interpretation.”

Wrapping up the three-hour session, Sen. Lowenthal remarked “we (now) have (more) transparency and openness, we need to make sure we don’t make (the audit process) such an onerous thing that everyone is at odds with each other.  But there have been tremendous steps forward.”  Subcommittee member Kathleen Moore added that she felt the meeting had been “a great first step in looking at this issue.”

Editor's Note: Jeff Hudson is the editor of EdBrief and an award-winning education reporter and writer in print, radio and television media.