After gaining little traction over the past two years, the push to hire an internal auditor for Scottsdale Unified School District is gaining momentum.
The prospect of hiring an internal auditor has been brought up sporadically over the past few years but the Governing Board had not broached the topic for nearly 10 months until Board President Allyson Beckham asked to discuss it at a future meeting in October.
Board Member Jann-Michael Greenburg, who made hiring an auditor a central issue in his 2018 election campaign, told the Progress he anticipates the board will vote before the end of the year.
Greenburg long pushed for a staff auditor to identify potential financial misconduct following the tenure of former Superintendent Denise Birdwell, who was fired in 2018 following allegations she took payments from an architect who later was awarded district contracts.
Other alleged impropriety related to contracts awarded to that architect, Brian Robichaux, resulted in a complaint filed by the state Attorney General that the district settled in 2018.
Birdwell’s CFO Laura Smith was also indicted on fraud and conflict of interest charges for signing off on contracts to a company owned by her sister and is awaiting trial.
But those scandals are not the only issues an auditor could help the district avoid, supporters say.
Greenburg said an auditor would also help increase efficiencies, limit waste and improve oversight over district finances.
Beckham, who appeared skeptical of hiring an auditor in the past, directed Greenburg to develop a proposal in October after a district parent and future Governing Board member uncovered issues with benefits paid to top district brass.
Zach Lindsay, who won one of three seats in this year’s election, filed public records requests with the district in order to compare administrative salaries with other districts.
Lindsay discovered some members of the administrative cabinet, which includes assistant superintendents, were receiving benefits beyond what was included in their contracts.
For instance, contracts for assistant superintendents showed that the district covers families for vision and dental insurance only but the district in practice was covering other fringe benefits as well.
In an email to Lindsay, SUSD General Counsel Michelle Marshall wrote that the district hired outside counsel to identify why those benefits were applied to cabinet-level employees.
On Oct. 20, the board voted to retroactively approve those additional fringe benefits for cabinet-level and executive director employees from 2017 through Dec. 31, 2020.
Greenburg said Lindsay’s discovery played a role in renewing interest in an internal auditor position.
“That certainly was a spur because I think we had made as a board a number of changes to the contracts for our employees last year and it was unfortunate and upsetting that we continued to have problems with a number of benefits we were paying out that we should not have been paying now,” Greenburg said.
Beckham declined comment except to confirm that “Jann-Michael and I are working on a proposal.”
The board included hiring an auditor on former Superintendent John Kriekard’s official list of priorities in late 2019 and early 2020.
But the district appeared to make little progress as Kriekard said he did not want to bring the item up for a vote unless it had significant support from board members.
Board Vice President Patty Beckman has already voiced support for hiring an auditor in the past.
Earlier this year, Kriekard said Beckham “appears to be the swing vote as to whether we present this to the board.”
Previous hesitation to address the internal auditor question had to do with the district’s spotty history with auditors in the past, Greenburg said.
Former internal auditors hired by the district “provided little value,” he said, and were seen as redundant or ineffective.
Beckham voiced that type of skepticism at a board meeting in September 2019.
“So, we are not once again hiring a consultant or even if it’s an internal auditor coming in and six months down the road, we really don’t have anything to measure it by,” Beckham said.
The SUSD Governing Board’s policies require the district to hire an auditor but the position has been empty since at least 2018.
Records show the district has had three auditors on staff since 2008.
But when district staff went digging through records at Greenburg’s request, they identified only two audits performed on cash accounts at Tavan Elementary and Desert Canyon Middle School that dealt with relatively small amounts of money.
Greenburg said the problem is that the position had functioned primarily as a support role to other departments rather than as independent check on district systems.
He cited a lack of documentation showing what, if anything, those auditors accomplished.
“What that kind of indicated was that whoever the internal auditor was, whether they were qualified to be an internal auditor professionally, they were not doing their job or they were not reporting it correctly,” Greenburg said.
To address those concerns, Greenburg researched internal auditor positions in both the public and private sector and worked to better define what an internal auditor would do, using language pulled directly from the Institute of Internal Auditors.
Those changes propose an internal auditor who would report directly to the Governing Board and suggest the creation of an audit committee of community members with applicable experience.
“So that is actually part of the industry standard for this position,” Greenburg said.
Dr. Scott Menzel, the district’s superintendent, said he is still researching the benefits of hiring an internal auditor but the effectiveness of the role will ride on how the position is defined.
“I would say that the structure of the position would be very important,” Menzel said. “My understanding is that we’ve had people in the position in the past and so I’m interested in learning more about when that didn’t work in that environment, because we still have those issues.”
Menzel said he is in the process of reaching out to the City of Scottsdale, which has its own auditor required by City Charter, and other East Valley school districts that have auditors on staff.
Beyond the job description itself, the cost of hiring another administrator also gave detractors pause in the past.
At a meeting in January, Greenburg cited data from the Los Angeles Unified School District’s inspector general, who has a budget of around $8 million per year and a staff of 55 people.
“Part of the reality is as the districts become smaller, people begin to double up on duties – you don’t have enough money to have a person to do everything (LAUSD) has,” Kriekard said in January.
But the auditor as defined by Greenburg’s proposal would be single person, not a massive department like LAUSD, which has nearly 600,000 students compared to Scottsdale’s 20,000.
Menzel said if the board decides to hire an internal auditor, the district will likely be able to afford it.
“I suspect that there would be a way to find the resources to pay for the position if, in fact, it’s designed to produce the kinds of savings over time that would yield more efficient operations,” he said.
Under a proposed job posting crafted by Greenburg, the district would pay the auditor between $90,000-$125,000 per year plus benefits.
Greenburg said that annual cost would more than pay for itself, citing outside on audits on the district’s phone system and Medicaid payments.
According to Greenburg, those audits, commissioned by retired CFO Jeff Gadd, saved the district between $450,000 and $600,000 according to internal estimates.
Menzel said he is still looking at whether it would be better to hire an internal auditor or continue to use the specialized outside firms the district has engaged in the past.
“I am committed 100 percent to being transparent and forthcoming with the community about how we utilize taxpayer resources and support of public education in Scottsdale, and I think we need to be held to a very high standard,” Menzel said.
“If the creation of this position helps advance that, I think it’s worth looking into and having the conversation.”