COMMENTARY (Part II): It didn’t start with County Commissioners, and didn’t end with the Health Department – Dealing with mismanagement, waste, fraud and abuse in Oklahoma Government
Published: January 2nd, 2018
OKLAHOMA CITY – Part I of this commentary examined the current controversy centered on mismanagement, waste, fraud and abuse at the Oklahoma Department of Health. That portion of this review of Oklahoma governance also touched on state government’s unwillingness to implement – either rapidly or incrementally – a broad bipartisan consensus on the need for sentencing reform, and changes in prison policies and practices (http://www.www.capitolbeatok.com/reports/commentary-part-i-it-didn-t-start-with-county-commissioners-and-didn-t-end-with-the-health-departmen).
In Part II, the focus is on PK-12 public education. The concluding paragraphs of this commentary focus on the need for regular independent audits of the state’s leading spending “cost-drivers,” including education.
K-12 Education spending scandals of recent years – A Brief Review
Year-in and year-out, education at all levels in Oklahoma – PK-12, Higher Education and CareerTech – gets around 51 percent of the state government budget. Despite the flattening of the state government spending curve in recent years, little has been done to restrain administrative costs or shift existing resources from non-instructional purposes to classroom use.
Although voters in 2016 rejected a ballot measure intended to force shifts in resources to finance a public school teacher pay hike (http://www.www.capitolbeatok.com/reports/a-not-so-fond-look-back-at-2016-the-hofmeister-indictment-and-boren-s-defeat-lead-capitolbeatok-s-to) – incidentally, the most significant defeat for University of Oklahoma President David Boren during his long career in politics and policy – support for better teacher pay remains popular, including among those dubious about tax increases.
OCPA, the state’s largest free-market think tank, has often offered methods that could be used to finance a good pay hike for classroom teachers. One of OCPA’s ideas (there have been several along these lines) would increase the “exclusivity fee” for Class III gaming operations run by the state’s Native American Tribes.
Jonathan Small, OCPA’s president, commented last May (in the latter stages of the regular legislative session), “We are very aware of the growing tribal sector compared to the non-tribal sector. Given that Oklahomans expanded gaming in the mid-2000s specifically for education and teacher pay raises, it’s fitting that gaming fees be increased to reflect the enormity of the gaming industry and fund a $1,000 teacher pay raise and income tax elimination.”
It’s not hard to build a list of public school financing controversies that run into the millions of dollars.
Sketched here are a few instances — and reference to a particularly egregious scandal from a decade ago.
In Chickasha, school district officials recently authorized an “independent” investigation of allegations of embezzlement and failure to report child abuse of special needs students. Without a proper investigative audit from the state Auditor and Inspector’s office, underlying issues may never be fully understood. In any case, the employees named in some stories have drawn support from many district patrons (http://newsok.com/school-district-investigation-underway/article/5576437).
Poor management and embezzlement in the Grant-Goodland school district led to a rare instance of state seizure of the management functions. Five years worth of records discovered that $200,000 of district money could not be found. A superintendent and a district deputy treasurer were suspended (the latter official killed herself the day after her suspension was announced), and a board member resigned, in the midst of the scandal. (http://www.oklahoman.com/article/5487676?access=a070a8eb1dcb8738dcee3908798b5fd2)
Last summer, the former superintendent at Grant-Goodland, was indicted – accused of stealing $50,000 (http://www.oklahoman.com/article/5553894?access=34e0a4fd3460d2f85f91e6af802a847e).
Then, there’s the tiny district of Swink, where an astonishing (proportionately) $235,000 was mis-spent over the same five years as the Grant-Goodland fiasco (2010-2015).
The total raised eyebrows because, beyond the boldness of funds-shifting, only 66 students were attending classes in the K-8 district in those years.
Two years ago, a television report concerning the Swink scandal, by Fox25 reporter Keaton Fox included this sentence: “The total amount of unaccounted for cash: $234,996 over five years, nearly 1/5th of the district’s total spending in a year.” (http://okcfox.com/news/local/okla-school-district-employees-accused-of-stealing-thousands)
Commenting on the Swink situation in the fall of 2015, state Auditor and Inspector Gary Jones said at least part of the problem might lie in a couple of pragmatic factors.
The Tulsa World quoted him telling the state Board of Education, “We have a real problem in the state of Oklahoma in that the number of firms auditing is decreasing. We have fewer number of firms doing more work. I think we have a tendency to try to get through the work more quickly.”
He also pointed that at this time of a declining number of firms, the need for rotating “house” auditors is actually greater, to avoid having schools engage in “audit shopping.” (http://www.tulsaworld.com/newsEducation,/amid-embezzlement-case-broken-arrow-firm-grilled-about-clean-audits/article_943e0d42-b90e-5ff5-ad96-3acd46254c8d.html
Speaking of Jones, his staff garnered plaudits for their response to a citizens petition request audit of the Crooked Oaks public school district, covering the period from July 1, 2011 to November 30, 2014. From the agency’s website, a summary (https://www.sai.ok.gov/Search%20Reports/database/CrookedOakWebFinal.pdf) of that audit’s findings follows:
* Between July 2013 and August 2015, Michael Robinson, a support employee of the District, was paid $105,714.68 or $59,229.78 in excess of his authorized compensation. No approvals or contracts could be provided for any of the additional compensation paid.
* False timesheets were utilized in the payment of Michael Robinson.
* Superintendent Bradley Richards received an increase in salary of $19,220.92 and stipends of $600 that were not provided for in his contracts as required by law.
* The District did not maintain proper control of activity event revenue, resulting in lost revenue of at least $700.
* The Clerk credited almost $7,000 of activity fund revenue to subaccounts without Board approval.
* Superintendent Richards incurred a $25,500 debt against the District that was not Board approved or timely encumbered, and was paid outside the correct fiscal year.
* The Clerk destroyed credit card statements and logs that were essential in the documentation of credit card expenditure activity.
* Vehicle use logs were not properly completed and vehicle usage was not documented in accordance with school policy.
* The District provided cell phone service to a school board member, continuing to pay for the service eighteen months after the individual no longer served on the Board.
* The District incurred a cost of $2,513.90 for a phone that was not used.
* Wi-Fi devices paid for by the District were, at times, used for personal purposes.
* The District sold surplus property without Board approval and records were not maintained for all sales.
Many other districts have faced scrutiny for dubious spending in amounts large and small, including Oklahoma City, McAlester, and Copan.
The granddaddy of the known modern school scandals is likely that of tiny Marble City, and the case of Superintendent Larry Couch.
In May of 2008, he entered a guilty plea of stealing nearly $1 million in federal and state school aid sent to the district under his care. (http://newsok.com/article/3249798)
Caught red-handed, his was a rare instance in which the stolen money was actually returned to the district, perhaps because the feds got deeply involved. In one of the years of his wrong-doing, he reported income of only $24,062, when his adjusted gross income was actually $142,312.
Posing a couple of questions
A steady chorus of voices have demanded expansion of government and increased taxes over the past few years. These voices have dominated news coverage and commentary particularly in the last year.
But the demands do not, at present, have majority support in the state Legislature. To be sure, the drumbeat is loud, and might drown out those who believe Oklahoma government is already too big, and that taxes are high enough to sustain a government they are willing to support, including help for the most vulnerable among us.
In the Legislature over recent months there has been, at times, majority support for partial fixes to the current budget challenges, combinations of small spending cuts with revenue enhancements.
These include but are not limited to the measures Gov. Fallin vetoed after the first special session (http://www.www.capitolbeatok.com/reports/fallin-vetoes-plan-b-budget-schulz-says-action-throws-state-finances-further-into-chaos), and those she signed after the second (http://www.news9.com/story/37129760/gov-fallin-signs-health-care-funding-bills). Other measures appeared to have majority support, but did not reach the floor of either the House or Senate.
As a third special session looms in days (with the regular session only a month away), a case can be made for continued restraint when it comes to passage of broad tax hikes. This is true both for some of the particulars of the budget and spending challenges right before lawmakers, and in the broader long-term picture.
Restraint might allow time for a stem-to-stern examination of management and expenditures in the troubled ship of state. For a long time only the two Garys running for governor (lawyer Richardson of Tulsa, and Auditor and Inspector Jones) pressed consistently for more frequent and serious audits of state agencies. Their views now border on being conventional wisdom.
In conclusion, two rhetorical questions seems in order.
What might be the result if each of the areas of government with the clearest instances of misappropriations over time (Health and Education) knew there would be regularly occurring (every 2-4 years) audits of expenditures?
And, what if the Legislature actually followed through on a broad policy consensus — fairly won in challenging political circumstances — to reform the policies and practices surrounding Corrections in Oklahoma?