By Patrick B. McGuigan

Publised: 30-Apr-2010

Sources with knowledge of past accounting and spending practices in the Broken Arrow public schools have told CapitolBeatOK documented financial mismanagement in current investigations will reach at least $3.1 million. The words “at least” may be an understatement.

The district is one of several public school systems identified by the Oklahoma state auditor as suffering from financial mismanagement.

The story unfolding in Broken Arrow is one of sustained poor management over a period of more than 10 years, with – to use a layman’s term for complicated machinery – lots of moving parts. Thousands of pages of transcripts and hundreds of individual exhibits are the basis for conclusions, shared with CapitolBeatOK, that the breadth of the scandal has hardly been hinted at in most news coverage.

In one document examined by CapitolBeatOK, a public school employee reported that Air Assurance, a local vendor, had been paid more than $550,000 in one year for work that could have been done for $130,000. 

While sources say the figure of $3.1 million covers the years 2003-2008, one key vendor’s tight relationship with the Broken Arrow public schools began in the 1990s.

In a release on Monday (April 26), the office of Auditor and Inspector Steve Burrage said, “It is a common practice for the State Auditor’s office to meet with the appropriate law enforcement agency when an audit’s findings raise questions of compliance with laws.”

Burrage’s statement came after CapitolBeatOK reported Monday morning the auditor’s office had received a request from the attorney general’s office to “refrain” from issuing a final report to allow more time to review findings and consider further action.

In an e-mail to Ricky Branch, director of the local government and special services division at the auditor’s office, Assistant Attorney General Tom Bates, director of the multicounty grand jury unit, wrote on Thursday, April 22: “Pursuant to our meeting earlier today on the above referenced audit, I am requesting that your office refrain from issuing a final report at this time so that this office can review your findings and determine what additional investigation needs to be done.”

Sources, in interviews with CapitolBeatOK, expressed concerns the request for “review” could be the prelude to some sort of redirection or recasting of the probe.

State Rep. Mike Reynolds, known as an aggressive fiscal “watch dog” at the State Capitol, had publicly expressed concern that documentation of mismanagement of taxpayer money might not be available in time for informed legislative decisions during the 2010 session.

CapitolBeatOK has learned that members of the attorney general’s staff  spent the balance of this week deploying on the case, beginning to examine evidence of massive wrongdoing amounting to millions of dollars in just one district.

Sure to provoke interest is evidence that the minutes of school board meetings in recent years have in some cases been altered by the district’s legal counsel.

Although internal battles among board members and district staff apparently go back many years, public signs of turmoil emerged in the fall of 2008, when Dr. James Sisney, district superintendent, was dismissed. Dr. Sisney had developed a reputation as a no-nonsense administrator bringing business-like acumen to public school finance, spending and governance.

Voting for his dismissal were Board member Sharon Whelpley, Maryanne Flippo and Shari Wilkins. Opposing dismissal of Sisney were board member Stephanie Updike and Board President Terry Stover.

Before he was dismissed, Superintendent Sisney had prepared an engagement letter for an independent audit of the Broken Arrow schools. In that letter he had specified the audit should examine competitive bidding procedures, to include bid-splitting (a common tactic to avoid competitive bidding thresholds).

After Sisney’s dismissal, the bid-splitting language was not included in a new version of the engagement letter. At the time, Sisney’s replacement, current Superintendent Dr. Gary Gerber, said the prior letter had not been approved by board members, but Gerber did not point out several changes in items for focus in the audit engagement letter.

The Broken Arrow school controversy has simmered for 18 months. It came to statewide attention two months ago, when state Auditor and Inspector Steve Burrage released an investigative audit of the Skiatook schools. That probe documented more than $500,000 in apparently excessive payments the district sent to a vendor.

In that case, the school system paid “$60, numerous times, for $11 trash cans,” Burrage said. For three mop heads valued at $13.50, the district paid $540. In the process, “nobody compared the invoice to the delivery ticket.” The average “commission” for every dollar spent on janitorial supplies was 63 cents, the audit found.

In unusually blunt language for a public official, Burrage said the “fraud, waste and abuse” he found were infuriating. He told reporters, “We usually release these audits without much fanfare. I’m making an exception this time because of the disgraceful, senseless waste of taxpayer dollars that keeps coming out in our investigative audits.”

In addition to Skiatook and Broken Arrow, Burrage said his office is conducting investigative audits in the public schools of Butner, Wagoner, Boynton and Seminole.

One source close to the unfolding story, a veteran employee of public schools in Oklahoma, lamented, “This is a tragedy, but this particular tragedy illustrates the continuing good-old-boy mindset that is keeping Oklahoma education from getting better. This is a story of millions of dollars wasted, rather than spent on making education better for the kids.”