Performance audit, Vail Unified School District

              Performance Audit
Vail Unified
School District
Division of School Audits
Debra K. Davenport
Auditor General
August • 2012
Report No. 12-12
A REPORT
TO THE
ARIZONA LEGISLATURE
The Auditor General is appointed by the Joint Legislative Audit Committee, a bipartisan committee composed of five senators and
five representatives. Her mission is to provide independent and impartial information and specific recommendations to improve the
operations of state and local government entities. To this end, she provides financial audits and accounting services to the State and
political subdivisions, investigates possible misuse of public monies, and conducts performance audits of school districts, state
agencies, and the programs they administer.
The Joint Legislative Audit Committee
Audit Staff
Ross Ehrick, Director
Vicki Hanson, Manager and Contact Person
John Ward, Team Leader
Jennifer Brown
Julia Coulombe
Copies of the Auditor General’s reports are free.
You may request them by contacting us at:
Office of the Auditor General
2910 N. 44th Street, Suite 410 • Phoenix, AZ 85018 • (602) 553-0333
Additionally, many of our reports can be found in electronic format at:
www.azauditor.gov
Representative Carl Seel, Chair
Representative Tom Chabin
Representative Justin Olson
Representative David Stevens
Representative Anna Tovar
Representative Andy Tobin (ex officio)
Senator Rick Murphy, Vice Chair
Senator Andy Biggs
Senator Rich Crandall
Senator Linda Lopez
Senator David Lujan
Senator Steve Pierce (ex officio)
2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553 -0333 • FAX (602) 553-0051
MELANIE M. CHESNEY
DEPUTY AUDITOR GENERAL
DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
August 30, 2012
Members of the Arizona Legislature
The Honorable Janice K. Brewer, Governor
Governing Board
Vail Unified School District
Mr. Calvin Baker, Superintendent
Vail Unified School District
Transmitted herewith is a report of the Auditor General, A Performance Audit of the Vail Unified
School to A.R.S. §41-1279.03. I am also transmitting within this report a copy of the Report
Highlights for this audit to provide a quick summary for your convenience.
As outlined in its response, the District agrees with all of the findings and recommendations.
My staff and I will be pleased to discuss or clarify items in the report.
This report will be released to the public on August 31, 2012.
Sincerely,
Debbie Davenport
Auditor General
Vail USD encourages a culture of
innovation and creativity across all
operational and educational areas. For
example:
Online instructional program—In 2008,
the District created an online instructional
program for its teachers to share
instructional plans and materials. Since
then, the District has partnered with 65
other Arizona districts and schools to
expand the reach of this program.
Laptop computers and buses with
Internet access—Since fiscal year 2006,
the District has operated a computerized
learning program at one high school
where each student receives a laptop
computer. Additionally, in December 2009
and July 2010, the District outfitted two
buses with wireless routers so that
students could access the Internet for
instructional purposes during their bus
rides.
Renewable energy and sustainable
materials in construction projects—In
May 2011, the District entered into a
20-year contract with a vendor to install
District’s culture of innovation fosters collaboration and
creative approaches to district operations
Student achievement higher than
peers’ and state averages—In fiscal year
2010, Vail USD’s student AIMS scores
were higher than peer districts’ averages
and much higher than state averages.
Additionally, all 16 of the District’s schools
met “Adequate Yearly Progress” for the
federal No Child Left Behind Act, and the
District’s 94-percent high school
graduation rate was similar to the peer
average of 92 percent and much higher
than the state average of 78 percent.
District operated efficiently overall—In
fiscal year 2010, Vail USD operated
efficiently overall with costs that were
similar to or lower than peer districts’, on
average. The District’s administrative
costs per pupil were the same as the peer
districts’ average, and its plant operations
costs per pupil were lower because it
maintained 14 percent fewer square feet
per pupil. Further, the District’s food
service costs per pupil were 17 percent
lower than peer districts’, on average,
because its cost per meal was slightly
lower and it served fewer meals per pupil.
The District’s transportation program had
lower costs per mile, but some
improvements are needed.
Higher student achievement and efficient operations
Our Conclusion
In fiscal year 2010, Vail
Unified School District’s
student achievement was
higher than both its peer
districts’ and state
averages, and the District
operated efficiently overall.
The District operated its
administration, plant
operations, and food
service programs efficiently
with costs that were similar
to or lower than peer
district averages, and its
transportation program
operated with lower per-mile
costs. Additionally, the
District has employed
various innovative methods
that have fostered
collaboration among
districts and encouraged
creative approaches to
district operations.
However, the District needs
to strengthen its accounting
and computer controls and
ensure its transportation
program meets the State’s
Minimum Standards.
REPORT
HIGHLIGHTS
PERFORMANCE AUDIT
2012
August • Report No. 12-12
Vail Unified
School District
Operational
Area Vail USD
Peer Group
Average
Administration $627 $627
Plant operations 843 917
Food service 255 308
Transportation 361 326
Per-Pupil Expenditures by
Operational Area
Fiscal Year 2010
Percentage of Students Who Met or
Exceeded State Standards (AIMS)
Fiscal Year 2010
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Math Reading Writing
Vail USD Peer Group State-wide
District should strengthen some controls in its transportation program
District did not maintain support for number of
riders—In fiscal year 2010, the District was unable
to provide documentation supporting its rider count
reported for state funding purposes. This lack of
documentation hindered the District’s ability to
calculate and use rider-based performance
measures, such as cost per rider and bus capacity
utilization, to evaluate its routes and program
efficiency.
District lacks procedures to ensure driver
certification requirements are met—To help
ensure student safety, the State’s Minimum
Standards for School Buses and School Bus Drivers
(Minimum Standards) require that bus drivers be
properly certified and receive periodic physical
examinations, drug tests, refresher training, and
CPR and first aid certification. However, we
identified lapses in, or a lack of support for, driver
requirements for 10 of the 15 bus driver files
reviewed. For example, 6 of the 15 bus drivers had
lapses in their physical performance tests that are
required every 2 years and test a driver’s reflexes,
agility, and strength. These lapses ranged from 2
weeks to over 2 months. Additionally, one driver’s
refresher training was 8 months overdue, and 4
drivers had expired CPR trainings and/or expired
first aid trainings. These expirations ranged from 1
to 5 months.
District failed to perform regular bus preventative
maintenance—The State’s Minimum Standards also
require districts to demonstrate that their school
buses receive systematic preventative maintenance
and inspections, such as periodic oil changes, tire
and brake inspections, and inspections of safety
signals and emergency exits. We found that 8 of the
10 buses reviewed had exceeded the District’s
8,000-mile preventative maintenance schedule
without being serviced. These lapses ranged from
54 miles to over 15,000 miles.
Recommendations—The District should:
••Retain documentation supporting its ridership
and use rider counts to calculate and monitor
performance measures.
••Implement a procedure to ensure that bus driver
requirements are met.
••Ensure that bus preventative maintenance is
conducted timely.
Inadequate accounting and computer controls increased risk of errors,
fraud, and unauthorized access to sensitive information
In fiscal year 2010, Vail USD was exposed to an
increased risk of payroll errors because it did not
have a delayed payroll system under which
employees would be paid after the end of a pay
period for actual hours worked during that pay
period, rather than on anticipated hours to be
worked. Additionally, the District did not adequately
separate its payroll and personnel responsibilities.
Further, the District granted 11 employees more
access to its accounting system than they needed
to perform their jobs, had inadequate controls over
network passwords, and did not install anti-virus
software on all computers. Although we did not
detect any improper transactions, these poor
controls exposed the District to an increased risk of
errors, fraud, and unauthorized access to sensitive
information.
Recommendations—The District should:
••Establish a delayed payroll system and separate
payroll and personnel responsibilities.
••Review employee access to its accounting
system, implement procedures to secure
network passwords, and install anti-virus
software on its computers.
solar power systems at two district sites, with the
long-term goal of reducing energy costs.
Additionally, in July 2010, the District opened a new
eco-friendly school with natural light in classrooms,
wind turbines, water harvesting tanks, artificial
grass, insulation made of denim, and other recycled
materials throughout the school.
REPORT
HIGHLIGHTS
PERFORMANCE AUDIT
August 2012
A copy of the full report is available at:
www.azauditor.gov
Contact person:
Vicki Hanson (602) 553-0333
Vail Unified
School District
TABLE OF CONTENTS
continued
page i
Office of the Auditor General
District Overview 1
Student achievement higher than peer district and state averages 1
District operated efficiently overall 2
Finding 1: District’s culture of innovation fosters collaboration and
creative approaches to district operations 3
District created an online instructional program that fosters collaboration among
districts 3
District encourages creative approaches to district operations 4
Finding 2: Inadequate accounting and computer controls increased
risk of errors, fraud, and unauthorized access to sensitive information 7
Lack of a delayed payroll system could lead to overpayments 7
District did not adequately separate payroll and personnel responsibilities 8
Increased risk of unauthorized access to critical systems 8
District did not accurately report its costs 10
Recommendations 10
Finding 3: District should strengthen some controls in its transportation
program 11
District did not maintain support for number of riders 11
District lacks procedures to ensure driver certification requirements are met 11
District failed to perform regular bus preventative maintenance 12
Recommendations 12
TABLE OF CONTENTS
concluded
page ii
State of Arizona
Other Findings 13
1. District spent some Classroom Site Fund monies on ineligible employees 13
Recommendation 13
2. District spent certain extracurricular tax credit monies for inappropriate school-related
purposes 13
Recommendation 14
Appendix
Objectives, Scope, and Methodology a-1
District Response
Table
1 Per-Pupil Expenditures by Operational Area
Fiscal Year 2010
(Unaudited) 2
Figure
1 Percentage of Students Who Met or Exceeded State Standards (AIMS)
Fiscal Year 2010
(Unaudited) 1
DISTRICT OVERVIEW
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Office of the Auditor General
Vail Unified School District is located 23 miles southeast of Tucson in Pima County and encompasses
about 390 square miles. It is one of the fastest-growing districts in the State, more than tripling its
number of students between fiscal years 2001 and 2010, leading to the opening of 10 new schools
during that time. In fiscal year 2010, the District served 9,645 students in pre-school through 12th
grade at its 16 schools: 7 elementary schools, 1 kindergarten through 8th-grade charter school, 4
middle schools, 3 high schools, and 1 charter high school that operated out of rented space in a
nearby technology park. Due to changing flight patterns from a nearby air base, the District could no
longer rent space for students at the technology park and decided to build a new K-12 charter
school, which opened for the 2010-2011 school year. The District plans to open a polytechnic high
school for the 2012-2013 school year.
In fiscal year 2010, Vail USD compared favorably to peer districts in student achievement with AIMS
scores that were higher than its peer districts’ and much higher than state-wide averages.1 The
District’s cost-efficiency in noninstructional areas also compared favorably in most areas. The District
operated its administration, plant operations, and food service programs efficiently with costs that
were similar to or lower than peer district averages, and its transportation program operated with
lower per-mile costs. Additionally, the District encourages a culture of innovation and creativity that
has led to new programs and ways of doing business, including designing an online program that
many other districts now use to share educational resources, incorporating renewable energy and
sustainable materials in construction projects, and providing school choice at the high school level
and through its charter school options. However, the District needs to strengthen some of its
accounting and computer controls and improve its transportation program to ensure that it is
following state requirements.
Student achievement higher than peer
district and state averages
In fiscal year 2010, 84 percent of the District’s students met
or exceeded state standards in math, 92 percent in reading,
and 86 percent in writing. As shown in Figure 1, these
scores were higher than the peer districts’ averages and
much higher than state averages. Additionally, all 16 of the
District’s schools met “Adequate Yearly Progress” for the
federal No Child Left Behind Act, and the District’s
94-percent high school graduation rate was similar to the
peer average of 92 percent and much higher than the state
average of 78 percent.
1 Auditors developed two peer groups for comparative purposes. See page a-1 of this report’s Appendix for further explanation of the peer groups.
Figure 1: Percentage of Students Who Met or
Exceeded State Standards (AIMS)
Fiscal Year 2010
(Unaudited)
Source: Auditor General staff analysis of fiscal year 2010 test results
on Arizona’s Instrument to Measure Standards (AIMS).
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Math Reading Writing
Vail USD
Peer Group
State-wide
page 2
State of Arizona
District operated efficiently overall
As shown in Table 1 and based on auditors’
review of various performance measures, in
fiscal year 2010, Vail USD operated all of its
nonclassroom programs with costs that were
similar to or lower than its peer districts’. The
District’s fiscal year 2010 per-pupil spending of
$6,548 and classroom spending of $3,622
were both lower than peer districts’ spending
primarily because it received less federal grant
money as a result of its lower poverty level.
Similar administrative costs—The
District’s $627 per-pupil administrative cost
was the same as the peer districts’ average.
Additionally, the District employs various
innovative methods, such as its online
instructional program, that have led to
collaboration among other school districts
throughout the State (see Finding 1, page 3).
However, the District can improve its accounting and computer controls to decrease the risk
of errors, fraud, and unauthorized access to sensitive information (see Finding 2, page 7).
Plant operations reasonably efficient—Although Vail USD’s $6.87-per-square-foot plant
cost was similar to the $6.53 peer district average, its plant operations cost per pupil was 8
percent lower because it maintained 14 percent fewer square feet per student.
Food service program reasonably efficient—Vail USD’s $2.34 cost per meal was
slightly lower than the peer districts’ average of $2.52. The District’s cost per pupil was 17
percent lower than peer districts’ primarily because it served fewer meals per pupil. Further,
the District’s program was self-supporting in fiscal year 2010.
Transportation program had lower per-mile costs, but some improvements
needed—In fiscal year 2010, Vail USD’s $2.42 cost per mile was 27 percent lower than the
peer districts’ $3.32 average. However, the District did not retain documentation to support
its number of riders and, as a result, the District’s cost per rider, bus capacity usage, route
efficiency, and overall program efficiency could not be determined. Additionally, the District
should improve controls to ensure driver files are current and bus preventative maintenance
is performed in a systematic and timely manner (see Finding 3, page 11).
Lower instructional support costs—Vail USD spent 23 percent less per pupil on
instructional support than peer districts averaged. Unlike all but one of the peer districts, Vail
USD does not employ certified librarians. Instead, the District has a media paraprofessional
on each campus. Media paraprofessionals are not required to be certified. These lower-cost
paraprofessionals likely contributed to Vail USD’s lower instructional support costs.
Spending
Vail
USD
Peer
Group
Average
State
Average
Total per pupil $6,548 $7,166 $7,609
Classroom dollars 3,622 4,025 4,253
Nonclassroom
dollars
Administration 627 627 721
Plant operations 843 917 914
Food service 255 308 366
Transportation 361 326 342
Student support 514 539 581
Instructional
support 326 424 432
Table 1: Per-Pupil Expenditures by
Operational Area
Fiscal Year 2010
(Unaudited)
Source: Auditor General staff analysis of fiscal year 2010 Arizona
Department of Education student membership data
and district-reported accounting data.
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Office of the Auditor General
District’s culture of innovation fosters collaboration and
creative approaches to district operations
The District encourages a culture of innovation and creativity across all operational and educational
areas. In recent years, Vail USD has employed various innovative methods that have fostered
collaboration among districts and encouraged creative approaches to many aspects of district
operations. For example, in 2008, the District created an online instructional program for its teachers
to share instructional plans and materials. Since then, the District has partnered with 65 other Arizona
districts and schools to expand the reach of this program. The District’s encouragement of innovation
and creativity has also led to changes ranging from providing laptops to students at one high school
and Internet access on bus routes to incorporating renewable energy and sustainable materials in
construction projects.
District created an online instructional program that fosters
collaboration among districts
In 2008, Vail USD created Beyond Textbooks™, which is “a comprehensive program of curriculum
development, instructional improvement, student assessment, and multi-level interventions” intended
to improve student achievement. Vail USD initially created the program for its own teachers, but has
since partnered with 65 other Arizona districts and schools to provide them access to the program.
Beyond Textbooks™ program created to help teachers implement state
curriculum standards—According to district officials, Vail USD created Beyond Textbooks™
in 2008 to help teachers implement the State’s standards-based curriculum. The District’s teachers
and its curriculum department work together to review state standards for each grade level and
create appropriate instructional materials. These instructional materials are uploaded onto an
online Web-based program that can be accessed by other teachers in the Beyond Textbooks™
network. This allows teachers to share successful instructional plans and materials beyond
student textbooks or other instructional materials purchased by the District, and likely reduces the
time teachers need to create instructional plans and search for supplemental materials. By
implementing this program, the District has also been able to decrease its spending on textbooks,
which has freed up monies for other purposes and has contributed to the District’s ability to
purchase more instructional technology.
FINDING 1
page 4
State of Arizona
District partnered with 65 other districts and schools to offer Beyond
Textbooks™—In 2010, Vail USD began entering into agreements with other Arizona school
districts and schools to provide them online access to the District’s Beyond Textbooks™
program. According to district officials, other districts’ officials began showing interest in Vail
USD’s program when they saw the level of student achievement that Vail USD was
experiencing. Since Vail USD began offering Beyond Textbooks™ access to other districts and
schools, 65 districts and schools have entered into agreements with the District. In addition to
accessing the instructional materials, teachers in partnering districts and schools can also
upload and share instructional materials meeting the Beyond Textbooks™ standards, which,
in turn, benefits Vail USD teachers.
Partnering districts and schools are charged on a per-pupil basis depending on their district
or school size. In addition to online access to the program, the fee includes professional
development to assist partnering districts’ teachers in implementing the program. All revenues
go into supporting the program and providing additional monies to Vail USD schools for
technology needs.
In 2011, Vail USD received an award from the International Society for Technology in Education
and T.H.E. Journal for its Beyond Textbooks™ program. This award recognizes one school
each year from more than 15,000 internationally for effectiveness and innovation through
technology.
District encourages creative approaches to district operations
During interviews with district staff from various areas, there was a prevailing theme that district
administration at Vail USD encourages a culture of innovation and creativity across all operational
and educational areas. The following are a few of the programs and projects the District has
implemented or is in the process of developing:
•• Information technology—Since fiscal year 2006, the District has operated a computerized
learning program at one high school where each student receives a laptop computer.
Students use the laptop computers to receive most of their instructional material
electronically, as well as to complete and submit assignments electronically. Additionally, in
December 2009 and July 2010, the District outfitted two buses with wireless routers so that
students could access the Internet for instructional purposes during their bus rides.
According to district officials, one of these buses serviced the District’s longest route, and
the other serviced the route with the highest ridership. The District also purchased a mobile
Internet unit that can be outfitted on buses on a rotating basis for use on long athletic or
field trips. Additionally, the District offers a learning program for students in grades 7 through
12 in which they can complete some or all of their courses online rather than in a traditional
classroom. During the 2012-2013 school year, the District will be implementing a blended
learning program for students in kindergarten through 8th grade that will provide students
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Office of the Auditor General
with online courses as well as on-campus enrichment. The District also plans to develop its own
data warehouse to better link student achievement to teachers.
•• Plant operations—In May 2011, the District entered into a 20-year contract with a vendor to
install solar power systems at two district sites, with the long-term goal of reducing energy costs.
Auditors reviewed 20 solar power agreements from other Arizona school districts and found that
Vail USD’s initial per-kilowatt-hour energy rate for solar power is slightly higher; however, Vail
USD’s contract includes no rate increases during the 20-year contract period unlike 11 of the
other districts’ solar contracts. Additionally, in July 2010, Vail USD opened a new school, the Vail
Academy and High School, where school construction was guided by the District’s commitment
to renewable energy and includes natural light in classrooms, wind turbines, water harvesting
tanks, artificial grass, insulation made of denim, and other recycled material throughout the
school. According to district officials, the District focused on using sustainable materials
wherever possible in order to be eco-friendly. Officials also stated that many items were donated
to or recycled by the District, including a shade covering that was donated by a local business
and only cost the District labor hours to install. All of these features helped Vail Academy and
High School receive Leadership in Energy and Environmental Design (LEED) Gold Certification,
which is given by the U.S. Green Building Council. Further, in June 2011, the District made the
decision to no longer water and maintain 19 of its 80 acres of fields, estimating that this saved
the District about $170,000 annually.
•• Food services—The District allows school staff and parents to operate the food service
program at the District’s kindergarten through 8th-grade charter school in order to provide these
parents with increased control over their children’s meals. At the other schools, food service is
operated by a food service management company. The director has implemented some
creative ideas to get students excited about eating, such as ethnic food days and an A-Z salad
bar where she offers salad bar items starting with every letter of the alphabet.
•• School choice—The District does not have school boundaries for its high schools, but instead
allows students and parents to choose the high school that will best serve their needs.
Additionally, in fiscal year 2010, the District offered parents the choice of sending their students
to two district-operated charter schools. One charter school served kindergarten through
8th-grade students, and the other served 9th- through-12th-grade students.
page 6
State of Arizona
page 7
Office of the Auditor General
Inadequate accounting and computer controls increased
risk of errors, fraud, and unauthorized access to sensitive
information
In fiscal year 2010, Vail USD was exposed to an increased risk of payroll errors because it did not
have a delayed payroll system under which employees would be paid after the end of a pay period
for actual hours worked during that pay period, rather than on anticipated hours to be worked.
Additionally, the District did not adequately separate its payroll and personnel responsibilities and
had an increased risk of unauthorized access to critical computer systems because it did not
implement proper controls. Although no improper transactions were detected by auditors, these
poor controls exposed the District to an increased risk of errors, fraud, and unauthorized access to
sensitive information. Finally, the District did not accurately report its costs.
Lack of a delayed payroll system could lead to overpayments
In fiscal year 2010, the District did not have a delayed payroll system—that is, a system that pays
employees after the end of a pay period based on actual time worked during that pay period.
Instead, the District paid employees partially based on their anticipated work hours and had to
correct any incorrect payments after employees were already paid. Under a delayed payroll system,
there is usually a 1-week delay between the close of the pay period and the actual pay date. This
allows districts the time to process payroll after all actual hours worked by employees have been
entered into the time accounting system and verified by supervisors. In contrast, Vail USD employees
completed handwritten, 2-week time sheets and submitted them to the payroll department 1 week
before the end of the 2-week pay period. To do this, employees had to estimate the hours that they
would work in the upcoming second week of the payroll period. The District’s payroll department
then had to correct any differences in estimated versus actual hours worked during the subsequent
pay period. In the case of employees who may terminate their employment during an impacted pay
period, there would not be a following pay period to make corrections, and the employees could be
overpaid. Additionally, if an employee takes sick or vacation leave, but does not have enough time
accrued, the employee would owe the District. Finally, this system could easily lead to a violation of
the Arizona Constitution by paying individuals for time not worked.
FINDING 2
page 8
State of Arizona
To help ensure that employees are appropriately paid, the District should establish a delayed
payroll system as required by the Uniform System of Financial Records for Arizona School
Districts (USFR). This would help ensure that employees receive only what they have earned
because the delay would allow the District to use the actual hours worked to calculate payments.
District officials stated that in November 2011, they began to implement a delayed payroll
system for certain departments and plan to have complete district-wide implementation by the
beginning of fiscal year 2013.
District did not adequately separate payroll and personnel
responsibilities
The District had an increased risk of errors and fraud, such as processing false time sheets and
modifying employee pay rates, because it did not separate the payroll and personnel functions.
Payroll employees, with little or no supervisory review, were responsible for entering new
employees into the system, modifying employee information, entering and editing employees’
time sheets, recording payroll expenses, and distributing paychecks. Allowing one individual the
ability to initiate and complete a transaction without an independent supervisory review could
allow the person to process false payments or create nonexistent employees.
Increased risk of unauthorized access to critical systems
Weak controls over user access to various information systems and the lack of anti-virus
software increases the District’s risk of unauthorized access to these critical systems. Additionally,
the lack of a thorough and tested disaster recovery plan could result in interrupted operations or
data loss.
Broad access to accounting system—Auditors reviewed the District’s user access
report for the 28 users with access to the accounting system and identified 11 district
employees who had more access to the accounting system than they needed to perform their
job duties. Three of these employees had the ability to perform all accounting system
functions. Although no improper transactions were detected in the sample of payroll and
purchasing transactions auditors reviewed, granting employees system access beyond what
is required for their job duties, especially full system access, exposes the District to increased
risk of errors, fraud, and misuse of sensitive information, such as processing false invoices or
adding nonexistent vendors or employees.
Inadequate controls over network passwords—The District needs stronger controls
over its computer network passwords. Vail USD employees choose their own initial passwords
but then relay their passwords to the District’s information technology (IT) department who
then create network accounts for the employees using their chosen passwords. This
procedure weakens the effectiveness of password controls because passwords are known by
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Office of the Auditor General
more than just the password creator, making it difficult to verify who is accessing certain sensitive
network information. Instead, the District should set a default password in the system that requires
a user to change it after first use. This helps ensure that a password is known only by the employee
who creates it and provides the District with greater certainty of who is accessing specific network
information.
Further, in fiscal year 2010, the District did not use available software to enforce password length,
complexity, and expiration requirements. In the absence of these requirements, employees can
create easily deciphered passwords or continue using their initial passwords, also known by IT
staff, for as long as they want without having to change them. After auditors brought this issue to
the District’s attention, the District began using the software to enforce a password length
requirement of at least eight characters; however, the District does not require users to change
their passwords periodically and does not enforce password complexity requirements. Common
security practice requires passwords to be at least eight characters, contain a combination of
alphabetic and numeric characters, and be changed periodically.
Physical access to an IT room was not limited—Although the District’s main server room
was secure, auditors observed a school with unsecured network hardware. At this school, the
network hardware was maintained in a small room that was accessible to non-IT staff who used it
as a storage room for snacks, beverages, paper plates, and similar items. The broad access to
the network room creates the risk of network interruption due to intentional or accidental equipment
damage.
District computers lack anti-virus software—The District primarily uses Macintosh
computers, and district officials believe that the risk of malicious attacks on Macintosh computers
and servers is very low. As a result, the District does not load the computers with anti-virus
software, which places the District’s computers and network at risk of having sensitive information
compromised or the network damaged, resulting in costly repairs and service interruption. For
example, recent events, such as the Flashback Trojan horse virus, indicate the need for Macintosh
users to take necessary precautions to control the risk of malicious attacks.1
Lack of disaster recovery plan could result in interrupted operations or loss of
data—In fiscal year 2010, the District did not have a written, up-to-date, and tested disaster
recovery plan even though it maintained critical student and accounting information on its systems
and network. A written and properly designed disaster recovery plan would provide continued
operations in the case of a system or equipment failure or interruption. The plan should include
detailed information on how systems could be restored in such an event. As part of a disaster
recovery plan, the District should also perform documented tests of its ability to restore electronic
data files from data backups, which are important to ensure continuous accessibility to sensitive
and critical data. After auditors brought this to the District’s attention, the District created and
implemented a disaster recovery plan; however, auditors noted remaining deficiencies, including
not documenting who is responsible for backups, whether or not backups are automated, and
what is being backed up. The plan also should include the testing procedures to recover backed-up
data.
1 In April 2012, a widespread Trojan horse virus called “Flashback” was identified and infected over 600,000 Macintosh computers. The attack
used an Adobe Flash Player installer to disguise itself and infiltrate the computers giving remote access to hackers.
page 10
State of Arizona
District did not accurately report its costs
Vail USD did not consistently classify its fiscal year 2010 expenditures in accordance with the
Uniform Chart of Accounts for school districts. As a result, its annual financial report did not
accurately reflect its costs, including both classroom and nonclassroom expenditures. Auditors
identified classification errors totaling approximately $3.2 million of the District’s total $63.2
million in current spending.1 When corrected, these changes decreased the District’s reported
instructional expenditures by about $2.4 million, or 3.6 percentage points. The dollar amounts
shown in the table in this report reflect the necessary adjustments.
Recommendations
1. The District should establish a delayed payroll system in compliance with the Uniform
System of Financial Records for Arizona School Districts to help ensure that employees are
paid correctly based on actual time worked.
2. The District should implement proper controls over its payroll processing to ensure
adequate separation of responsibilities.
3. The District should continue to review employee access to the accounting system and
modify access to ensure that an employee cannot initiate and complete a transaction
without an independent review.
4. The District should implement procedures to ensure that network passwords are known
only to the employees who create them.
5. In addition to its recent implementation of password requirements related to length, the
District should implement and enforce password expiration and complexity requirements.
6. The District should limit physical access to its IT rooms so that only appropriate personnel
have access.
7. The District should install anti-virus software on its Macintosh computers and servers to
protect its sensitive information and protect against costly damage or interruption.
8. The District should review its formal disaster recovery plan to ensure that it is complete and
test it periodically to identify and remedy deficiencies.
9. The District should classify all transactions in accordance with the Uniform Chart of Accounts
for school districts.
1 Current expenditures are those incurred for the District’s day-to-day operation. For further explanation, see Appendix page a-1.
page 11
Office of the Auditor General
District should strengthen some controls in its
transportation program
In fiscal year 2010, Vail USD’s cost per mile of $2.42 was 27 percent lower than its peer districts’
average of $3.32. However, the District did not retain documentation to support its number of riders
and, as a result, the District’s cost per rider, bus capacity usage, route efficiency, and overall program
efficiency could not be determined. The District needs to improve controls to ensure that rider counts
are properly made and documented, driver files are current, and bus preventative maintenance is
performed in a systematic and timely manner.
District did not maintain support for number of riders
In fiscal year 2010, the District was unable to provide auditors with documentation supporting the
District’s rider count. Although state transportation funding is primarily based on miles driven, the
number of riders is also a factor in determining the per-mile rate that districts receive, and districts
are required to maintain documentation that supports funding for 4 years. Further, not monitoring
rider counts hinders the District’s ability to calculate and use rider-based performance measures,
such as cost per rider and bus capacity utilization, to evaluate its route and program efficiency and
make informed program decisions.
District lacks procedures to ensure driver certification requirements
are met
To help ensure student safety, the State’s Minimum Standards for School Buses and School Bus
Drivers (Minimum Standards) administered by the Department of Public Safety require that bus
drivers be properly certified and receive periodic physical examinations, drug tests, refresher training,
and CPR and first aid certification. However, auditors identified lapses in, or a lack of support for,
driver requirements for 10 of the 15 bus driver files reviewed. Specifically, auditors identified the
following problems:
•• Lapsed and unsupported physical performance tests—Six of the 15 bus drivers had lapses
in their physical performance tests. These lapses ranged from 2 weeks to over 2 months.
FINDING 3
page 12
State of Arizona
Further, the District did not maintain documentation for two drivers pertaining to whether
they met physical performance test requirements. Physical performance tests are required
every 2 years and test a driver’s reflexes, agility, and strength.
•• Overdue and unsupported refresher training—One of the 15 bus driver’s refresher
training, which is required every other year, was 8 months overdue. For another bus driver,
the District did not maintain documentation pertaining to whether the employee met the
refresher training requirements.
•• Expired CPR and first aid training—Four of the 15 bus drivers had expired CPR trainings,
and one of these drivers also had expired first aid training. The CPR and first aid expirations
ranged from 1 to 5 months.
These lapses occurred because the District did not have a process in place to ensure that bus
driver certification requirements were met. Instead, the District relied on the Department of Public
Safety to let them know when a driver’s requirements had lapsed. The District should implement
procedures to ensure that tests, trainings, and other certification requirements are conducted
before they lapse.
District failed to perform regular bus preventative maintenance
The State’s Minimum Standards also require districts to demonstrate that their school buses
receive systematic preventative maintenance and inspections. Preventative maintenance and
inspections include periodic oil changes, tire and brake inspections, and inspections of safety
signals and emergency exits. These standards are designed to help ensure the safety and
welfare of school bus passengers, as well as extend the useful life of buses. Auditors reviewed
maintenance files for 10 of the District’s 73 buses and found that 8 of the 10 buses had exceeded
the District’s 8,000-mile preventative maintenance schedule without being serviced. These
lapses ranged from 54 miles to over 15,000 miles. District officials stated that one reason for
these lapses is that work orders are not submitted for preventative maintenance until the bus has
reached 8,000 miles since the last service. Then it can be awhile until the mechanics complete
the work order. Instead, the District should plan for and schedule buses for preventative
maintenance before the buses exceed the maximum mileage between services.
Recommendations
1. The District should retain documentation supporting its ridership for state funding purposes
and use its rider counts to calculate and monitor performance measures such as cost per
rider and bus capacity utilization.
2. The District should implement a process to ensure that bus driver requirements are met
and documented in accordance with the State’s Minimum Standards.
3. The District should ensure that bus preventative maintenance is conducted in a systematic
and timely manner in accordance with district policy and the State’s Minimum Standards.
OTHER FINDINGS
page 13
Office of the Auditor General
In addition to the three main findings presented in this report, auditors identified two other less
significant areas of concern that require district action. These additional findings and the related
recommendations are as follows:
1. District spent some Classroom Site Fund monies on ineligible
employees
In fiscal year 2010, Vail USD spent some Classroom Site Fund (CSF) monies inappropriately.1
According to the Attorney General’s definition of a teacher, only those employed to provide instruction
to students related to the school’s educational mission are eligible for CSF monies.2 However, in
fiscal year 2010, Vail USD paid four ineligible employees almost $16,000 in CSF monies. These
employees provided athletic and technology support at schools, but did not instruct students.
Recommendation
The District should reimburse the Classroom Site Fund for amounts spent inappropriately in fiscal
year 2010, work with the Arizona Department of Education to make the necessary corresponding
adjustments to its expenditure budget, and ensure that only eligible employees receive Classroom
Site Fund monies in the future.
2. District spent certain extracurricular tax credit monies for
inappropriate school-related purposes
The District did not consistently follow statute in its decisions about using tax credit monies for
extracurricular activities. According to Arizona Revised Statutes §43-1089.01, tax credit monies can
be spent only on character education programs or school-sponsored, optional, extracurricular
activities that are educational and benefit enrolled students who pay a fee to participate. Such
activities typically include afterschool sports programs, clubs, trips for competitive events, and field
trips that supplement a school’s educational program. However, in fiscal year 2010, Vail USD spent
1 In November 2000, voters passed Proposition 301, which increased the state-wide sales tax to provide additional resources for education
programs. Under statute, these monies, also known as Classroom Site Fund (CSF) monies, may be spent only for specific purposes,
primarily increasing teacher pay.
2 Arizona Attorney General Opinion I01-014, July 21, 2001.
page 14
State of Arizona
$82,868 of tax credit monies for technology and instructional materials to support regular, for
credit, instructional programs rather than extracurricular activities.
Recommendation
The District should reimburse the Extracurricular Activities Tax Credit Fund for the $82,868
inappropriately spent in fiscal year 2010, work with the Arizona Department of Education to make
the necessary corresponding adjustments to its expenditure budget, and ensure that
extracurricular tax credit monies are spent in accordance with statute in the future.
APPENDIX
page a-1
Office of the Auditor General
Objectives, Scope, and Methodology
The Office of the Auditor General has conducted a performance audit of the Vail Unified School
District pursuant to A.R.S. §41-1279.03(A)(9). Based in part on their effect on classroom dollars, as
previously reported in the Auditor General’s annual report, Arizona School District Spending
(Classroom Dollars report), this audit focused on the District’s efficiency and effectiveness in four
operational areas: administration, plant operations and maintenance, food service, and student
transportation. To evaluate costs in each of these areas, only current expenditures, primarily for fiscal
year 2010, were considered.1 Further, because of the underlying law initiating these performance
audits, auditors also reviewed the District’s use of Proposition 301 sales tax monies and how it
accounted for dollars spent in the classroom.
In conducting this audit, auditors used a variety of methods, including examining various records,
such as available fiscal year 2010 summary accounting data for all districts and Vail USD’s fiscal year
2010 detailed accounting data, contracts, and other district documents; reviewing district policies,
procedures, and related internal controls; reviewing applicable statutes; and interviewing district
administrators and staff.
To analyze Vail USD’s operational efficiency, auditors selected a group of peer districts based on their
similarities in district size, type, and location. This operational peer group includes Vail USD and the
nine other unified or union high school districts that also served between 8,000 and 19,999 students
and were located in cities and suburbs. To compare districts’ academic indicators, auditors
developed a separate student achievement peer group using poverty as the primary factor because
poverty has been shown to be strongly related to student achievement. Auditors also used secondary
factors such as district type, size, and location to further refine these groups. Vail USD’s student
achievement peer group includes Vail USD and the 13 other unified districts that also served student
populations with poverty rates less than 14 percent. Additionally:
•• To assess the District’s student achievement, auditors reviewed the Arizona’s Instrument to
Measure Standards (AIMS) passing rates, “Adequate Yearly Progress” for the federal No Child
Left Behind Act, and high school graduation rates. AIMS passing rates were compared to the
state-wide average and the average of the student achievement peer districts.
•• To assess the District’s financial accounting data, auditors evaluated the District’s internal
controls related to expenditure processing and scanned all payroll and accounts payable
transactions for proper account classification and reasonableness. Additionally, auditors
1 Current expenditures are those incurred for the District’s day-to-day operations. They exclude costs associated with repaying debt, capital
outlay (such as purchasing land, buildings, and equipment), and programs such as adult education and community service that are outside
the scope of preschool through grade-12 education.
page a-2
State of Arizona
reviewed detailed payroll and personnel records for 30 of the 2,001 individuals who received
payments through the District’s payroll system and reviewed supporting documentation for
30 of the 15,854 accounts payable transactions. After adjusting transactions for proper
account classification, auditors reviewed fiscal year 2010 spending and prior years’
spending trends across operational areas. Auditors also evaluated other internal controls
that were considered significant to the audit objectives.
•• To assess the District’s computer information systems and network, auditors evaluated
certain controls over its logical and physical security, including user access to sensitive data
and critical systems, and the security of servers that house the data and systems. Auditors
also evaluated certain district policies over the system such as data sensitivity, backup, and
recovery.
•• To assess whether the District’s transportation program was managed appropriately and
functioned efficiently, auditors reviewed and evaluated required transportation reports,
reviewed bus driver files for 15 of the District’s 72 drivers, and reviewed bus maintenance
and safety records for 10 of the District’s 73 buses. Auditors also reviewed fiscal year 2010
transportation costs and compared them to peer districts’.
•• To assess whether the District was in compliance with Proposition 301’s Classroom Site
Fund requirements, auditors reviewed fiscal year 2010 expenditures to determine whether
they were appropriate and if the District properly accounted for them. Auditors also reviewed
the District’s performance pay plan and whether the 702 individuals who received
performance pay were eligible based on their job descriptions.
•• To assess whether the District’s administration effectively and efficiently managed district
operations, auditors evaluated administrative procedures and controls at the district and
school level, including reviewing personnel files and other pertinent documents and
interviewing district and school administrators about their duties. Auditors also reviewed
and evaluated fiscal year 2010 administration costs and compared these to peer districts’.
•• To assess whether the District’s plant operations and maintenance function was managed
appropriately and functioned efficiently, auditors reviewed and evaluated fiscal year 2010
plant operations and maintenance costs and district building space, and compared these
costs and capacities to peer districts’. To analyze the District’s solar power system contract
and its effect on electricity costs, auditors reviewed 20 solar power contracts from other
Arizona school districts and reviewed Vail USD’s electric utility statements.
•• To assess whether the District’s food service program was managed appropriately and
functioned efficiently, auditors reviewed fiscal year 2010 food service revenues and
expenditures, including labor and food costs; compared costs to peer districts’; reviewed
the Arizona Department of Education’s food service monitoring reports; and observed food
service operations.
page a-3
Office of the Auditor General
We conducted this performance audit in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings and conclusions based on our
audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objectives.
The Auditor General and her staff express their appreciation to the Vail Unified School District’s board
members, superintendent, and staff for their cooperation and assistance throughout the audit.
page a-4
State of Arizona
DISTRICT RESPONSE
DISTRICT RESPONSE
“Where Education is a Community Effort”
web site address: www.vail.k12.az.us email: bakerc@vail.k12.az.us
OFFICE OF THE SUPERINTENDENT
13801 E Benson Highway • P.O. Box 800 • Vail, AZ 85641 • 520-879-2000 • FAX 520-879-2001
August 22, 2012
Ms. Debra K. Davenport
Auditor General
Division of School Audits
2910 North 44th Street, Suite 410
Phoenix, Arizona 85018
Dear Ms. Davenport:
The Vail Unified School District respectfully submits its response to the Performance Audit
conducted by the Office of the Auditor General and the Division of School Audits for the 2010 Fiscal
Year. The District would like to thank the Auditor Generalʼs staff and the leadership of Vicki
Hanson, Manager, and John Ward, Audit Senior, for their professionalism, direction, and education
with regard to this audit, and agree with the Auditʼs findings and recommendations.
Student Achievement higher than peer district and state averages
The Auditorʼs overview strongly highlights that our student achievement is higher than both our peer
districts and state averages. In fiscal year 2010, 84 percent of the Districtʼs students met or
exceeded state standards in math, 92 percent in reading, and 86 percent in writing. These scores
were higher than the peer districtsʼ averages and significantly higher than state averages.
The overview also indicates that the District operated efficiently overall with similar administrative
costs as peer districts, lower transportation costs per-mile, and reasonably efficient Plant Operation
and Food Service Programs.
The Vail School District remains committed to fiscal responsibility, transparency, and effective
stewardship of taxpayersʼ funds. We value the Auditors Generalʼs input and collaboration in this
process.
Please contact us if there are any questions regarding our response.
Sincerely,
Calvin Baker
Superintendent
“Where Education is a Community Effort”
Finding 1: Districtʼs culture of innovation fosters collaboration and creative approaches to
district operations.
We greatly appreciate the content of this finding and its placement as the #1 finding.
As noted, we are continually striving to find different and better ways of improving academics,
parent satisfaction, and efficiency. And, we are committed to sharing our successes with others. We
are proud, for example, that 70 districts and charter schools across Arizona are seeking to duplicate
our academic successes through their partnership in Beyond Textbooks.
Finding 2: Inadequate accounting and computer controls increased risk of errors, fraud,
and unauthorized access to sensitive information.
The District agrees with this finding and has or will implement the recommendations.
Recommendation 1: The District should establish a delayed payroll system in compliance with the
Uniform System of Financial Records for Arizona School Districts to help ensure that employees are
paid correctly based on actual time worked.
The District began an extensive search and evaluation process in January of 2011 to identify time
carding systems and vendors who would be able to provide the district with a viable system to
capture actual hours worked for district employees. This would allow the district to move away from
the antiquated paper system it was using in 2009-2010, the period evaluated in this audit. The
District was in the process of converting to the new system when staff members from the Auditor
Generalʻs Office arrived in September of 2011 to begin the audit process. The District selected a
vendor that could provide a system to comply with the Uniform System of Financial Records and
established a training and implementation schedule that would phase in the system a few schools
or locations at a time. The phase-in began at the district office in November of 2011 and concluded
with the transportation department in July of 2012. Employees are now paid on a bi-weekly basis
for actual hours worked within the pay period. All appropriate leave and actual hours worked are
captured and maintained by the system.
Recommendation 2: The District should implement proper controls over its payroll processing to
ensure adequate separation of responsibilities.
The District has been modifying system access for all individuals using the integrated Payroll,
Human Resource, General Ledger, and Purchasing and Payables system on an annual basis since
the system was implemented. After discussions with staff from the Auditor Generalʼs office, further
changes have been made to restrict access of payroll employees. This will decrease or eliminate
the risk of error and fraud. Time sheets have basically been eliminated except for some unusual
circumstances subject to staff review. Separation of duties between Payroll and Human Resource
staff has been more clearly defined and system access adjusted accordingly.
Recommendation 3: The District should continue to review employee access to the accounting
system and modify access to ensure that an employee cannot initiate and complete a transaction
without an independent review.
The District has further restricted the access to our accounting system. We will continue to assure
appropriate access levels with relation to job responsibilities are maintained.
“Where Education is a Community Effort”
Recommendation 4: The District should implement procedures to ensure that network passwords
are known only to the employees who create them.
The District will craft and implement procedures to ensure that network passwords are known only
to the employees who create them.
Recommendation 5: In addition to its recent implementation of password requirements related to
length, the District should implement and enforce password expiration and complexity requirements.
During the summer of 2012, the District implemented a new password policy requiring that all user
passwords contain at least 8 characters, one capital letter, and one number or symbol. All existing
user passwords that did not conform to this policy were revised by the users in question to bring
them to the new standard.
Recommendation 6: The District should limit physical access to its IT rooms so that only appropriate
personnel have access.
Over the course of this school year, the District will design and install informational signs on all IT
spaces. These signs will clearly designate the nature of the space, that access is restricted to IT
personnel, and that any other use (such as storage) is prohibited.
Recommendation 7: The District should install anti-virus software on its Macintosh computers and
servers to protect its sensitive information and protect against costly damage or interruption.
The District has installed Sophos Anti-Virus software on all district servers, as well as central and
site administratorsʼ laptops and workstations.
Recommendation 8: The District should review its formal disaster recovery plan to ensure that it is
complete and test it periodically to identify and remedy deficiencies.
The District will revise and update the Disaster Recovery Plan by the end of the calendar year,
designating specific personnel responsible for backup and recovery of data. Specific date to be
backed up will be identified and a simulated off-site recovery event will be rehearsed.
Recommendation 9: The District should classify all transactions in accordance with the Uniform
Chart of Accounts for school districts.
After detailed discussions with AG staff in early 2012 regarding proper classification of
expenditures, the District has made changes to areas, such as student travel, equipment repair,
staff training and travel, school achievement banners, and payroll coding. The District will continue
to review and identify coding practices within the district. District staff tasked to review expenditure
coding will take advantage of training opportunities to ensure on-going compliance with the Uniform
Chart of Accounts and make appropriate changes when revisions are made to the Chart of
Accounts.
Finding 3: District should strengthen some controls in its transportation program.
The District agrees with this finding and has implemented the recommendations.
“Where Education is a Community Effort”
Recommendation 1: The District should retain documentation supporting its ridership for state
funding purposes and use its rider counts to calculate and monitor performance measures such as
cost per rider and bus capacity utilization.
New documents for more accurate recording of rider counts have been developed. The frequency
of rider counts has been increased with an emphasis on both morning and afternoon ridership. The
Transportation Department will continue to combine routes from different schools to ensure
maximum utilization of all vehicles and control costs.
Recommendation 2: The District should implement a process to ensure that bus driver requirements
are met and documented in accordance with the Stateʼs “Minimum Standards”.
In order to ensure that bus drivers receive on-going training and that they meet the Stateʼs
“Minimum Standards” for bus driver requirements, the District has implemented the following
actions: all driver records are maintained digitally. Every nine weeks drivers whose credentials
need to be updated during the following nine-week period are notified verbally and in writing of
those elements which need to be renewed. This nine-week period coincides with the regularly
scheduled breaks to the District Calendar. It ensures all drivers have time to comply and gives staff
the opportunity to make certain compliance occurs. The Transportation Department also conducts
CPR and First Aid training as a regularly scheduled event during the scheduled break periods.
Annual refresher training takes place during the week before school begins.
Recommendation 3: The District should ensure that bus preventative maintenance is conducted in a
systematic and timely manner in accordance with district policy and Stateʼs “Minimum Standards”.
The Transportation Department has implemented an enhanced computer based fleet maintenance
program. Using software called Service Finder and linked to our routing programs, every vehicle in
the District fleet is monitored for mileage, fuel consumption, repairs, and compliance with State of
Arizona standards. Eighty-five buses in the District fleet were required to be inspected by the
Department of Public Safety this year. The Department had a 100% pass rating on all vehicles with
no deficiencies found. Preventive Maintenance cycles are documented and all services are now
being conducted in a systematic and timely manner in accordance with district policy and State
"Minimum Standards".
Other Findings:
The District agrees with the finding and will implement the recommendation.
Recommendation: The District should reimburse the Classroom Site Fund for amounts spent
inappropriately in fiscal year 2010, work with the Arizona Department of Education to make the
necessary corresponding adjustments to its expenditure budget, and ensure that only eligible
employees receive Classroom Site Fund monies in the future.
The employees in question for 2010 were Certified Site Technology Coordinators and an Athletic
Trainer. The District has corrected coding for these positions and will reimburse the Classroom Site
Fund and make any necessary adjustments.
Recommendation: The District should reimburse the Extracurricular Activities Tax Credit Fund for
the $82,868 inappropriately spent in fiscal year 2010, work with the Arizona Department of
“Where Education is a Community Effort”
Education to make the necessary corresponding adjustments to its expenditure budget, and ensure
that extracurricular tax credit monies are spent in accordance with statute in the future.
The District has taken steps to ascertain that tax credit monies are not spent on instructional
programs. The District created a tax credit use form in February 2012 and has continued to make
revisions to that form that accompanies all such requests for expenditure of tax credit funds. The
form requires important questions be asked of the requestor and site administration approval to
encourage reasonable understanding of the purpose for using tax credit funds for any
extracurricular activity. The District will reimburse the Tax Credit fund and make any necessary
adjustments.