Thursday, May 27, 2010
State Auditor Blasts Bernalillo School District
By Elaine D. Briseño
Copyright © 2010 Albuquerque Journal
Journal Staff Writer
The state auditor has classified Bernalillo Public Schools as "high risk" for misusing federal funds and questionable overtime and stipend payments.
State Auditor Hector Balderas said in a phone interview with the Journal that the district is at risk for fraud, embezzlement and other abuses of taxpayer money.
Superintendent Barbara Vigil-Lowder said the district has taken steps to resolve Balderas' concerns, adding that the district had already started to address some of the issues before the audit.
Balderas reviewed the district for fiscal year 2006-2009.
"I am the one who self-reported on the federal funds," Vigil-Lowder said. "It's important to me that there is transparency in district finances."
The school board voted against renewing Vigil-Lowder's contract in March. Her last day is June 30.
Balderas said he directed the district to take immediate corrective action. Failure to do so, he said, could include penalties ranging from suspending the school board's financial authority to recommending criminal prosecution.
"What I'm discovering in school districts across the state is that when conditions like this exist, it's a playground for people who want to embezzle taxpayer money or abuse the system," he said. "Jemez was a good example of this."
Kathy Borrego, business manager for the Jemez Mountain School district, pleaded guilty to embezzling an estimated $3.4 million from her employer. She was facing up to life in prison but committed suicide earlier days before her sentencing.
Balderas noted the following concerns:
• The U.S. Department of Education has put the district on probation for mismanaging Title III federal grant funds. As a result, the district must pay for federal programs out of its operational budget and submit receipts to the federal government for reimbursement. Title III funds are earmarked specifically for American Indian students.
Balderas said the district must pay back close to $25,000 in Title III federal funds because it could not provide proper documentation to show how the money was spent and that federal money was being used to pay unqualified personnel overtime and stipends.
Twice the district used federal grants to pay for a trip to an amusement park but could not provide documentation about who attended the trip.
"I'm more concerned about the possibility that federal funds are being used as some abusive bonus system," Balderas said. "We need to make sure that the recipients of the federal dollars, mostly Hispanics and Native Americans, are protected and the district has qualified personnel."
Vigil-Lowder said the district now has procedures in place intended to help track federal money.
Denise Irion, the district's finance director, said the district also is working closely with the state and the federal government to make sure federal money is used properly.
• Balderas said he is concerned that the district does not have a documented policy for conflicts of interest, which he said "creates a tone from the top that is conducive to favoritism and abuse of district resources."
Vigil-Lowder said the district has worked with an attorney and the school board to amend the existing Conflict of Interest Policy to address this concern.
• The district does not properly secure its checks. The checks are kept in a vault that is left unlocked throughout the day. Irion said the district addressed that problem in 2009.
• The district has insufficient documentation for stipends and overtime pay, personal use of district vehicles, tuition reimbursement and benefits for nondistrict employees.
Vigil-Lowder said the district does not allow overtime pay anymore and is negotiating stipend pay with the union.
In July 2009, four district employees were indicted on charges of embezzling thousands of dollars from the district. The four were allegedly involved in a scheme in which they made out checks for "extra duties" and stipends.
Earlier this year, the Legislative Finance Committee released a report that looked at every aspect of how the district does business. The report questioned why the district allowed working lunches in town. It gave dozens of examples of working lunches charged to district credit cards during the 2009-10 school year. While the practice is not illegal, the report said it's not clear whether the charges benefit adults or students.
Vigil-Lowder said the credit cards have been collected from users and accounts closed except for one, which is kept in a locked area with limited access. Check-out procedures were created and documentation required for proper use.