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Here is Paul Sharpless' presentation to the School Board on 19 Jan 2009:

 Now is the Time!!

 

First I want to thank the board for the opportunity to address my concerns as a taxpayer during these difficult financial times.  How the board has dispensed the money throughout the 2007-08 and 2008-09 budgets concerns me greatly.

Since I have several issues with the budgets, I hope to break them into smaller presentations over the next few months to help you easily follow my concerns.

A quote from a letter written by Thomas Jefferson to Shelton Gilliam over 200 years ago is just as applicable today as it was those many years ago.

“The same prudence which in private life would forbid our paying our own money for unexplained projects, forbids it in the dispensation of the public moneys.”

      --- Thomas Jefferson, letter to Shelton Gilliam, 19 June 1808

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In this evening’s presentation I will focus on the multiple checks written from the general fund over the course of this past school year, 2007-2008, that are credited to line item 10-2500-300, entitled ‘support services - business’.  In the 2008-09 budget the 10-2500 line item is identified as ‘business administration’.  The checks I refer to were written to W. Reese Lichtel.

I assure you that I have no interest in asking personal questions regarding either his work habits or on the job performance.  Those issues are the responsibility of those who hire him.  My interest lies solely in the reason for the many checks written to W. Reese Lichtel and their total impact on the school district budget, and, more specifically, the taxpayer.

(Pass out charts to the board members)

The chart I have handed to each of you tabulates the individual checks found in the listings at the back of board packets for each month, including another series of checks that have appeared thus far for the current 2008-2009 school year.  Mr. Lichtel received his first check in Jan of 2008 in the amount of $927.60.  Mr. Lichtel received an additional 6 checks, bringing the total to $30,920.75 in the 2007-2008 school year, which closed on 30 June 2008.

The amounts paid with each check vary greatly from month to month, and January through June of last year should have guided your estimates for this year, but looking at the chart, one can expect a repeat of overspending and belated budget transfer.  It appears that our elected officials fail to hold the administration accountable for the financial mismanagement.   

Since there is no record of hiring Mr. Lichtel as an employee, I can only presume that he is treated as a contractor or vendor, whose services were hired on an ad hoc basis. Given that the budget for the 10-2500-300 line item in 2007-2008 was only $8,300.00, the district obviously exceeded it and apparently had not anticipated using Mr. Lichtel's services.  No motions were made nor votes taken to increase the budget for this line item during the school year through budget transfers nor do the minutes reflect any decision by the board to employ Mr. Lichtel''s services or describe what he does for the district.  

Policy 610 requires the board to obtain competitive bids for products and services.  Policy 610 states that three written or telephonic price quotations shall be required for purchases exceeding $4,000.00 and a formal bidding process in the case of purchases exceeding $10,000.00.  Four of the checks written to Mr. Lichtel for that period were in excess of four thousand dollars, but if his services are taken as a whole for the school year, the amount was more than three times greater than the threshold for formal bidding.  The least the board should have done was voted to transfer money from other parts of the budget in advance of spending the money under line item 10-2500-300.  Instead, the board waited 5 months after the school year ended to approve the budget transfers.  I marvel that there was no finding for this in the audit performed by Greenawalt & Company, especially since it was one of many examples of such belated budget transfers, which totaled $1,336,091.00 for the 2007-2008 school year when they were approved on 10 November 2008.  Many other line items also were overspent during the past school year without prior vote by the board.  In other words, the board ignores what has been budgeted and spends whatever it wants and then waits until 5 months later to approve the adjustments in budget transfers that were recommended by the auditor.

Of course, Mr. Lichtel's income must be reported to the IRS for 2008, and he may owe social security taxes, but I question why Mr. Lichtel is not simply hired as staff to augment the business office, since his services seem very crucial in support of the business manager, and you are clearly continuing to use those services during the present school year.  That would make budgeting so much easier.

We must remember that the district’s facilities manager for at least six years, Mike Benton, pled guilty this past fall to participating in a “kickback scheme” that involved several years’ duration, admitting to cashing checks for at least $30,000.  This only came to light because the Attorney General of New Jersey contacted the Adams County District Attorney in connection with a similar scheme conducted at a school system in New Jersey.  The same individual was perpetrating the scheme in that school district as he did with Mr. Benton and confessed to his actions at Littlestown.  

The connection between this and my presentation is that neither the Property and Supply committee chairperson Jay Wantz, nor superintendent McConaghy, nor previous business manager Joni Rudy, who were on watch during the period of Mr. Benton's nefarious behavior are here to be accountable for the failure of discovering these actions.  However, the current business manager, the auditor, the members of the finance and budget committee and the rest of the board members are here to explain why such a thing could go on under their noses without detection, for years.  

The expenditures to W.H. Chemical began in November 2002 and continued up through 16 June 2008.  They did not cease until the district was notified by the District Attorney of the New Jersey case and its linkage to LASD.   Those expenditures totaled more than $316,000.00 over nearly 5 years and included many instances in which either three phone calls should have been required to justify the expenditures on a single invoice or a formal bidding process should have been performed, according to law.  During the 2007-2008  school year alone, 8 checks exceeded the $4,000.00 threshold requiring three phone calls each and two exceeded the $10,000.00 threshold requiring a formal bidding process.  One of those checks was for over $24,000.00.  For cleaning supplies?

If legal procedures were being followed, they would have uncovered this fraudulent activity long before the Adams County District Attorney approached the current superintendent.  Not a single check in 2007-2008 was written for less than $4,000.00.

Monthly, the district writes many checks to various contractors and vendors, who often receive multiple checks from the district in the tens of thousands of dollars over the course of a year.  With a $25 Million budget and little obvious oversight of the actual order/delivery of the vast amount of products, it is vital that board members become more inquisitive regarding verification of these many expensive purchases.  With the expansion of the right-to-know law and so much publicity of the political corruption that can and does occur in many levels of government, it behooves every taxpayer to be ever vigilant.

Transparency in government is vital to guarantee our freedom from tyranny and corruption in government.  Genuine transparency on the part of the elected LASD school board members has not been part of my experience during the many years I have approached this board about serious matters. The failure of the auditor and all other members of the administration and board of directors to uncover Mr. Benton's behavior since at least the 2004-2005 school year, is not just disappointing, but very curious indeed. The abrupt departure of a former business manager, a superintendent with time left on his contract and the prior chairperson of the Property and Supply Committee beg the question of what may have been known and not acted upon.  The cryptic statement  by the auditor in the last two audit reports to the board at official meetings that malfeasance could be going on without their knowledge and not discovered until years later is especially disconcerting.

Now is the time to make this budget process much more open and transparent and to start telling the public what it needs to know about the board's efforts to institute proper internal controls over the district's budget and the behavior of all, including itself, in that process.  

Now is the time to stop spending money you haven't budgeted and waiting to rob Peter for Paul's reimbursement until the next school year is well underway.

 Now is the time to tell us who Mr. Lichtel is and what he is doing on behalf of the business office and the district.  Now is the time to explain the variances in expenditure to him from month to month, why the business manager even needs his services and why we cannot achieve the same results more cheaply, or at least properly budget them at the outset.

Now is the time to let us know how much longer we will need those services and what plans are in place to subordinate them to normally employed staff in the business office.

Now is the time to explain why none of these discrepancies in the purchases of supplies and other items covered under legal mandates are never reported by the auditor as findings.  

Now is the time to explain why Jennifer Leppo was hired on January 14, 2008 to allegedly help the current business manager with just the sorts of problems I have enumerated, yet Auditor Jim Lyons again repeated his 2007 finding in the November 2008 audit report of a deficiency in the district business office team.

Now is the time to tell us if the preliminary budget will be ready  by 15 February 2009, as required now under Act 1.  

Now is the time, ladies and gentlemen of the board, to tell those of us who are being ever vigilant just exactly what you are doing.