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January 31, 2014

Ethics questions, errors cited in Northern Cambria audit

NORTHERN CAMBRIA — The state auditor general’s  audit of Northern Cambria School District turned up two potential state Ethics Act violations involving school board members and a more than $25,000 loss to the district as a result of errors in outside student enrollment and transportation recordkeeping.

According to a report released Friday by Auditor General Eugene DePasquale’s office, school board meeting minutes from July 15, 2008, to March 19, 2013 show one board member voted to approve a $1,500 airfare reimbursement and another member voted to approve a confidential settlement agreement between the district and the parent of a student. In both cases, the report reveals that the board members’ spouses were the beneficiaries of the approval votes.

In the first instance, the travel bill came from an educational conference attended by the board member’s spouse, who also is a district employee.

The report also notes that the payment was made to the independent educational group that organized the conference, not the employee.

In the second instance, the parent was the spouse of a board member. The complainant’s attorney’s fees, reported to be $12,000, were paid by the district through its insurance carrier. The settlement was approved by the board on March 19.

“The Pennsylvania Public School Code requires board members to publicly announce or disclose the nature of their interests as a matter of public record,” the report states. “The board members did not do this in either instance, nor did the board members file a written memorandum with the district’s board secretary. As a result, the board members’ actions and/or lack of disclosure may have been in violation of the Ethics Act.”

The board meeting minutes referred to in the report do not give further context to either instance and do not reveal the names of the board members whose votes are being questioned by DePasquale’s office.

“When people are voting for something that could be benefiting them financially, that is a conflict of interest,” DePasquale told The Tribune-Democrat Friday. “It’s not Watergate, but it is a problem.

“Any time, even if it’s not you (who benefits directly), even if it’s family members, you’ve got to abstain – period. End of story.”

According to the release, DePasquale said the district has agreed to educate board members on ethics policies, disclosure and voting abstention.

“In the future, the board will be educated on items that they should abstain from and if and when the board member does abstain, they will be required to fill out a form as to why they abstained,” reads the district’s response in the audit report.

District administrators were not prepared to comment on the report Friday, as they had not yet received the press release from the auditor general’s office. DePasquale noted, however, that the audit’s findings were shared with the district before being entered into public record.

The district also will look to recoup $25,104 in tuition reimbursements from the state Department of Education, lost due to an understatement of the district’s out-of-area foster home students for the 2012-13 school year. According to the report, three non-district resident students were classified as resident students, causing the missed funds.

The report states that it is the district’s responsibility to establish internal controls that ensure the student data submitted to the Pennsylvania Informational Management System is accurate.

“If you don’t give the right amount (of students), you don’t get the right amount from the state,” DePasquale said.

Finally, DePasquale revisited, for the third audit in a row, an issue of incorrect accounting procedures regarding students in non-public school transportation. The resulting state subsidy underpayment of $9,240 could have been avoided if the district heeded recommendations from audits performed since the 2004-05 school year.

However, DePasquale told The Tribune-Democrat he got a sense that the district was taking the matter seriously and will work to rectify it. He also recommended the state Education Department correct future subsidy allocations to correct the underpayment.

“We reviewed it as an accounting issue – that’s certainly how we see it,” he said. “Sometimes, you have to dedicate staff to (fixing the problem). ... If a school district needs help with that, we can provide help as well.

“They’ve got to be willing.”

Justin Dennis covers Northern Cambria School District for The Tribune-Democrat. Follow him on Twitter at Twitter.com/JustinDennis.

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