School Spending Fiasco

Every dollar spent by the Los Angeles Unified School District should pass a simple test: Will students benefit? The $700,000 wasted on educational videos that were so bad they were never broadcast flunked that test--and every other measure of accountability.

The revelation of this latest fiscal fiasco should result in a strengthening of financial controls, establishment of stronger checks and balances, scrutiny of nepotism and cronyism and creation of an independent inspector general.

The board is ultimately responsible for spending decisions, but as Times staff writer Doug Smith reported Sunday, there is still some question as to whether the 1994 video project, paid for with federal funds, ever came before the board. How could a sum that large be spent without board approval or competitive bidding? Is bypassing the board routine? Is this an example of terrible mismanagement or is it something worse?

The district’s internal audit branch, which seems incapable of providing the answers, has long been considered a weak link. A preliminary report prepared by outside auditors from KPMG Peat Marwick and released last month found the district’s budgetary spending of nearly $6.6 billion being monitored at a “paper and pencil level” in this computer era; it said auditors suffer from administrative meddling, get too little training and spend too much time on minor inquiries. That report validated many of the charges of the former director, Wajeeh Ersheid, a veteran corporate auditor who was hired to upgrade the poorly performing branch. He recommended raising the qualifications for auditors, increasing the staff and directing more attention to fraud--then was fired over an ethnically insensitive remark.

The school board has already approved the creation of a new director of internal audits and special investigations--who should report to the board members and outside financial experts who now make up the district’s audit committee. But that is not enough. As we have said before, the school district needs its own inspector general to safeguard the district’s billions. Here’s a project the IG could start with: What happened to $300,000 in federal earthquake recovery funds that haven’t been accounted for at Marvin Avenue Elementary School?

Part of the problem is the extent to which the school district is run like a family business in which husbands and wives, sisters and brothers and pals are awarded plum jobs or lucrative contracts. The family connection of Patricia Marshall, the now-retired head of the LAUSD television station who originally agreed to the video deal, and her brother Ron Prescott, who at that time handled state government relations, probably has no bearing on this matter. But nepotism and cronyism are the norm rather than the exception. Consider that the wife of former Supt. Sid Thompson held a coveted job, the wife of former Supt. Bill Anton still holds a good assignment and the husband of Assistant Supt. Lilliam Castillo took her old job after she was promoted, although he recently resigned. And so it goes, down through the ranks.

The leadership of the district has changed since the awarding of the video contract nearly five years ago, so some insiders view the matter as ancient history or dismiss it because the wasted funds were federal, not state. That attitude will only fuel the anger and distrust of parents and taxpayers. The school board has to get its crumbling financial house in order before another costly scandal breaks.