State audit critical of Seattle school district

The state auditor's office on Tuesday issued a sharply critical audit of Seattle Public Schools, accusing the district of misappropriating money or leaving public assets "susceptible to misappropriation" because of ineffective policies, failure to enforce its own rules and inadequately trained staff.

District officials said some of the findings dating back to the 2008-09 school year have already been resolved, and others are being addressed.

The message to Seattle Public Schools from the state auditor is keep improving the district's internal financial controls.

The audit report also demands that the school board take a more active role in monitoring the district's financial controls. Board members should evaluate the new procedures set up by the superintendent to answer the issues raised in previous audits, not just leave the improvements to the professional staff, the audit said.

"It is the responsibility of the board to hold executive management accountable for adherence to district policies," the audit said.

The report notes some issues that have come up in previous audits, including about $334,000 overpaid to employees because of mistakes made during conversion to a new payroll system.

Duggan Harman, the district's executive director of finance, said more than $71,000 has been repaid, payment plans are in place to recover another $145,000, and the district is working to recover the rest of the money, some of which was paid to people who no longer work for the district.

Other issues raised in the audit include:

- Not recording and making public all board meeting minutes. Harman said a new policy has resolved this issue.

- Not reporting more than $7,000 in equipment losses to the state. Harman said this concerned a series of thefts at one school, which the district was aware of, but someone forgot to send the proper form to the state.

- Spending more than $1.8 million in capital project dollars on training instead of actual construction costs, a use the auditor ruled to be against state law. Harman said all the money spent on training minority- and woman-owned contractors on how to do business with the district is being transferred back into the capital fund from the general budget.

- An overarching need to tighten controls on how money is spent, tracked and reported, including the use of district credit cards, and procedures for processing checks coming into the district.

"We take any of these audit findings very seriously," Harmon said, adding that an executive level audit committee is actively working to fix any systems that need fixing. "We're deeply committed to being good stewards of the public's resources."