The district writes hundreds of checks each month, totalling millions of dollars. In fact, the check total for the April 13, 2009 meeting was a whopping 400+ checks for over $9.5M. One of the reasons that the Finance Committee meets twice each month is so that checks can be "approved" twice each month, instead of piling up.
The one definition of "approve" to which the school board apparently subscribes to is the concept of rubber stamping approval of checks. The committee can ask for additional information about checks, but the only action they have at their disposal is to Approve". There is no "Not Approved" or "Rejected" button.
Perhaps what's really needed is to add (what many thought was intuitively part of this process already) the words, "Review and ..." in front of "Approve Checks". When your bank statement comes in each month, one hopes that you review it for accuracy, rather than just "approve" it by filing it away untouched. Occasionally, banks (and check processors) DO make mistakes. In our own homes, by reviewing one's statement, one occasionally might learn that one's spouse has gone out and purchased some toy or other which the "management team", so to speak, had not jointly agreed. Regardless of the situation, the proper procedure is to review the check register, ask the difficult (but necessary) clarifying questions, and THEN "approve", those checks that qualify, for payment.. In rare instances, we CAN find that unacceptable purchases had been made.
Check writing is the world's most fertile ground for misappropriation of funds. We say that because it's a fact. Your school board will get either defensive or queasy about this topic. But that attitude is what has gotten numerous businesses--and school districts--into trouble. Don't believe us? Try googling "school district" along with unsavory terms like "embezzlement". We are NOT suggesting that any of our district employees are dishonest. In keeping with the principles of "trust but verify", however, it is simply common sense to build visible, structured, and defensible systems to monitor the check writing process. It has been shown time and time again that the best deterrent to financial shenanigans is to have a very visible, operative system that checks and double checks things. Look, we all understand that bad things sometimes happen to good people. And what follows is that sometimes basically good people make poor decisions. Usually, however, when it comes to financial accounting, the probability of someone reaching for the forbidden fruit is inversely proportional to the perceived level of deterrent activities. Some of you know exactly what we're talking about...right?
OK...this is getting too serious. Time for some levity. Remember that old "Knock Knock" joke?
Joker: Knock. Knock.
Target: Who's there?
Joker: Banana.
Target: Banana who?
Joker: Knock. Knock.
Target: Who's there?
Joker: Banana.
Target: Who's there?
Joker: Banana.
this repeats until sensing frustration, the joker finally changes to:
Joker: Knock. Knock.
Target: Who's there?
Joker: Orange
Target: Who's there?
Joker: Orange
Target: Orange who?
Joker: Orange you glad I didn't say banana?
Where are we going with this? Well...this joke is so very much like an ongoing discussion within the school board's Finance Committee between Caren Diedrich and citizen representative Rick Mealy. Except it goes something like this.
Mealy: I move to separate check numbers "X" and "Y" for a separate approval vote.
Diedrich: So...you're voting to not approve those checks. But the services have been rendered. We need to pay the vendors.
Mealy: Caren, are you telling me that my only option is to approve ---to rubber stamp--- all checks?
Diedrich: We can't not pay a vendor who has provided the district with something.
Mealy: Oh but we can. The board/district CAN make whoever made an inappropriate purchase reimburse the district. Perhaps the school board should take the employee who made the inappropriate purchase on an all expenses paid trip to the " 'Splaining Room ". Perhaps the employee needs to pay for the item out of his/her pocket. This is the only way people will learn what is and what is NOT an appropriate purchase.
The problem is that neither the school board nor the Finance Committee offer any option or protocol to "not approve" any particular check for payment. Even if there's 1 or 2 dissenting votes on a check at the Committee level, the full school board then unanimously rubber stamp approves full payment an hour or so later at the board meeting. There's no dis-incentive for anyone that violates rules governing spending. In fact, the "rules" themselves are loosey goosey at best.
The procurement system (and not just checks) needs to be re-worked from the top on down. Rules need to be established and followed. There has to be consequences for those that don't follow the rules. The Management Team needs to be the enforcers, so the school board does not have to micro-manage. And lastly, the Finance Committee has to develop a real, sound policy for reviewing and validating checks being generated. Payment --by the taxpayers--must not be an absolute. Yes. it will be tough to do this. But good things don't come easily.
- Rick Mealy
You get the point. This discussion has gone on at too many Finance Committee meetings to count. What makes the whole process so ridiculous is, as Mealy pointed out to Diedrich this past week: "Caren...you have the votes. It's going to be a 3-1 vote to approve these checks as it always is. You're gonna win. So why continue to argue this?" Mealy then suggested that if Diedrich didn't like his approach of voting to not approve certain checks then perhaps she could suggest some other alternative approach that would address the issue.
This past week was a little different; Diedrich actually responded to Mealy in their regular "Point - CounterPoint" session that she "would have to think about a way to cope with this". We'll see what THAT means.
No Policy. No Procedure.
Here's what really underscores the issue. "Checks" is an agenda item at EVERY Finance Committee and School Board Meeting. In fact, Finance Committee members are told to submit their "check questions" to Rhonda Page in advance of the Finance Committee meeting (preferably on Friday....geee we wouldn't want folks to take too much time to review 400 checks, eh?). Of course the check runs aren't even available until late on Thursday. Usually check questions don't come in until the weekend or early Monday. Then a response is provided by Rhonda, typically between 4:00 and 5:00 pm on Monday...often less than an hour or two prior to the meeting. Nothing like having no preparation time...right?
You know what's great? For such a detailed procedure, it doesn't exist in ANY of the board's policies or Administration's procedures! In fact, "check approval" doesn't even appear as one of the Finance Committee's duties and responsibilities in Policy BCE.
Of course, we're just waiting for the school board's response to be something like, "You're right. Check Approval does NOT exist in policy....so we're going to discontinue the practice. We're taking bets that this is their response to resolve this problem. Any takers?
SP-EYE: This is yet another example of where school board members like JohnE Whalen hide behind the "Micro-management" immunity shield. It's their carte blanche to do nothing. And it's wrong. Current (and past) practice is not how these board members would handle their personal finances (gulp...we hope) or their businesses. And it's not how the school district should operate either.
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