May 21st, 2010 5:33 pm | by BETH SLOVIC News | Posted In: CLEAN UP, Schools

Updated: Audit of Jefferson High School's Student Funds Shows "Lack of Internal Controls"

Vicki Phillips naming Cynthia Harris Jefferson's new principal in June 2007

The departure of Jefferson High School's principal and business manager came on the same day that Portland Public Schools completed a financial audit of Jefferson's student-body funds. [PDF]

PPS put Cynthia Harris, Jefferson's principal since June 2007, and Reis Wilbanks, the school's part-time business manager, on paid leave on Thursday.

Also on Thursday, PPS's accounting office completed its audit covering Jefferson's 2008-2009 school year. PPS won't say if the two events are related. Harris could not be reached for comment. But Wilbanks did connect her paid leave to the audit. "I'm very puzzled by all of this," she said. "I'm on leave because I sign checks."

That audit, which examined paperwork for only a small portion of the school's $238,257.32 student-body-fund account, found numerous areas of concern for the auditor, Amoy Williamson, who performed the review. "The audit revealed a lack of internal controls over the operation of the Student Body Funds and an inconsistent tone at the top which resulted in an override of established policies and procedures without written justification," Williamson writes in the introduction to the audit.

Among the findings:

1. Jefferson leased a latte machine to serve paying fans at school athletics events for 12 months after a 2008 audit [PDF] found the school had lost $2,000 on the machine. [Update at 10:26 pm: New link to the previous school year's audit.]

2. Harris used student-body funds for purchases that included "sundry items, such as soaps, cards, folders, lip gloss, food items, flowers, etc." Jefferson sometimes offers incentives for parents to encourage them to be involved at school. But the audit did not specify how the sundry items were used; it said only that they lacked proper documentation.

3. As of June 30, 2009, 16 sub-accounts in Jefferson's student-body fund had negative balances. It is unclear how many sub-accounts there are total.

4. Two charitable donations of $5,000 or more, from Portland Opera Presents and the Jubitz Family Foundation, were deposited into the principal's discretionary account. "The principal claims that although the funds were placed in her discretionary account, that the spending was appropriate to the donation," the audit says.

5. An employee got a reimbursement four months after making a purchase, with the request for payment "supported by a copy of the spouses' on-line bank account statement which did not list the items purchased," the audit says.

6. The principal made purchases from accounts that already had negative balances. "For two purchases cited in our sample which totaled more than $7,000 the principal agreed that one purchase was made without a purchase order and that both purchases were made without prior approval," the audit says.

7. The principal entered into personal-service contracts without following district policies and without getting written agreements with contractors. In one case the contractor was paid $1,000 before the contractor signed an agreement. In another case, a contractor was paid before completing the work. In a third case, Harris paid a contractor in full on March 1, 2009 -- one month before signing a contract -- for work that was supposed to include meetings on April 11, 2009 and May 16, 2009. "Such informal procedures make it difficult to determine if all contractors are performing the work required by the contract," the audit notes.

8. The business manager approved expense requests from the principal, but district policy says the principal's supervisor should have done so.

Jefferson's student-body fund was just one of the accounts under the principal's control. Every PPS high school also has what's called a consolidated budget. Harris overspent that budget in the 2008-2009 school year by almost $70,000, as WW first reported in September 2009. It is unclear how that happened, but Portland Public Schools is continuing its financial investigation of Jefferson's accounts, a spokesman for the district says.

In recent years, five of 10 PPS high schools have had business managers, whose salaries initially came in part from a grant from Nike. PPS has hailed business managers in schools as "financial and operations professionals whose job is to free high school principals from daily facilities, budget and technology obligations, allowing them to focus more on instructional leadership in the classroom, teacher training and contact with parents," according to a 2007 PPS press release.

Photo of Harris with former Superintendent Vicki Phillips, who named Harris Jefferson's new principal in June 2007.
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