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February 29, 2012 Published in Schools

Alexandria City Council Allocates $6.36 Million To Reconcile Public School System’s CIP Financial Muddle

By Carla Branch

With great reluctance, the Alexandria City Council approved a $6.36 million capital budget allocation to cover financial irregularities in the Alexandria City Public School system’s handling of capital projects. These funds do not exceed the approved ACPS Capital Improvement Program budget.

ACPS Superintendent Morton Sherman discovered the problems last fall and commissioned an outside audit. The results of that audit have not yet been made public but are expected to be released soon. So far, two members of the ACPS facilities staff and the school system’s Chief Financial Officer have left.

Preliminary findings by an internal review indicate that work on some projects was billed to other projects where there was sufficient funds and vendors were asked to submit invoices in fiscal years to those in which the work was actually performed. There are no indications that anyone took money for their own gain.

Within the $6.36 million, $2.8 million is to cover cost over-runs on capital projects. “While I understand that there is money in the capital budget to cover these expenditures and that the school system is not asking for additional money from Council, I have to point out that this $2.8 million is coming out of funds, which were designated for projects at five other schools,” said Vice Mayor Kerry Donley at last night’s Council meeting. “That means that these five schools are going to have to do without these projects and that at some time in the future ACPS is going to need to put that money back into those projects.”

ACPS Deputy Superintendent Margret Byess explained. “While it is not exactly a one-for-one allocation, that is true. Some of the money is coming from excess funds for projects that have been completed and some of the funds that are being transferred in this request are for new projects that have not yet been started,” she said. “We had to go back two years to deal with this issue, which arose because contracts were authorized for which there was not funding.”

Donley expressed outrage. “That means you were basically operating on over-drafts and that violates every basic principle of public accounting,” he said. “What are you doing to ensure that this never happens again?”

Byess explained that ACPS has initiated multiple checks and balances and levels of approval for transferring funds between CIP projects. By policy, these transfers must be approved by the School Board and then by City Council.

“The City does the accounting for the CIP budget and we have not kept our own set of books for these accounts,” Byess said. “We will now begin to keep ghost accounts so that we can better monitor these expenditures.”

Again, Donley was astonished. “How can you track expenditures when you don’t know what is in these accounts,” he asked. “This does not give me a lot of confidence in the school system’s ability to administer funds and is going to make us reluctant to continue to respond positively to ACPS funding requests. The superintendent continues to tell us about the many facility maintenance needs and this $2.8 million could have been spent to cover some of those. Now it is needed to cover cost over-runs. This is not the last time we are going to talk about this matter.”

Councilman Frank Fannon also had a question about the funds. “I guess what you are telling us is that the work has already been done so we really don’t have a choice,” he said.

Byess agreed that this was the case and Council approved the request unanimously.

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