Superintendent's statement on the state audit

Statement by Seattle Public Schools Superintendent Maria Goodloe-Johnson on the state audit:

We requested an investigation by the state auditor as soon as we were alerted that fraudulent financial activity may have occurred. We also reported the loss to the Seattle Police Department. Their investigation is ongoing and they have our full cooperation.

I am very angry that any school district employee would consider using this or any other program fraudulently and for their own personal gain. Such a use would be an abuse of taxpayer funds and an appalling violation of our community's trust.

We have shut down the Regional Small Business Development Program and put in place additional financial controls, policies and procedures. These measures are designed to ensure that the public's investment in our schools is protected.

We are also working with our legal team to seek repayment of these funds where possible.

The Regional Small Business Development Program was established to encourage local small businesses to bid on school district projects. The intent was to support local jobs and spend taxpayer dollars in the local community. It is truly unfortunate that it now appears to have been abused.

The District is committed to addressing all recommendations made in the State Auditor's draft report in a prompt manner. We have already made progress in several areas:

• Ethics Program: This Winter we launched the first Seattle Public Schools ethics program. We named an ethics officer, established a complaint and investigation process, launched an ethics webpage, and will be providing training to employees.

• Whistleblower and Anti-Retaliation Program: We will provide information and training to our employees about the rights and protections provided to Whistleblowers and about our Anti-Retaliation Policy. We will vigorously enforce these protections.

• Anonymous Hotline: A hotline has been launched that allows employees and others to lodge anonymous complaints about ethics violations, fraud and other employee misconduct. This will ensure that employees have a way to raise issues without fear of retaliation. We plan to conduct an awareness campaign so that employees know about the hotline and we will follow up on complaints that are received.

• Internal Auditor: Recruitment for a new internal auditor is currently under way and we will be implementing an expanded and robust internal audit system, including additional audit staff. This system will include additional focus on personal service contracts and appropriate review of invoices.

• Insurance Claim: We have made a preliminary claim with our insurance pool for coverage regarding the loss of funds. We will pursue this claim to ensure the District is compensated in accordance with its coverage.

• Recovery of Funds: Legal counsel has been retained to assess and pursue recovery of losses and investigation costs.

• Internal Controls: Departmental performance measurement reporting requirements have been instituted in the last year and new review procedures are being developed to address the recommendations. This will help ensure that programs and associated personal service contracts receive adequate oversight, invoices are adequate and properly reviewed, and staff is trained to comply with these requirements.