.......... .......... .......... .......... .......... .......... .......... .......... .......... .......... .......... .......... .......... .......... .......... .......... .......... ..........
Copyright © 2019 Albuquerque Journal
Editor’s note: This story has been updated with a clarified graphic.
An Albuquerque charter school entered into a $5.5 million lease purchase agreement without an appraisal.
It paid $50,000 to the employer of its foundation president.
And that same school overpaid a vender by about $52,000, and it appears management didn’t realize it was overbilled until the issue was flagged by auditors.
Those are among the 30 findings – 13 of which were deemed material weakness – that were flagged by auditors at 21st Century Public Academy and its foundation.
The school is now working to correct the shortcomings outlined in the financial audit for the fiscal year that ended June 30, 2018.
The 21st Century Public Academy is among 10 Albuquerque Public Schools-authorized charter schools that are required to come up with a corrective action plan following material weakness findings in the audit, which covered about 25 charter schools and foundations.
The 21st Century had by far the most findings, which were detailed across 26 pages in the annual independent audit of APS that included charter schools.
The findings ranged from lack of records and outdated policies to a slew of financial reporting issues.
In one instance, the audit says a vendor confirmed an outstanding amount of $100,000 that was not recorded as outstanding in school records.
Virginia Trujillo, president of the school’s governing council, told the APS Board of Education during a meeting that the audit happened during a move and during the transition of a new bookkeeper.
“Things were in boxes everywhere,” she said.
She said work had been done but it was packed away.
“I look forward (to) coming back to you so you can see our plan and so you can see all the work that was done that was in boxes when the auditors came,” she told board members.
The audit showed several instances in which 21st Century was overbilled by vendors, had overcompensated an employee and could have overpaid for other services such as construction costs.
According to the audit, the school overpaid a vendor by $52,401 after it was charged gross receipts tax twice. Management’s response in the audit called the overpayment an “oversight” and said a memo was sent out to the vendor to collect the overpaid money after the audit was conducted.
In addition, auditors could not gather evidence to support certain transactions, the document shows.
For instance, the school spent more than $700,000 over an initial cost estimate for construction on its building, the report said. But the audit says there were no records at the school that documented or approved the change order. Nor was there documentation on what the additional cost was for.
And the school did not go out for proposals for an approximately $2 million construction project, auditors determined.
The audit also found a couple of “related party transactions” at the school, including a payment of $50,000 to the employer of its foundation president. The president’s husband was also the broker for the lease purchase agreement, which was eventually transferred to the foundation, according to the audit.
There were also several findings around the school’s lease purchase agreement.
The audit states the school did not get approval from the state Public Education Department before entering into its agreement, which is required under state law, and incurred additional legal fees to come into compliance.
A separate finding labeled “lack of due diligence” states that the school also may have paid more for its land and building than market value, per an appraisal.
“The school entered into a Lease Purchase Agreement for $5,500,000 without an appraisal and did not have any documentation showing the basis for the price. An appraisal was conducted by a bank on February 1, 2018, determining the market value to be $5,030,000 after the School paid approximately $2,137,834 for construction on the property,” the audit said.
The school, which is at 4300 Cutler NE, has just under 300 students, according to APS documents.
The audit reviewed about 25 charters, including any charter foundations, the document says.
At a policy and instruction committee meeting, APS Office of Innovation and School Choice officials told the APS school board that the charters have met with the department and are in the corrective action plan process to address the audit findings.
“The school develops the action. What we do … is remind them that every audit finding that they have, they should do a self examination of their processes and procedures to fix the audit finding going forward,” said Joseph Escobedo, senior director of charter schools.
The Office of Innovation and School Choice recommended schools finish their plans by June 30.
From there, the department will monitor the schools’ progress and update the board.
According to APS, a school creates its own timeline in the plan for correcting any deficiencies and APS will review it. If a school fails to comply with its plan, APS can take that into account when it’s time to renew or revoke the charter.