Controlling Your District's Environment

By Charles K. Trainor

In February 2012, officials from Pennsylvania’s Bensalem School District contacted the local police. A tip alleged that the foreman and members of the grounds crew manipulated time cards to indicate employees were on the job when they weren’t. The tipster said that two employees, absent for one year and three years, respectively, were paid for shifts they never worked.

The losses associated with this incident were estimated to be more than $200,000. Two arrests were made in this “ghost employee” scam.

Another tip led police to investigate problems in the district’s bus garage. According to police, employees stole tires and batteries purchased for district vehicles, then sold them on the Internet, and kept the cash. One individual allegedly gave 30 vehicles to a junkyard without administrative approval. As compensation, he and his friends scavenged parts for their personal use, charging the district’s account.

Police believe the scams have operated for 10 to 20 years. This February, a year after the initial investigation, police arrested 18 additional current and former district employees, including a previous business manager. Investigations continue, with the possibility of more arrests. Preliminary loss estimates are at more than $1.5 million.

Unfortunately, what occurred in Bensalem is not rare. How does it happen? Sometimes districts simply lack the organizational structure to protect themselves from internal and external threats. At other times, controls may be in place but the oversight necessary to verify that policies and procedures are operating effectively is lacking. Now is a good time to assess your district’s control environment and evaluate it to determine if board oversight is effective.

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