ORCSD School Board Meetings On Demand...

As time permits, we will be publishing school board meetings online shortly after they become available to the public.

Here is the first meeting:

SB meeting - 10-01-08

Procurement Audit Report

To: Interested Citizens

From: Jenna Roberts

Date: October 4, 2008

Re: Procurement Audit Report

I am the author of the audit report (attached at the end of this memo) and am writing to clear up some confusion.

First, I am a professional auditor. I have worked for the State of Massachusetts for almost 10 years and part of my tenure has involved conducting internal audits of vendors to ensure contract compliance, provide fiscal oversight and technical assistance. I continue to work part time in Boston and currently assist the Director in overseeing our $16M budget as well as all personnel practices.

When I performed the audit I conducted it in the same way I would in my job. I leave assumptions at the door. The findings are based on fact of what was presented in the files. Following the review—which was very short given the limited number of files—I did exhaustive research on national best practices for procurement and purchasing.

Second, I have a deep commitment to the children in this community. I am the mom of a busy 5 year old who currently attends the fantastic PEP preschool program at Mast Way. I am also expecting a second child in March. I also volunteer in our community as the Director of Oyster River Parents & Preschoolers and I serve on the Durham Parks & Rec Committee.

Third, I conducted this audit after making multiple attempts to address the procurement discrepancies directly with the administration and the School Board. I made a proposal to the School Board that additional bidding documentation should be reviewed to assess current procurement practices used by the District.

When I received no response, I decided to review these practices myself through the Right to Know Law. The point of our report was to outline any problems with the current systems and then, more importantly, offer concrete solutions to the problems. This process was to identify problems in the systems. Presently, there are widespread systemic issues with the way in which the district conducts their procurement practices as well as a lack of oversight to ensure existing policies are being followed throughout the process. These problems exist on multiple levels and not on any one person.

I spent many hours looking at solutions that would ultimately be effective, save time for our administrators and give the Board some oversight over larger contracts. In addition, I have recommended that the policy NOT be changed that currently requires the District to obtain a minimum of 3 bids and advertise the bids publicly. What does need to change is how the District will provide oversight the ensure compliance with this policy. The policy is a best practice and should be enforced, which it currently is not based on the review.

I proposed solutions that would be a win-win-win. These recommendations would benefit the administration, Board and the public. My hope with this report is to shine a light on solutions allowing us to fix the problems at hand and move forward.

Lastly, I have spent much of my time this summer writing a fair and comprehensive report. Personal remarks made by some members of the board in an attempt to discredit the hard work I put into this report are irresponsible and harmful to our community and only serve to add fuel to the fire. These negative comments only serve to alienate the community they have been elected to serve.

I will continue to push our leaders to raise the bar and work toward more accountability and transparency in our District. In these uncertain economic times it is vital that we trust how our funds are being allocated and to whom. I will continue to work toward a positive outcome and I hope our leaders will do the same. There are problems to be fixed—some are easy and some are more complex—but if we work together and push for positive change, we have much to gain as a community.

If you would like more detail on the report or would like to view the many resources I provided to the District, I am happy to provide it to you. Please feel free to e-mail me using the link below.

________________________________________________________________________

Audit of ORCSD Contracts and Bidding Documentation

Executive Summary

Pursuant to a request under the state’s Right-to-Know law (RSA 91-A), on August 12, 2008 a team of five volunteers, led by a professional auditor, undertook a review of documents related to all District contracts worth more that $5,000 over the previous three years.

District personnel did not fully comply with the request, limiting the team’s ability to draw conclusions and make recommendations. For this review the District provided the team with 12 files worth approximately $1,185,000. In 2007-2008 there were over 160 vendors receiving over $5,000 and the total value of District contracts was over $10M. However, many problems were uncovered with the limited paperwork that was provided.

The team uncovered a consistent trend of widespread failure to adhere to District policies regarding proper advertising of bids and obtaining the required minimum numbers of bids, as well as an inconsistent bid review and evaluation process. Lastly, files regarding the contracting process are inadequately maintained and preserved. With the current lack of accountability and fiscal control, the potential for fraud and waste of District resources is significant.

We recommend that District personnel take steps to address the issues we found; specific recommendations are included in the body of the report. Most importantly the District should enlist a firm to conduct a full forensic audit of all files to determine the full extent of mismanagement and ensure that there is no fraud related to this mismanagement.

We also recommend that going forward the School Board play an active role in approving and overseeing larger contracts, and create policies which hold District personnel accountable for following District procedures in all contracts and in all instances.

Background

RSA 91-A Document Request Timeline Summary:

On July 10, 2008, under the State of New Hampshire’s Right-To-Know Law, a request was made by Jenna Roberts to audit fiscal and contract files from the Oyster River Cooperative School District for all vendors with contracts over $5,000 over the past 3 years.

Acknowledgement of the request was received on July 16, 2008. It was indicated that the files would not be available until the week of July 28, 2008.

When the District did not respond by July 28^th, an e-mail was send to the District on July 29^th to inquire about the status of the files.

An e-mail was received on July 30^th stating that not all of the files had been pulled but that the review could commence at any time.

Due to vacation conflicts the review was not scheduled until August 12, 2008.

Document Review Findings:

Overview:

Based on expenditure reports received, in fiscal year 2007-2008 there were over 160 vendors who received awards over $5,000. Of these only twelve vendor files were provided in response to the Right To Know Law RSA 91-A request. Of the twelve we received, the award amounts ranged from $30,000 to over $300,000.

Given the limited number of contracts we reviewed, it is impossible to determine whether the issues we uncovered are widespread. Among the small sample we had access to, there was a clear pattern of mismanagement.

Specific Problems:

1. All 12 files reviewed were not in compliance with existing bidding policies.

Policy violations:

• The policy states that advertising is required for all contracts over $5,000
• FINDING à No advertising was conducted for any of the 12 contracts.
• The policy states that there must be a minimum of 3 bids for all contracts over $5,000
• FINDINGà Of the 12 files, 7 of the awards were granted with less than 3 bids, including some basic services such as: roofing, flooring, computer networking, septic.

2. Contract awards are poorly managed

• It was often unclear who in the District authorized the award.
• Based on the information we reviewed, the District is authorizing work without a scope of service or a formal contract.
• Only 1 vendor had a signed contract with the District—this contract was initiated by the vendor and not the District.
• No other awards had evidence of a contract or contract process.
• Adequate fiscal information was non-existent for all the files even though it was included in the request.
• No file had evidence of a bidding evaluation process.
• Inconsistencies between bid amounts and purchase orders had no notes or justification.
• Some final payments were less than the estimates. It is unclear where the cost savings differential is being captured.

3. File preservation and maintenance is inadequate

• The primary file for these vendors is not maintained in the SAU office.
• The business manager does not have copies in his possession nor is he aware of what is maintained in these files.
• The managers who oversee the work maintain all paperwork and keep the files in their offices.
• The files are poorly organized and the information that is kept in the files is inconsistent and incomplete.
• Some documentation was not adequately filed but left as a heap of paper that had to be sorted on site by the evaluators.

4. RSA 91-A request was not met

• Five members of the public arrived to review all contractor files over $5,000 for the past 3 years. When we arrived there were only 12 files out of over 160 known files available for the review.
• Based on expenditure documentation received through a separate request it is known that in 2007-2008 there were over 160 vendors receiving over $5000 in funding from the District in 2007-2008.
• No billing documentation was supplied per the request.

Recommendations:

It is impossible to fully identify the scope of the problem given the lack of compliance with the request. To ensure that no fraudulent activity has taken place, the first step the Board should take is to retain a firm to perform a full forensic audit of all District accounts.

Though only 12 documents were provided for this review, some problems can be corrected immediately. The Board and District administration should review the following recommendations and implement corrective strategies as soon as possible.

Procurement Process & Oversight

Bidding Policy Amendment Process:

• No administrative staff of the District should be drafting policy that would pertain to them or their staff. This is a clear conflict of interest.
• A committee of non-District staff with procurement experience should be created to draft a new procurement policy and present it to the policy committee for review.
• Outside consultation by experts with procurement experience (e.g. UNH procurement staff, town administrators, professionals in the community, etc.) is required to ensure expertise, as well as transparency and credibility for the process
• If members of the public cannot volunteer then a firm with fiscal procurement expertise should be hired to make these recommendations. This firm should report to the Board and not District administration.
• Legal counsel should review the policies once they are written to ensure that they do not conflict with existing State or Federal laws.
• The two primary policies currently in place should not be altered—advertising should be required and a minimum of 3 bids must be required unless an exception is voted upon and approved by a majority of the Board.

The Board Must Create Accountability Standards and Oversight

• The Board must be more involved in the oversight of the bidding process for larger contracts.
• The Board must define clear accountability standards for District staff as well as action that will be taken if policies are not followed.
• Policies should be written with explicit remedies to address non-compliance of a bidding process (e.g. a contract will be re-bid immediately if it is clear that the basic policies were violated without prior permission from the Board).
• Once revised policies and accountability standards have been put in place, the Board should establish a trained citizen’s audit/oversight committee to create a layer of checks and balances and thus maintain public confidence.
• This committee will provide oversight through quarterly reviews of school operations, procedures and practices.
• This committee will also work with the policy committee to make recommended changes to policy as needed.
• The Superintendent should set up a system to regularly verify that all bids follow the current policies:

1. all bids over $5,000 must be properly advertised;

2. a minimum of 3 bids must be solicited for any bid over $5,000

• The Board should receive regular updates of awards over $5,000 during public meetings so that the Board and the public are aware of how the money is being managed.

• Any bid over $25,000 should be presented to the School Board for vote:
• The contract manager or business manager should present to the Board how the process was conducted, how policies were followed, the protocols used for selection, bid amounts received, and make a recommendation to the Board.
• The Board should not vote if there are inaccuracies, if policies were not followed or if members of the public present discrepancies.
• RFP should be re-bid if any of the above problems are presented
• Ethical standards and conflict of interest guidelines should be developed related to procurement practices for District and non-District personnel.
• Civil and administrative remedies should be developed for employees or non-employees who breach policies or ethical standards.
• A policy should be established to ensure compliance with RSA 91-A requests.
• The Board should establish policy which will outline the actions it will take if requests are not adequately met.
• Board protocols should be in place to immediately react to any lack of compliance with any bidding policies.
• The Board should establish a clear policy of how the public may file a formal grievance with the Board if there are issues with high ranking administrators related to bidding or any other issues.
• More communication is needed to reinforce to the community that the formal role of a School Board is to represent the public, not the school administration.

Institute Basic Bidding Practice Standards

• Define different types of bidding processes and when to use (samples below taken from UNH website*)
• Request for Information (RFI) —when you don't know exactly what you want or you don't know what is available in the market place. Often the information gathered would be used to write a RFP (e.g. a firm identifies cost saving measures that could be instituted for the District. The District would then write a RFP to get specifications and pricing from multiple vendors.)
• Request for Proposal (RFP)—when you have a general idea with some specifications and/or it's a large, complex project with potential for multiple solutions.
• Request for Bid (RFB)—when you know precisely what you need and have precise requirements and specifications—these are more straightforward and simple projects (e.g. plowing snow, purchasing equipment, fixing a roof, etc.)
• Boilerplates should be created to issue RFP’s or any requests for bids.
• The boilerplate should include: service requested, timeline, maximum award amount (if applicable), contract conditions, performance requirements, terms of service, etc.
• All RFP’s must have a formal evaluation process as part of the proposal. These are used for high value and complex or multi-year projects. A simple request for bids can be used for lower value, less-complex projects (e.g. repairs, simple maintenance, etc.)
• Any RFP which lists selection criteria should have a formal review committee whereby vendors are scored and paperwork is maintained to ensure transparency and equity.
• Reviewers should sign a conflict of interest clause as well as a confidentiality statement. These documents should be filed in the primary file and subject to public review.
• Civil and administrative remedies should be developed for employees or non-employees who breach policies or ethical standards.
• Policies should be written with explicit remedies to address non-compliance of a bidding process (e.g. a contract will be re-bid immediately if it is clear that the basic policies were violated without prior permission from the Board).
• A process should be developed to allow vendors to provide feedback about the bidding process, to allow bidders to obtain a formal meeting if their bid was not selected and to provide a protocol for the vendor to document a formal complaint is they believe the bid was not fair or equitable.

Advertising

• The District should provide easy access to all open bids on their website.
• The website should post all bid requests and RFP’s as soon as approval has been granted.
• A formal e-mail distribution listserve should be developed to e-mail RFP’s directly to interested parties for any bid over $5,000.
• Any bid over $5,000 should be advertised in at least 1 local paper.
• Large bids/RFP’s (over $25,000) should be posted at least 30 days before the bid is due.
• Recently awarded bids should be posted on the website and list the vendor selected and the amount of the award (see www.comm-pass.com for a sample from the State of MA).
• Outreach should be conducted to inform local vendors that new systems will be put in place to announce bids—website, newspaper, listserve.

Policy for Contract Award Process

• Any bid over $25,000 should be presented to the School Board for vote:
• The contract manager or business manager should present to the Board how the process was conducted, how policies were followed, the protocols used for selection, bid amounts received, and make a recommendation to the Board.
• The Board should not vote if there are inaccuracies, if policies were not followed or if members of the public present discrepancies.
• RFP should be re-bid if any of the above problems are presented.
• No awards over $5,000 should be granted without a contract with the vendor which includes the vendor signature and signatures from 2 approved District staff.
• Contracts should include, at a minimum: the scope of service and dates of delivery/completion.
• No awards over $25,000 should be granted without a contract with the vendor which includes the vendor signature and signatures from 2 approved District staff and the Board Chair following a majority vote of the Board to award the contract.
• Contracts should include, at a minimum: the scope of service and dates of delivery/completion.
• The District should consider new negotiation models which could include “best and final offers” or master purchase agreements for multi-year projects to maximize savings.
• The lowest cost vendor should be selected so long as it does not compromise quality or other requirements of the scope of service.
• Additional justification should be presented to the Board for a vote if the District wishes to award any bid that does not represent the lowest cost.
• Local vendors should be given priority but not at the expense of quality or significant cost.

Procurement and Vendor Documentation Maintenance

• The primary file for all contracts should be maintained and easily accessed at the business office—contract managers should maintain a copy of files but not the original file. These files should be easily accessible to District staff or members of the public.
• Files should contain all relevant bidding and contract award documentation, including, but not limited to:

• Documentation demonstrating how RFP was advertised, including copies of e-mails sent to listserve.
• Copy of RFP.
• All bidders applications and attachments or other materials submitted.
• Documentation of the method of evaluation, scoring tools used, individuals involved in the application review and any other evaluation documentation.
• Award notice and method of posting including copies of e-mails sent to listserve.
• Complete contract package with vendor including, signed contract, scope of service, deliverables, project workplans, budget, budget amendments, etc.
• Any contract oversight/performace documentation.
• All billing documentation submitted by the contractor over the course of the contract to date.
• Any other documentation related to performance or any other aspect of these contracts.

Research & Professional Advice

• A committee of non-District staff with procurement experience should be created to draft a new procurement policy and present it to the policy committee for review.
• Outside consultation by experts with procurement experience (e.g. UNH procurement staff, town administrators, professionals in the community, etc.) is required to ensure expertise, as well as transparency and credibility for the process.
• If members of the public cannot volunteer then a firm with fiscal procurement expertise should be hired to make these recommendations. This firm should report to the Board and not District administration.
• Consultation with the New Hampshire School Board Association (NHSBA) and the National Association of School Boards to gather information regarding best practices in procurement.
• NHSBA provides a policy review service for school boards.
• Review practices of other states to ensure that ORCSD raises the bar and achieves a higher standard of procurement practices (other NH school board policies were reviewed for this report and were determined to be similar or less adequate than the current policies used by ORCSD).
• Review practices of other towns and agencies (UNH and the town of Durham policies were reviewed for this report).
• Possible consultation with a new vendor to conduct research on national best practices and make recommendations on procurement policies and oversight of those policies by the Superintendent as well as the School Board.
• More extensive training for School Board members to be more effective and aware of their roles and responsibilities

Attachments (submitted under separate cover):

Montgomery Procurement Manual

Town of Durham NH Purchasing Manual

UNH Bidding Resources

Augusta County Public Schools Purchasing Manual

Fauquier County School Board Procurement Policy

Articles: “Managing Your Money” Naomi Dillon; “Money” by Charles Trainor; “Developing Board

Leadership” Elk Mound Area School District

Resources Reviewed:

*UNH Sample: http://www.unh.edu/purchasing/policy/purchasing/6-006.htm

UNH Procedures: http://www.unh.edu/purchasing/policy/purchasing/6-toc.htm
UNH Bid Results (posted on website): http://www.unh.edu/purchasing/bid-results.html

Virginia Beach Public School: http://www.vbschools.com/policies/3-89_p.asp

Procurement Manual for Montgomery County Public School: http://www.montgomeryschoolsmd.org/departments/materials/miscellaneous/procurement/Feb_2007_Procurement_Manual_no_reg_links.pdf

Procurement Procedures Manual Miami-Dade: http://procurement.dadeschools.net/pro_manual/default.htm

Augusta County VA Procurement: http://www.augusta.k12.va.us/66879071493759/blank/browse.asp?A=383&BMDRN=2000&BCOB=0&C=54225

Baltimore City Procurement Policies: http://www.baltimorecityschools.org/Procurement/Procedures.asp

Stafford County VA Procurement: http://stafford.schoolfusion.us/modules/cms/pages.phtml?pageid=23868

Exeter NH Policies: http://www.sau16.org/schools/schoolboards/policies/coop/cooppolicies.htm

Concord NH Policies: http://www.concord.k12.nh.us/new/sau.asp?fcpath=conferences/sau-www/board

Hanover NH Policies: http://www.sau70.org/boards/hanover/policies.htm

Vermont School Board Policies: http://www.vtvsba.org/policy/policy.htm

NH School Board Association: http://www.nhsba.org

National School Board Association: http://www.nsba.org/

Audit Conducted: August 12, 2008

Report Completed: September 23, 2008, 2008

Report written by: Jenna Roberts

Auditors: Jenna Roberts, Durham Seth Fiermonti, Durham Henry Brackett, Lee

Jerry Gottsacker, Durham Jocelyn O’Quinn, Durham

This review was conducted by citizens living in the Oyster River Cooperative School District who are interested in ensuring more accountability and transparency within the District. It is the role of the School Board to create policy and ensure that all policies are being followed by the administration. This role is essential to ensure that public funds are being properly dispersed and managed.

Based on this preliminary review we believe that the current School Board is not fulfilling these responsibilities. It is also the belief of this team that better management of District funds would result from increased involvement, oversight and discipline from the School Board.

This report will be distributed to the ORCSD School Board, ORCSD Superintendent and Business Manager, Town Officials in Durham, Lee and Madbury, interested citizens.

FEEDBACK ON 10/8 SPECIAL BUDGET MEETING

Well, the first thing and to put a sad end to all discussions on this board is that:

FULL DAY KINDERGARTEN IS OFF THE TABLE FOR NEXT YEAR.

It was decided that the district implement no NEW or EXPANDED initiatives for next year.

The default budget came it at 5% higher and there was discussion to have a 3% budget cap or even lower. In the upcoming meetings in the following weeks, the final budget will come to light.

Stay tuned...

THIS WEEK'S MEETINGS (Oct 5-11)

Tonight @ 730pm - Special School Board Budget Meeting
Tomorrow (Thurs) @ 730pm - Policy Committee Meeting regarding Bidding/Purchasing Policy

Please see orcsd.org for more details and agendas.

Learnings from Tonight's Full Day Kindergarten Forum at Moharimet

Tonight I attended the Moharimet meeting to discuss the proposed Full Day Kindergarten. Approximately forty-five of us sat in a large circle and individuals offered their comments and posed questions in an orderly and considerate manner. Here's what I learned:

* The District fully acknowledges that Full Day Kindergarten is not an academic initiative (per Superintendent Colter and Principal Harrington)
* The District feels that children entering first grade are well prepared and that Full Day Kindergarten is not being studied due to any ill-preparedness among entering first graders (per Superintendent Colter and Principal Harrington)
* The Full Day Kindergarten study found that there are benefits associated with Full Day Kindergarten such as "more time to do more during the day," "being able to slow down" and "lowering daycare costs" (per Principal Harrington)
* The District does not know how many children are in daycare and are forced to make a transition between school and daycare, but promises to look into getting this information (per Superintendent Colter)
* The District has not yet decided to move forward with Full Day Kindergarten and tonight's discussion is part of the process in making a decision (per Superintendent Colter)
* There were seven (7) families, of the sixty-seven (67) in the Moharimet School district area, who chose not to enroll their children at Moharimet because of complications related to kindergarten / day care coordination / transitions (per Principal Harrington)
* The initial start up cost for the proposed program is estimated $50,000 to set up classrooms for three (3) classrooms (per Blaine Cox)
* The Full Day Kindergarten program's estimated cost for four (4) new teachers and four (4) new paraprofessionals, fully loaded with benefits including healthcare and operational costs such as electricity, fuel, etc., is estimated to be $340,000 per year; this figure already takes into account savings related to eliminating the afternoon bus run which is $140,000
(per Blaine Cox)
NOTE: Many at the meeting felt that this figure seems to be quite low for the number of full time staff additions. I agree. There will be additional training costs to ramp up and compensate teachers.
* Modular classrooms will cost approximately $15,000 per year (per Blaine Cox)
* There are several possible options including extended day kindergarten, partial half day / full day that will be costed and presented to the ORCSD School Board (per Superintendent Colter)
* The District will provide requisite training and compensate teachers for attending training in the summer months prior to the start of a Full Day Kindergarten program (per Superintendent Colter)
* Superintendent Colter stated that this meeting was a great opportunity to hear from parents and went beyond Full Day Kindergarten, but also included thoughts about other District priorities.

So, what are the next steps...here's the timeline (per Superintendent Colter's comments at the Oct.1st School Board meeting):

Oct 15th - Share public comments with the Board; provide a preliminary budget with no change in staffing, but if change in staffing then it will be in other grades.

Nov. 5 - -Determine whether or not to include Full Day Kindergarten in the 2009/2010 budget. Board can also request more information at this point.

Nov. 19 - Board vote on Full Day Kindergarten

Other considerations...
* The School Board is preparing a District Survey. Should not the Board poll parents and tax payers on District priorities? I proposed this at the end of tonight's meeting and hope to see this take place. How would you like $340,000 spent? I can think of many other areas of importance that are founded on academic principles (e.g. early foreign language, tiered classes in high school, more AP curricula, music / band in high school, etc.).
* Paraprofessionals need dedicated space to help children with special needs, rather than working with children in hall ways and nooks.
* Should not the District focus on academic / educational priorities? Parental daycare concerns should not be part of the District's concerns.

Insights from School Board Meeting

Watching the school board discuss and comment regarding the audit of the bidding process and public comments.

Here are my observations:

Public Comments

Comments from two board members:

- Joe Quimby said to remove them for a few months for budget season.

- David Taylor said to limit public comments by NOT televising them although in favor of hearing all comments.

- David Taylor said that public comments are "corrosive, have ill fact-checking, make false accusations, are grandstanding, and political in nature"

Remarks on Bidding Audit

- JoAnn Portalupi said the public is "confused"

- Our Business Administrator has the 100% backing of the chair

- The annual financial audit verifies that the audit that the community did was without merit and basically false. The chair stated that the audit looks into these matters and nothing material really comes out of them each year.

- Jennifer Reif and Kim Clark asked that a discussion take place on this topic and it was not really recognized by the chair.