Office of Inspector General The School District of Palm Beach County

Transcription

1 Office of Inspector General The School District of Palm Beach County Case No Pahokee Middle/Senior High School Agricultural Land Lease Monies TABLE OF CONTENTS PAGE EXECUTIVE SUMMARY i AUTHORITY AND PURPOSE 1 BACKGROUND 1-2 REVIEWS PERFORMED 2 RESULTS OF REVIEW 2-4 CONCLUSIONS 5-7 ADDITIONAL INFORMATION 7-8 FURTHER ACTION 8 EXHIBITS & ATTACHEMENTS Exhibit 1: Clarifying Points 9 Exhibit 2: Letter & Response to/from the Bureau Chief Management response from the Chief Operating Officer 23

2 Office of Inspector General The School District of Palm Beach County Case No Pahokee Middle/Senior High School Agricultural Land Lease Monies EXECUTIVE SUMMARY The Office of Inspector General (OIG) initiated an investigation in response to a complaint sent to School Board Members and the Superintendent regarding Pahokee Middle/Senior High School (School). The complaint alleged 1) sexual misconduct by school staff; 2) employee(s) cover up of the arrest of a school employee for fraud; 3) employment application documents altered; and 4) agricultural income inappropriately used, and $60,000 of unaccounted income. In response to the above allegations, and prior to the OIG commencing its investigation on January 9, 2014, the Office of Professional Standards submitted a document to the School Board Members clarifying the District s past actions regarding the allegations. The document indicated that the District investigated and disposed of all four allegations. The results of the OIG s investigation concluded that the District properly addressed the first three allegations. However, the allegation regarding misappropriation of agricultural income was not investigated. As a result, the OIG expanded the scope of their investigation specifically on the fourth item. Pahokee derives income from two parcels of land leased and farmed by local growers. One parcel owned by the District, the other utilized through a land use agreement with the State of Florida. During the past four fiscal years, annual income for both parcels totaled $272,007. The results of the investigation concluded the District properly recorded agricultural income for Fiscal Years 2010 through Consequently, the allegation regarding unaccounted agricultural income was unfounded. We did conclude, however, that a portion of agricultural income totaling approximately $32,843 was expended outside of required student-related activities, inconsistent with the account definition for Sugar Cane Operations. Those expenditures, as detailed in the report, included staff meals, faculty meetings, and negative budget balances. i

3 Office of Inspector General Case No A Farming Agreement between the District and a local grower expired several years ago. There is no loss of income, as the farmer continues to compensate the District. We recommended the District update this agreement. In the course of our review, we identified an issue outside of the allegations under investigation. Land lease contracts affecting two District schools, including Pahokee, did not comply with certain required land use provisions. We addressed this issue with District management, who initiated corrective action. ii

4 Office of Inspector General The School District of Palm Beach County Case No Pahokee Middle/Senior High School Agricultural Land Lease Monies INVESTIGATIVE REPORT AUTHORITY AND PURPOSE Authority. School Board Policy 1.092, Inspector General (4)(a)(iv) provides for the Inspector General to receive and consider complaints, and conduct, supervise, or coordinate such inquiries, investigations, or reviews as the Inspector General deems appropriate. Allegation. The Office of Inspector General (OIG) initiated an investigation in response to a complaint received by School Board members and the Superintendent on January 7, 2014, regarding Pahokee Middle/Senior High School (School). The complaint alleged: 1) Sexual misconduct by School staff 2) Employee(s) cover up of the arrest of a School employee for fraud 3) Employment application documents altered to show the applicant was a college graduate 4) Agricultural income inappropriately used, and $60,000 of unaccounted income BACKGROUND In response to the above allegations, and prior to the OIG commencing its investigation on January 9, 2014, the Office of Professional Standards submitted a document to the School Board Members clarifying their response to the allegations (Exhibit 1). Summarily, the Professional Standards clarifying points indicated that regarding: 1) Allegations of Sexual Misconduct Over the past several years, a number of complaints were reported. All complaints were fully investigated and criminal charges in some cases were filed. 2) Employee s Cover-Up In February 2011, School Police conducted a criminal investigation resulting in the arrest of a School employee who was charged with grand theft. The employee s criminal case was concluded in September The Office of Professional Standards conducted an administrative investigation. Disciplinary sanctions were recommended and taken. 1

5 Office of Inspector General Case No ) Alteration of Employee s Application The employee was hired as a dayto-day substitute teacher and part-time coach. Neither of these positions required a college degree. The employee s application shows that they are not a college graduate. 4) Misappropriation of Sugar Cane Money An HR Manager investigated an anonymous complaint during the School Year 2011/12. The allegations were unfounded. The findings showed monies spent exclusively on student-related expenditures. There was no evidence that any employee misused the monies. REVIEWS PERFORMED Document Review School Accounting Records School Advisory Council (SAC) Minutes Applicable School Board Policies School Board Internal Accounts Manual Farming Agreements Interviews Conducted Former Middle School Principal This investigation was conducted in compliance with the Quality Standards for Investigations within the Principles and Standards for Offices of Inspector General, promulgated by the Association of Inspectors General. RESULTS OF REVIEW We confirmed the clarifying points issued by Professional Standards for items 1 through 3. 1) Allegation #1: Sexual Misconduct of School Staff The OIG confirmed with School Police that over the past several years, various sexual misconduct cases were reported and fully investigated. Criminal charges were filed where warranted. 2) Allegation #2: Employee(s) Cover-Up The OIG confirmed that both School Police and the Office of Professional Standards each conducted investigations and took appropriate action. 2

6 Office of Inspector General Case No ) Allegation #3: Altering an Employment Application The OIG confirmed the Office of Professional Standards reviewed the allegation and determined it was unfounded. With regard to the allegation of misappropriation of sugar cane money, the OIG review results varied significantly from the clarifying points issued by the Office Professional Standards, which stated that an HR Manager investigated an anonymous complaint during the 2011/2012 school year. The allegations were unfounded. The findings showed that monies were spent exclusively on student-related expenditures. There was no evidence that the monies were misused by any employee. Specifically, the OIG concluded the following: 4) Allegation #4: Misappropriation of Sugar Cane Money The documentation provided by Human Resources did not include any evidence to substantiate there had been a review of the financial aspects of the relevant account. The Human Resources Manager, who received the original allegation, provided a statement to the OIG explaining that while the allegation was discussed, he could not find any documentation indicating an investigation was performed. Because there was no evidence that Allegation #4 was previously investigated by Human Resources, the OIG performed an investigation specifically on this item. Agricultural Income. The School derives income from two parcels of land farmed by local growers. Parcel A (20 acres), owned by the District, generates annual revenue through a 15-year lease established in Fiscal Year Revenue from Parcel B (44 acres), owned by the State of Florida, depends on several variables including the market price of sugar cane, annual planting schedule and as a result varies from year to year. For example, the farming cycle requires planting a cover crop instead of sugar cane to improve soil quality, causing a decrease in revenues from the parcel during that year. The School has received revenue from Parcel B since

7 Office of Inspector General Case No Revenue generated from the two parcels since Fiscal Year 2010 is shown below: Agricultural Income Fiscal Year Parcel A Parcel B Total 2010 $ 10, $ 55, $ 65, , , , , , , , , , , , , Totals $ 51, $ 220, $272, No District Guidelines. We found no specific detailed District guidelines governing the use of agricultural income. Growers mail the income checks for the two parcels directly to the School, and staff deposits the checks into Account # of the School s Internal Accounts. As such, the use of this revenue is governed by DOE Rules (Chapter 8 of the 2012 Department of Education s Financial and Program Cost Accounting and Reporting for Florida Schools) and the District s Internal Accounts Manual. The Account Definitions for Internal Funds in the Internal Accounts Manual provides for appropriate use of Sugar Cane Operations Sugar Cane Operations. This account is used by those schools that generate revenue from the lease, management, and operation of farmland provided to the schools by the State of Florida. The actual work performed on each farm is performed by subcontract labor in legal agreement with each school center. The profit arising from this entire operation is for the direct benefit of all students is under the direct supervision of each school principal. This account is in no way connected with the Future Farmers of America club account. All expenditures from this account are subject to State and District rules. Split Campus. The School historically served students from Grades 6 to 12 in one building until Fiscal Year 2011 when a new middle school building opened next to the high school. A school principal was added to oversee the middle school. However, the two buildings continue to share one school ID number, one bookkeeper, and one bank account for internal funds. Beginning in Fiscal Year 2012, accounts were added to the Chart of Accounts to split school-wide accounts between the Middle and High Schools (i.e., HS Administrative Courtesy and MS Administrative Courtesy; HS Sugar Cane Operations and MS Sugar Cane Operations). After that, agricultural revenue received was split evenly between the High School and the Middle School accounts. 1 Decrease in annual revenue resulted from normal farming cycle. 4

8 Office of Inspector General Case No CONCLUSIONS Proper Accounting of Agricultural Money. Based on a review of deposit records, general ledgers, and related documentation, we concluded that the District properly accounted for the agricultural income. The allegation regarding $60,000 of agricultural income missing is unfounded. Improper Use of Money for Non-Student Related Activities. Due to the lack of detailed District guidelines governing the use of agricultural income, we relied on the description of the account definition for Account # Sugar Cane Operations, which states that the profits arising from this operation are to be used for the direct benefit of all students. A review of past uses found that the bulk of agricultural money was spent for student incentives, such as honor roll meals, field trips, gift cards, and cash awards to students. Additionally, the money was used to supplement the expenses of sports teams, to reduce the amount owed to the District for lost textbooks and sporting event security, and to provide classroom and tutorial supplies. However, during our investigation, certain expenditures were determined to be nonstudent activities, as follows: IB Articulation Meeting. Twelve (12) staff members of the School attended an International Baccalaureate (IB) Schools Conference in San Antonio, Texas during July 20-25, On July 22, 2011, all 12 staff members, plus two staff members from Pahokee Elementary and one staff member from the Department of Choice and Career Options, attended a dinner meeting at a restaurant in downtown San Antonio. The total cost of the dinner for 15 participants was $ and paid with School check #21958 dated June 14, Documentation IB K-12 Articulation Meeting Agenda was attached to the Check Requisition. The available documentation does not support that this expenditure represented a direct benefit to all students. Additional Non-Student Related Activities. In addition to the Articulation Meeting discussed above, 12 additional expenditures from the Sugar Cane Operations Account between July 1, 2009 and December 31, 2013 were not directly associated with studentrelated activities, as shown in the following Table 1. The former Middle School principal stated it was her understanding agricultural monies could be used for certain staff-related activities, when the benefits resonated to the students. 5

9 Office of Inspector General Case No Table 1 Non Student-related Expenditures Fiscal Year Vendor Purpose of Expenditure Amount 2010 Poppa Jimmy's Catfish & More Restaurant Holiday Breakfast for the staff $ School District Cover negative budget balance for custodian 18, School District P-card charges for faculty party P-card charge for online testing 2012 School District fee for staff member Caine & Weiner 2012 School District Settlement for collection agency for postage machine 2, Delinquent P-card charges (11-12 months) of Middle School 2, Precision Printing Teacher Appreciation Week Reimbursement Teacher Luncheon Ya Foot In It Principal's Luncheon Ya Foot In It Review Team Luncheon Delinquent P-card charges ( School District months) of Middle School 1, Sunshine Golf Cars Golf Cart Repairs Totals $29, Two transfers from the Sugar Cane Operations Account were made to offset the deficits in adult-related accounts that occurred during Fiscal Year Spending in these accounts is dedicated strictly to adult staff and is not for the benefit of students. (Table 2.) Table 2 Staff Related Accounts Fiscal Year Transferred to Account Cause of Deficit Amount 2013 Faculty Fund Overspending $ MS Administrative Courtesy Overspending 2, Totals $2, Total expenditures on non-student related activities were $32, during July 1, 2009 through December 31,

10 Office of Inspector General Case No Based on the description in the account definition in the Internal Accounts Manual for Account # Sugar Cane Operations, the allegation regarding inappropriate use of agricultural income was substantiated. We recommend that management develop and implement detailed guidelines for uses of agricultural income by the recipient schools. No written agreement. A local grower has been farming Parcel B on behalf of the School since approximately The first formal Farming Agreement between the School Board and the grower was signed on January 7, 1987 for a term of 10 years. On October 20, 1995, the Board approved an Addendum to Farming Agreement extending the original term for five years, with an option for an additional five years. The grower continued to send income checks to the School, although we did not identify any current written agreements with the grower approved by the School Board beyond the agreements described above (i.e. for the period 2006 to present). ADDITIONAL INFORMATION Land Use Agreement with State. On February 20, 2014, we notified management of an issue we became aware of during our investigation that required immediate attention. Two schools, Pahokee Middle/High School and Glades Central High School receive income annually derived from two parcels of agricultural land leased from the State of Florida. Parcel B described above is one of these two parcels. Use of these parcels was conveyed by the Trustees of the Internal Improvement Fund (TIIF) 2 to the Board of Public Instruction of Palm Beach County on November 29, 1960, through Land Use Agreement #1433. The agreement restricts the use of both parcels for agricultural education projects and purposes of the Vocational Agricultural Divisions of both high schools, under the direction of the School District. Other use restrictions include use by any chapter of Future Farmers of America (FFA) of the respective high schools, provided such use is supervised by the Vocational Agricultural Divisions. Both schools had active FFA clubs and Vocational Agricultural Departments for many years and used the two parcels for farming and ranching activities. The departments and clubs were discontinued in or about School Year The individual schools have maintained 2 In 1969, the name was changed to the Board of Trustees of the Internal Improvement Trust Fund. The Board of Trustees consists of the Governor, Attorney General, Commissioner of Agriculture, and the Chief Financial Officer. The Board of Trustees holds land in trust for the benefit and use of the people of the state. 7

11 Office of Inspector General Case No relationships with local growers who continue to produce sugar cane and manage the land on behalf of the schools while remitting the earned income to the schools. The schools and District may be at risk of losing the income generated by local growers farming land governed by the School Board s Land Use Agreement due to the use restrictions outlined above. Both schools have relied on the income from these parcels since approximately 1972 to supplement student education and educational programs. The OIG recommends that: 1. Management determine whether it is reasonable and beneficial for the District to institute an agricultural education program (consistent with the provisions of the State Board of Education) and seek a modernization of the Land Use Agreement with the Board of Trustees of the Internal Improvement Trust Fund, including public-private partnerships with local growers regarding the applicable land; or Determine whether the Board of Trustees would release the School Board from the requirement that the parcels be used only for agricultural education projects and purposes, while still permitting the local growers to farm such lands to benefit the local schools; and 2. Formalize agreements with local growers On July 23, 2014, management submitted a proposal to the Bureau Chief of the State s Public Land Administration with an updated plan to implement agricultural education programs and initiatives at both schools. The proposal and the State s preliminary response are attached (Exhibit 2). FURTHER ACTION The OIG provided a draft copy of this report to the appropriate parties for review and response. Attached hereto in its entirety is the response from the District s Chief Operating Officer, Mike Burke, detailing the District s action with regard to the land use agreement with the State. As expressed by Mr. Burke, the State is awaiting a legal opinion from their Legal Counsel. The OIG will follow up with management to determine the outcome of negotiation with the State. 8

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