Accounting Best Practices Workshop
It couldn’t have been the easiest way to start a new job. Freshly minted Principal Brett Nelson at Dougherty Elementary School was barely two months into his new position when he began to hear whispers. The whispers became allegations which then led to an investigation. At the heart of it, some were voicing suspicions of potential fiscal improprieties within the Dougherty Parent Faculty Club (PFC). Charges of this nature needed to be substantiated. A process that included the school and District personnel began. The preliminary findings prompted both parties to then turn this matter over to the Dublin Police Department. As this is an ongoing investigation / prosecution, OneDublin.org will not comment on the current status of the case.
However, the aura of this active case hung like a dark cloud over Dougherty. Reforms and safeguards were immediately implemented. In spring 2013, several local news outlets announced that an arrest of a parent volunteer had been made. The subject then became much larger as families at other sites wondered aloud about the security of funds at their own respective schools. While Principal Nelson recognized the need to reinstate the confidence of the parents at Dougherty, DUSD also realized the vital need for enhanced training in fraud prevention. That District-wide training was presented in the form of workshops last week.
A subject matter expert was enlisted to discuss strategies with both administrators and PFC leaders. Jeri Wenger possesses deep ties to numerous school districts throughout California. She has gained over 30 years of management and technical experience in public education. Additionally, Ms. Wenger has accumulated over 20 years as a Principal/Partner with two CPA firms and a compliance and advocacy consulting organization. Jeri is very familiar with DUSD as she has previously worked with the district in delivering information on how school organizations can lawfully raise funds. OneDublin.org was invited to attend some of these sessions and the dialogue was fascinating. First, we had a visit with the facilitator.
OneDublin.org: The earlier portion of your presentation focused on the “Fraud Triangle”. This phenomenon is not confined to any particular geography. What are some of the lasting effects on a school district/school when this occurs?
Jeri Wenger
Jeri Wenger: “The effects of fraud vary depending on the extent: amount of funds stolen, if collusion was involved and how the matter was handled. It is my opinion that trust and confidence are the two factors most affected by fraud. Loss of trust and confidence negatively impacts morale, business operations, public perception and much more. DUSD clearly understood the public’s trust could be lost a long time if immediate corrective action was not taken.”
OneDublin.org: In order to prevent theft, you suggest several strategies. These include: annual audits, employing two signatories, a verification of cash logs and making timely bank deposits. In general, when these safeguards are employed, what is the rate of success in preventing future abuse?
Wenger: “We know of no organization, even with the strongest internal controls that is immune from fraud. However, strengthening internal control policies, processes and procedures definitely makes an organization a less attractive target to both internal and external criminals seeking to exploit internal control weaknesses. All three factors of the “Fraud Triangle” we discussed must be present for fraud to occur. When adequate safeguards are employed, potential perpetrators recognize that the “perceived opportunity” is not there and thus are far less likely to commit fraud.”
OneDublin.org: Much of your presentation is rooted in public education law – some of which was spurred through ACLU lawsuits. Essentially, all students cannot be required to pay fees for certain activities or to raise specified amounts of money. However, the dilemma for many PFC’s is that they are hoping/expecting all students to “do their fair share”. How do you advise these schools?
Wenger: “The question is not whether schools and parent groups can continue to request funds to support schools and students. They can. It is how they ask parents for it. The law prohibits the practice that communicates parent pay their “fair share”, as a condition for their child to participate in an educational activity. The reality is that the State has never provided adequate funds for co-curricular and extra-curricular activities. To make things worse, in 2007-08 school funding was cut by over 22%. Thus, schools do not received adequate funds to even support statutory classroom (core) programs. Parents need to understand that schools have and will not receive adequate funds for these “extra” activities. Advance planning helps. By timely sharing cost information and engaging parents early, PFC’s and schools will have greater success in securing voluntary donations to support DUSD schools and students.”
OneDublin.org: Again, as dictated by law, please comment on the appropriate language that should be utilized for donations requests.
Wenger: “Here is some sample language. We’ve provided PFC’s and schools with training and compliant letter templates to facilitate appropriate language for donation requests. Schools and parent groups cannot have language that says “The fee for each student is $__. We ask that you pay if you are able. It will be helpful if everyone pays their fair share.” They can however say, “We need your help. We do not have adequate funds to cover all of the costs for the XYZ trip. ABC charges a $__ admission fee for each student and the school also incurs transportation costs. Any contributions to help defray these costs will be greatly appreciated.”
So, we have discussed the broader issue, which not brings us back to Dougherty Elementary. As we are well into the current school year, it is also important to look back and to understand the steps that were taken at JDS while it was mired in a potentially explosive environment. We sat down with Principal Nelson and he shared his thoughts.
OneDublin.org: When did you become aware of potential fiscal improprieties within the PFC? How did you react and what were your immediate action steps?
Brett Nelson
Brett Nelson: “The current PFC board at Dougherty discovered some irregularities in August of 2012. The very next day, they notified me. In turn, I notified the school district and Dr. Hanke who guided us on next steps. The PFC, District and the school then worked together to investigate. Beverly Heironimus, the District CBO, was most helpful getting the process of investigating started. This, along with the hard work of the PFC board reviewing the financials and providing documents for the investigation, lead to a detailed account of past history.”
OneDublin.org: In the aftermath of a lengthy investigation and charges being levied, what safeguards did you and the PFC organization employ?
Nelson: “Working closing with the PFC and the District many safeguards and procedures were put into place to allow for tighter controls. An example is that we are now posting all warrants and voting on them for approval. The process begins with school administration confirmation that all items will benefit instruction and programs, and then goes to the PFC board and open session for approval. It is this series of steps outlined in the Districts policies and procedures and training to all administrators by Wenger & Associates that eliminates the misuse of funds.”
OneDublin.org: With the ongoing consultation by Wenger & Associates, what would you like to convey to families at your school site as it relates to internal fiscal safeguards? Why should families and students at all school feel confident as we move forward?
Nelson: “We are sorry to have funds that should be allocated to the students misused. This was an issue that the current board and I inherited from the prior year, but with the collaborative working relationship of the parents on the board and myself with the district support we were able not just to conduct an effective investigation but also establish a positive system of checks and balances to prevent a similar incident from occurring again. We, the PFC, James Dougherty and the District are committed to the students and the programs that benefit them. These programs will be maintained and I am confident that we are more structured and ready to support student learning than ever before.”
OneDublin.org: Anything else that you would like to add?
Nelson: “As a principal it is an honor to have so much support from the district and I cannot say enough about the hours that the current PFC board and the Dublin Unified School District have put into to investigating and rectifying this situation.”
To be sure, it was a stormy situation to walk into at Dougherty Elementary over a year ago. We applaud Principal Nelson and the PFC leadership for calming the waters and moving ahead in a positive fashion. Further, we acknowledge DUSD for applying the same level of concern by offering enhanced training to all of the other school sites.
