The District's School Modernization Program Has Failed to Comply With
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028:15:JL:LG:MY:cm:LP:KP The District’s School Modernization Program Has Failed to Comply with D.C. Code and Lacks Accountability, Transparency and Basic Financial Management July 1, 2015 Audit Team: Julie Lebowitz, Audit Supervisor Lilai Gebreselassie, Auditor-in-Charge Markia Yates, Auditor A Report by the Office of the District of Columbia Auditor Kathleen Patterson, District of Columbia Auditor July 1, 2015 What follows is the Office of the District of Columbia Auditor’s (ODCA) report entitled “The District’s School Modernization Program Has Failed to Comply with D.C. Code and Lacks Accountability, Transparency and Basic Financial Management.” This performance audit was conducted as required by D.C. Code §38-2973.05. ODCA addressed the requirements of the statute by: 1. Evaluating the use of the Public School Capital Improvement Fund including a school and project specific audit of all expenditures for school facility capital improvements; and 2. Assessing whether the Department of General Services (DGS) met the process, quality, schedule, and cost objectives of the Facilities Master Plan (MFP) and Capital Improvement Plan and Budget. ODCA thanks DGS staff for their assistance and cooperation during this audit. We also would like to thank representatives of the D.C. Partners for the Revitalization of Education Projects (DC PEP), a joint venture partnership between McKissack & McKissack and Brailsford & Dunlavey, as well as representatives of the Modernization Advisory Committee. All of their valuable time and efforts spent on providing us information were greatly appreciated. This report is part of a package of information designed to assist the D.C. Council in its oversight of the school modernization program. Other elements include: A companion report titled Audits of Public School Construction Programs: A Literature Review. An interactive map of schools and funding broken down by individual campus and by ward, available here: http://geospatial.dcgis.dc.gov/templates/dcfinder/s2.html?appid=102e3aeccafb487296c 3b17142315828. July 1, 2015 The District’s School Modernization Program Has Failed to Comply with D.C. Code and Lacks Accountability, Transparency and Basic Financial Management What ODCA Found Why ODCA Did This Audit The audit was conducted as required by D.C. law charges the Department of General Services (DGS) D.C. Code §38-2973.05. with oversight and management of the District’s school modernization program. In addition to DGS administration, What ODCA Found: several other District offices and agencies have varying roles in the design and execution of the program, including the Deputy Mayor for Education, the Mayor of the District of I. The Fenty and Gray Columbia, the Council of the District of Columbia, and the Administrations, the Office of District of Columbia Public Schools (DCPS). Public Education Facilities Modernization, and the This decentralized structure may well have contributed to a Department of General Services number of the problems outlined in this report. It has proven have failed to comply with difficult, if not impossible, to determine how, when, why, and requirements of the School by whom schools are selected for modernization. Additionally, Modernization Financing Act of the District does not currently provide the public with 2006. comprehensive data on both the state of the program and II. The District Government failed to plans for its future. The District has delegated the day-to-day monitor school modernizations management of the program to a partnership of two large for compliance with statute, project management firms and has provided only limited contracts, best practices, and to supervision of their work. secure cost savings. III. OPEFM/DGS failed to provide During ODCA’s review of individual projects, we found several basic financial management, specific concerns regarding the manner in which DGS creating the risk that the District managed the program. Issues ranged from a lack of support has not obtained maximum value for payments that DGS made to contractors, to a basic for taxpayer dollars and the inability to produce required contracts and reports. The potential for the misuse of internal control environment has made little progress since taxpayer funds. ODCA’s last audit of the program in 2011. In some cases, the control environment was so deficient that ODCA could not perform the assessments necessary for a basic program evaluation. With this audit and others to follow during the course of the coming year we hope to provide constructive feedback to assist the executive and legislative branches of the District government – including DGS and DCPS as well as policymakers -- in righting the ship of school modernization. Providing facilities conducive to learning remains a top priority for the Mayor and Council and securing the greatest value possible For more information regarding this report, please for taxpayer dollars is the goal of this and subsequent audits. contact Anovia Daniels, Communications Analyst/ANC Outreach, at [email protected] or 202-727-3600. Table of Contents Background ...................................................................................................................................................................... 2 Objectives, Scope and Methodology ................................................................................................................................ 7 Audit Results .................................................................................................................................................................... 9 I. ... The Fenty and Gray Administrations, the Office of Public Education Facilities Modernization, and the Department of General Services have failed to comply with requirements of the School Modernization Financing Act of 2006. ............ 9 The District has not met the process and schedule objectives of the Master Facilities Plan and does not have a process in place for selecting schools for modernization. ........................................................................................... 9 The Mayor's Capital Improvement Plan did not comply with D.C. Code § 38-2803(d), omitting important information about the future of the District's schools. ................................................................................................................. 15 The District's Modernization Advisory Committee could have provided valuable technical expertise to the District's school modernization program and identified deficiencies in the MFP and CIP, but due to inadequate support, stopped meeting in 2008. ........................................................................................................................................ 17 The Mayor, D.C. Council, and CFO disregarded the funding provisions of the School Modernization Financing Act of 2006. ....................................................................................................................................................................... 19 II. The District Government failed to monitor school modernizations for compliance with statute, contracts, best practices, and to secure cost savings. ............................................................................................................................. 22 The District failed to collect required documentation for school modernization contracts and may have spent more on construction costs than was necessary or contractually required. ........................................................................ 22 High school modernizations have exceeded the cost per square foot standard included in the 2010 MFP. ................ 27 A majority of modernization projects reviewed exceed the District’s LEED standards, potentially driving costs beyond projections. ............................................................................................................................................................. 29 III. OPEFM/DGS failed to provide basic financial management, creating the risk that the District has not obtained maximum value for taxpayer dollars and the potential for the misuse of taxpayer funds.............................................. 31 DGS’ internal control environment hindered ODCA’s review of the District’s school modernization program and requires substantial improvement. .......................................................................................................................... 32 For 166 out of 458 project budget transfers reviewed, representing $168,997,484 in budgetary authority, ODCA could not verify that the project expenditures were approved before they were made...................................................... 37 Neither DGS nor DC PEP could properly support a substantial number of payments made to District contractors, creating the risk of improper payments.................................................................................................................... 39 DGS record keeping does not provide an accurate accounting of the total cost to modernize each District school. ... 45 $44,945 of funds allocated for the District’s school modernization program were instead spent on parks and community centers. ................................................................................................................................................. 47 IT equipment is not being properly monitored as DGS purchases and installs the equipment in District Schools. .....