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SUMMARY
The Office of the Auditor General has conducted a performance
audit of the Flagstaff Unified School District pursuant to A.R.S.
§41-1279.03(A)(9). This performance audit examines seven aspects of the
District’s operations: administration, student transportation, plant operation
and maintenance, expenditures of sales taxes received under Proposition 301, the
accuracy of district records used to calculate the percentage of dollars spent
in the classroom, expenditures of desegregation monies, and the District’s
English Language Learner programs.
Administration (see pages 5 through 12)
The District’s administrative costs were higher than
comparable districts because the District had more administrative positions and
paid higher salaries. In particular, Flagstaff had a higher ratio of
administrators to students and would need to reduce its 130 administrative
positions by 25 positions to have the same ratio as the average of the
comparable districts. In addition, Flagstaff USD paid its school-level
administrative staff, including principals, assistant principals, and
secretaries, 7 to 19 percent more than comparable districts paid, on average. As
a result, the District spent a higher percentage of its resources on
administration than comparable districts and the state average. Flagstaff USD
spent 10.1 percent of its available operating dollars on administration, higher
than the comparable districts’ average of 9.0 percent and the state average of
9.4 percent.
Also, several of the District’s agreements for providing and
receiving services need attention. For example, the District had an agreement
with a local charter school, which resulted in the District’s providing the
charter school more than $50,000 in services in fiscal year 2006 for which it
was not compensated. Similarly, the District’s agreements with a transportation
district and with a parent to transport some Flagstaff students to another
district were not necessarily in its financial interest as the District received
no funding for these students, but paid for their transportation. Further, the
District did not conduct any analysis to determine whether these agreements were
less costly than operating its own routes and bringing these students to a
Flagstaff USD school.
In addition, the District did not have adequate controls over
its fuel cards. In fiscal year 2006, the District made purchases totaling about
$14,000 on its 19 active fuel credit cards. The District did not have a policy
regarding the use of these cards, did not require the authorized users to sign
agreements that listed the allowable uses, and did not monitor the cards’ use to
ensure purchases were appropriate.
Lastly, district employees had access to more accounting
system modules than necessary to perform their job duties. This allowed
individuals the ability to initiate and complete transactions without an
independent supervisory review and increased the District’s exposure to both
errors and fraud.
Student transportation (see pages 13 through 16)
Flagstaff USD’s transportation program was self-supporting
with revenues exceeding expenditures by approximately $526,000. However, the
District did not accurately report mileage and number of riders for state
funding purposes, resulting in its likely being overfunded by about $200,000 in
fiscal year 2007. Additionally, the District spent significantly more per rider
and a larger percentage of its available operating dollars on transportation
than comparable districts. These higher costs were due primarily to the
District’s driving many more miles than comparable districts, but improved
management oversight could reduce costs. For example, the District did not
establish and monitor performance measures necessary to adequately manage the
program and did not adequately manage its bus fleet.
Plant operation and maintenance (see pages 17 through 22)
The District has relatively low maintenance costs, but this
is because it does a poor job maintaining its facilities. The District’s $4.88
per-square-foot plant cost was about 13 percent lower than the comparable
districts’ average of $5.60 primarily because it employed fewer plant employees
and deferred maintenance on its buildings. The District’s maintenance workers
and craftsmen each maintained about 84,000 square feet, 63 percent more than the
51,394 square feet maintained by the comparable districts’ workers, on average.
The District did not establish a preventative maintenance plan or ensure that
work orders for repairs were followed through to completion. As a result, its
facilities were poorly maintained. Auditors observed broken glass in both
interior and exterior doors and windows, broken exit signs, broken and missing
floor and ceiling tiles, and frequent water damage. In 2006, the District passed
bonds that included $48.6 million earmarked for building and grounds
improvements. At the time of the audit, district officials stated that the
District had issued the first $10 million of bond monies and spent approximately
$800,000 on building designs, repairs, and renovations. The District’s plan for
its bond monies addresses deficiencies at 10 schools and the district bus barn
that were identified by a consulting company’s facilities assessment. Once the
buildings are restored, a preventative maintenance program will be critical to
keep them in good repair.
The District’s per-pupil plant costs were higher than the
comparable districts’ average mostly because its schools operated at about 23
percent below capacity. This resulted in the District’s having more schools and
about 22 percent more square footage per student than the comparable districts.
Proposition 301 monies (see pages 23 through 26)
In November 2000, voters passed Proposition 301, which
increased the state-wide sales tax to provide additional resources for education
programs. The District’s Proposition 301 plan was incomplete as it did not
identify the positions eligible to receive Proposition 301 monies or specify the
amount of performance pay employees could earn. Further, the District did not
always follow its plan when disbursing Proposition 301 monies. Specifically, the
District paid at least 12 employees for additional duties that were not included
in its plan, paid incorrect amounts to 24 employees, and paid out remaining,
unexpended performance pay monies at year-end to employees without requiring
additional performance measures to be met. The District also spent approximately
$33,600 on performance pay for 15 employees who were not eligible to receive
Proposition 301 monies.
Classroom dollars (see pages 27 through 29)
Statute requires the Auditor General to determine the
percentage of every dollar that Arizona school districts spend in the classroom.
Because of this requirement, auditors reviewed the District’s recording of
classroom and other expenditures to determine their accuracy. After adjusting
approximately $3.9 million for accounting errors, the District’s classroom
dollar percentage decreased from 58.3 to 55.2 percent. This revised percentage
is below the comparable districts’ average of 58.7 percent and the State’s
average of 58.3 percent.
The District spent $7,148 per pupil, $1,108 more than the
comparable districts’ average and $315 more than the state average. The District
received and spent more dollars per pupil primarily because it received more
funding than the comparable districts, including desegregation, career ladder,
state transportation aid, excess utilities, and federal programs.
Desegregation monies (see pages 31 through 34)
The District was one of 19 Arizona school districts budgeting
monies to address desegregation issues in fiscal year 2006. The District’s
desegregation agreement with the U.S. Department of Education, Office of Civil
Rights, requires the District to ensure equal educational opportunities for its
English Language Learners (ELL). Excluding capital purchases, the District spent
about $2.2 million, $1,687 per ELL student, on its desegregation plan in fiscal
year 2006. The District’s desegregation expenditures have increased by 15
percent over the past 3 years even though its number of ELL students has
decreased by 25 percent during that same time period. Nearly 80 percent of the
District’s desegregation monies were spent on classroom instruction costs.
English Language Learner programs, costs, and funding (see
pages 35 through 41)
Statute requires the Auditor General to review school
district compliance with English Language Learner (ELL) requirements. In fiscal
year 2006, the District identified approximately 12 percent of its students as
English language learners and provided instruction for them in several different
types of programs, including Structured English Immersion, bilingual education,
mainstream, and Compensatory Instruction. In compliance with statute, the
District tested students with a primary home language other than English to
identify ELL students and provided them language instruction. The District
accounted for its ELL costs separately, but not all of these costs were
incremental—that is, only the portion that is in addition to the cost of
teaching students who are fluent in English. Based on its accounting records,
the District received over $550,000 more in ELL-related revenues than it spent
for its ELL program.
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