Performance audit, Superior unified school district : a report to the Arizona Legislature

              Performance Audit
Superior Unified
School District
Division of School Audits
Debra K. Davenport
Auditor General
December • 2011
Report No. 11-13
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
Ann Orrico, Manager and Contact Person
Jennie Snedecor, Team Leader
Jay Rasband
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
Senator Rick Murphy, Chair
Senator Andy Biggs
Senator Olivia Cajero Bedford
Senator Rich Crandall
Senator Kyrsten Sinema
Senator Steve Pierce (ex officio)
Representative Carl Seel, Vice Chair
Representative Eric Meyer
Representative Justin Olson
Representative Bob Robson
Representative Anna Tovar
Representative Andy Tobin (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
December 14, 2011
Members of the Arizona Legislature
The Honorable Janice K. Brewer, Governor
Governing Board
Superior Unified School District
Mr. Pete Guzman, Superintendent
Superior Unified School District
Transmitted herewith is a report of the Auditor General, A Performance Audit of the Superior
Unified School District, conducted pursuant 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 December 15, 2011.
Sincerely,
Debbie Davenport
Auditor General
REPORT
HIGHLIGHTS
PERFORMANCE AUDIT
2011
December • Report No. 11-13
Separation of duties lacking—One
district employee, with little or no
supervisory review, is responsible for
adding new employees to the payroll
system, modifying employee information,
entering/editing time sheets, recording
payroll expenses, and distributing
paychecks. Although no improper
transactions were detected in the sample
tested, this lack of separation of duties
could permit false payments or the
creation of nonexistent employees.
Broad access to accounting system—
Three district employees have more access
to the accounting system than is needed to
perform their job duties. Two of these
employees can perform all accounting
system functions. Although no improper
transactions were detected in the sample
tested, such broad access increases the
risk of errors, fraud, or misuse of
information, such as processing false
invoices or adding nonexistent vendors.
Weak password requirements—The
District does not require complex
passwords with letters and numbers.
Requiring that passwords contain a
combination of alphabetic and numeric
characters would decrease the risk of
unauthorized persons gaining access to
the District’s systems.
Recommendations—The District should:
••Implement proper controls over payroll
processing.
••Limit computer access to each
employee’s assigned functions.
••Increase complexity of passwords.
Inadequate accounting and computer controls
Student achievement and operational efficiencies mixed
Our Conclusion
In fiscal year 2010,
Superior Unified School
District’s student
achievement results and
operational efficiencies
were mixed. Student AIMS
scores were lower than
peer districts’ in math and
writing but higher in
reading. The District’s per-pupil
administrative costs
and per-meal food service
costs were lower than
peer districts’, but its
transportation and plant
operations costs were
higher. Transportation
costs were high primarily
because of overstaffing
and some inefficient
routes, and plant
operations costs were high
because of overstaffing.
Further, inadequate
accounting and computer
controls put the District at
higher risk for errors or
fraud, and some
employees received
performance pay despite
the goal not being met.
Superior Unified
School District
Student achievement mixed—In fiscal
year 2010, Superior USD’s student AIMS
scores were below the peer districts’
averages for two of the three areas tested
and below state averages. However, the
District’s two schools met “Adequate
Yearly Progress” for the federal No Child
Left Behind Act and its fiscal year 2009
high school graduation rate of 80 percent
was higher than the state average.
District’s operational efficiency mixed—
Superior USD spent 22 percent less per
pupil on administration than peer districts,
and although its food service cost per
pupil was higher than peers’, its cost per
meal was lower. However, the District’s
transportation costs per mile and per rider
were much higher than peer districts’
primarily because of overstaffing and
some inefficient bus routes. Further, the
District’s plant operations costs per square
foot were 17 percent higher than its peers,
primarily because it had more staff.
Percentage of Students Who Met or
Exceeded State Standards (AIMS)
Fiscal Year 2010
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Math Reading Writing
Superior USD Peer Group State-wide
Per Pupil
Superior
USD
Peer Group
Average
Administration $1,125 $1,446
Plant operations 1,433 1,473
Food service 505 428
Transportation 376 468
Expenditures by Function
Fiscal Year 2010
REPORT
HIGHLIGHTS
PERFORMANCE AUDIT
December 2011
A copy of the full report is available at:
www.azauditor.gov
Contact person:
Ann Orrico (602) 553-0333
Superior Unified
School District
Part of the District’s goal for performance pay
required that 75 percent of high school students
show improvement in math test scores. However,
only 54 percent of students showed improvement.
Therefore, the oversight committee responsible for
the performance pay plan changed the goal criteria,
without board approval, so that performance pay
could be awarded.
Recommendation—The District should pay
employees for only those performance goals met,
as allowed by the plan.
Some employees received performance pay despite goal not being met
The District’s $6.34 cost per square foot for plant
operations was 79 cents, or 14 percent, higher than
the peer districts’ average. This higher cost can be
attributed to more plant employees maintaining
fewer square feet than the peer districts’ average.
Although Superior custodians each maintained
about 20,000 square feet, the national average is
about 32,100 square feet per custodian.
Recommendation—The District should review
plant operations staffing levels to see if it can
reduce costs.
Plant operations overstaffed
Higher staffing costs—Superior USD’s $894 cost
per rider was 12 percent higher than the peer
districts’ average, and its $3.71 cost per mile was 47
percent higher. Although the District has a similar
number of transportation employees, it transports
students significantly fewer miles than the peer
districts. Further, Superior USD is 1 of only 6 districts
in a 17-district peer group that has a full-time
mechanic, and the 5 other districts with a full-time
mechanic had 30 percent more buses to maintain.
Some inefficient routes—Although four of the
District’s six bus routes were fairly efficient, two
routes, which accounted for 70 percent of total
mileage, transported only eight riders. The District
should consider other ways of handling these routes,
such as using minivans or contracting with parents
to pay them to transport their own students to school
or to district bus stops closer to the schools.
Not all state standards met—State standards
require districts to demonstrate that their school
buses receive systematic preventative maintenance
and inspections. Although the District’s records
indicate that regular maintenance was done, the
District did not maintain documentation, such as a
checklist, to show what was inspected and/or
repaired. In addition, the District is required to
conduct annual drug tests as well as random drug
and alcohol tests of bus drivers, but the District
conducted only annual drug tests.
Recommendations—The District should:
••Review staffing levels to see if savings are possible.
••Review bus routes for efficiency.
••Develop a checklist to document preventative
maintenance.
••Ensure that random drug and alcohol tests are
done.
Improvements needed to lower high transportation costs
TABLE OF CONTENTS
continued
page i
Office of the Auditor General
District Overview 1
Finding 1: Inadequate accounting and computer controls increase
risk of errors and fraud 3
Payroll process lacks proper separation of duties 3
Increased risk of unauthorized access to critical systems 3
Lack of disaster recovery plan could result in interrupted operations or loss of data 4
Recommendations 4
Finding 2: Improvements needed to lower District’s significantly
higher transportation costs 5
District had higher transportation costs 5
District lacks proper preventative maintenance documentation 6
District did not conduct random drug and alcohol tests 6
Recommendations 7
Finding 3: District should review plant operations staffing levels for
further cost savings 9
District had higher plant operations costs per square foot 9
Recommendation 9
Finding 4: Some employees received performance pay despite goal
not being met 11
Recommendations 11
TABLE OF CONTENTS
concluded
page ii
State of Arizona
Other Findings: 13
District did not accurately report its costs 13
Recommendation 13
Appendix
Objectives, Scope, and Methodology a-1
District Response
Tables
1 Comparison of Per-Pupil Expenditures by Function
Fiscal Year 2010
(Unaudited) 2
2 Comparison of Cost Per Rider and Cost Per Mile
Fiscal Year 2010
(Unaudited) 5
3 Comparison of Plant Operations Cost Per Pupil and Per Square Foot and
Square Feet Per Plant Staff
Fiscal Year 2010
(Unaudited) 9
Figure
1 Percentage of Students Who Met or Exceeded State Standards (AIMS) 1
Fiscal Year 2010
(Unaudited)
DISTRICT OVERVIEW
page 1
Office of the Auditor General
Superior Unified School District is a small, rural district located about 60 miles east of Phoenix, in
Pinal County. In fiscal year 2010, the District served 376 students in kindergarten through 12th grade
at its two schools located on the same campus.
Relative to its peers, Superior USD’s performance was mixed both in its student achievement and in
its operational efficiency in noninstructional areas.1 The District operated its administration with costs
that were significantly lower than the peer districts’ average, and its food service program had lower
costs per meal served. However, the District should take steps to improve the efficiency of its student
transportation and plant operations, strengthen some of its accounting and computer controls, and
ensure that it spends its Classroom Site Fund monies according to its governing board-approved
plan.
Student achievement is mixed compared to peer district and state
averages
In fiscal year 2010, 42 percent of the District’s students
met or exceeded state standards in math, 69 percent in
reading, and 50 percent in writing. As shown in Figure 1,
all three of these scores were lower than the state
averages, and two of the three were lower than the peer
districts’ averages. Although its AIMS scores were
generally lower, the District’s schools met all applicable
“Adequate Yearly Progress” objectives for the federal No
Child Left Behind Act in fiscal year 2010. Further, its fiscal
year 2009 graduation rate of 80 percent was the same
as the peer group average and higher than the 76
percent state average.
District’s operational efficiencies mixed with some costs higher and
some costs lower than peer districts’
As shown in Table 1 on page 2, in fiscal year 2010, Superior USD operated its administration
efficiently with per-pupil costs that were significantly lower than the peer districts’ average. Further,
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 the Arizona Instrument to Measure Success (AIMS).
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Math Reading Writing
Superior USD
Peer Group
State-wide
page 2
State of Arizona
despite plant operations costs that were similar to peer districts’ and transportation costs that were
lower than peer districts’, other performance measures demonstrate that changes are necessary to
improve efficiencies in both areas. Although food service costs per pupil were higher than the peer
districts’ average, the program operated efficiently with lower per-meal costs.
Significantly lower administrative
costs—At $1,125 per pupil, the District’s
administrative costs were 22 percent lower
than the peer districts’ average, primarily
because it employed fewer administrative
staff by having its superintendent also serve
as the principal for the District’s two schools.
Only two other districts from the peer group
also combined these positions. However,
auditors identified some administrative
practices that need strengthening (see
Finding 1, page 3).
Higher per-square-foot plant operations
costs—Superior USD’s per-pupil plant
operations costs were similar to the peer
districts’. However, its per-square-foot plant
costs were 14 percent higher primarily
because it employed more plant staff (see
Finding 3, page 9).
Food service program efficient despite higher costs—Although Superior USD’s food
service costs were higher per pupil, its $2.69 cost per meal was lower than the peer districts’ $3.04
average cost per meal. Superior USD’s cost per pupil was higher because the District served
more meals per pupil than the peer districts’, likely because it had a significantly higher percentage
of students qualifying for free or reduced-price meals. The District’s food service cost per meal
was lower because it had lower salary and benefits costs.
Transportation costs very high, with improvement needed—Superior USD’s per-pupil
transportation costs were lower than its peer districts only because it drove fewer miles and, on
average, transported fewer riders. The District’s transportation costs per mile and per rider were
both higher than peer districts’ because the District employed more transportation staff and had
some inefficient routes, indicating that changes could be made to improve the program’s
efficiency (see Finding 2, page 5).
Spending
Superior
USD
Peer
Group
Average
State
Average
Total per pupil $8,882 $9,886 $7,609
Classroom dollars 4,678 5,016 4,253
Nonclassroom
dollars
Administration 1,125 1,446 721
Plant operations 1,433 1,473 914
Food service 505 428 366
Transportation 376 468 342
Student support 355 625 581
Instructional
support 410 430 432
Table 1: Comparison of Per-Pupil
Expenditures by Function
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.
page 3
Office of the Auditor General
Inadequate accounting and computer controls increase
risk of errors and fraud
Superior USD lacks adequate controls over its payroll processing and access to its accounting
system and computer network. Although no improper transactions were detected in the samples
auditors reviewed, these poor controls expose the District to an increased risk of errors and fraud.
Payroll process lacks proper separation of duties
The District has an increased risk of errors and fraud, such as unauthorized changes to employee
pay rates, paying nonexistent employees, or processing false time sheets or payments, because it
does not separate payroll and personnel functions. One district employee, with little or no supervisory
review, is responsible for entering new employees into the system, modifying employee information,
entering and editing employees’ time sheets, recording payroll expenses, and distributing paychecks.
Although the District’s administrative staff is small, there is opportunity to separate these duties and
thereby ensure that proper controls are in place.
Increased risk of unauthorized access to critical systems
Weak controls over user access to the District’s accounting system and network increase the risk of
unauthorized access to these critical systems.
Broad access to accounting system increases risk of errors, fraud, and misuse
of sensitive information—Three district employees have more access to the accounting
system than they need to perform their job duties, with two of these employees having the ability
to perform all accounting system functions. Having employees with 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 information, such as processing false invoices or adding nonexistent
vendors or employees. The District should review and further restrict its employees’ access to the
computerized accounting system to ensure no one employee has the ability to initiate and process
a transaction without independent review and approval.
FINDING 1
page 4
State of Arizona
Weak password requirements—The District needs stronger controls over its network
passwords. Although network passwords are user-defined and must be changed periodically,
the passwords have a low-complexity requirement—that is, passwords need not contain
numbers or symbols. Common practice requires passwords to be at least eight characters
and contain a combination of alphabetic and numeric characters. This practice would
decrease the risk of unauthorized persons gaining access to the District’s systems.
Lack of disaster recovery plan could result in interrupted
operations or loss of data
The District does not have a formal, up-to-date, and tested disaster recovery plan for critical
student information on its systems and network. A written and properly designed disaster
recovery plan would help ensure continued operations in the case of a system or equipment
failure or interruption. Although the District creates backups of critical data and stores the
backups in a secure location, the District does not regularly test its ability to restore electronic
data files from the backups, which could result in the loss of sensitive and critical data. Disaster
recovery plans should be tested periodically and modifications made to correct any problems
and to ensure their effectiveness.
Recommendations
1. The District should implement proper controls over its payroll processing to ensure
adequate separation of duties.
2. The District should review employee access to the accounting system and modify access
to ensure that an employee cannot initiate and complete a transaction without independent
review.
3. The District should implement stronger password controls, requiring its employees to
create more secure passwords that contain a combination of alphabetic and numeric
characters.
4. The District should create a formal disaster recovery plan and test it periodically to identify
and remedy any deficiencies.
page 5
Office of the Auditor General
FINDING 2
Improvements needed to lower District’s significantly
higher transportation costs
In fiscal year 2010, Superior USD’s transportation costs were significantly higher than its peer
districts’, on average. The District’s cost per mile was 47 percent higher than peer districts’, and
its cost per rider was 12 percent higher, indicating that program improvements could be made.
Inefficiencies, such as high staffing costs, and low bus capacity on some of its routes contributed
to the District’s higher costs. Further, the District should develop a checklist for preventative
maintenance inspections and ensure that required random drug and alcohol testing is conducted.
District had higher transportation costs
As shown in Table 2, in fiscal year 2010, Superior USD’s $894
cost per rider was $94, or 12 percent, higher than the peer
districts’ average, and its $3.71 cost per mile was $1.18, or 47
percent, higher than the peer districts’ average. Several
factors contributed to the higher costs. Specifically,
Higher staffing costs—In fiscal year 2010, Superior USD’s
transportation salary and benefit costs were 65 percent
higher per mile and 30 percent higher per rider, on average,
than the peer districts’. The following two factors resulted in
the District’s higher salary and benefit costs:
•• Similar number of employees despite driving fewer miles—Superior USD employed
3.25 transportation full-time equivalent (FTE) positions, which is similar to the average for
the peer districts. However, on a per-mile basis, the District employed one FTE for every
13,371 miles driven in fiscal year 2010 while the peer districts averaged one FTE for every
36,290 miles driven.
•• Full-time mechanic position increased costs—Of the 17-district peer group, Superior
USD is one of six districts that employed a full-time mechanic. However, the five other peer
districts employing full-time mechanics transported students more miles and had to
maintain more buses than Superior USD. On average, these five peer districts transported
District Name
Cost
per
Rider
Cost
per
Mile
Superior USD $894 $3.71
Average of the peer group 800 2.53
Table 2: Comparison of Cost Per
Rider and Cost Per Mile
Fiscal Year 2010
(Unaudited)
Source: Auditor General staff analysis of fiscal year
2010 Arizona Department of Education district
mileage reports and district-reported
accounting data.
page 6
State of Arizona
students over 169,000 miles in fiscal year 2010, while Superior USD transported students
about 45,000 miles during that same period. Further, the peer districts employing full-time
mechanics had 30 percent more buses to maintain than Superior USD. Although it is
beneficial to the District to employ a mechanic due to its somewhat remote location, the
District should consider whether the mechanic’s duties could be combined with other
duties, such as bus driving or plant maintenance, to reduce the overall number of
transportation positions.
Routing could be more efficient—In fiscal year 2010, Superior USD had six established
bus routes. Four of these routes operated fairly efficiently, with most buses being filled to an
average of 77 percent of seat capacity. However, the remaining two routes went to remote
areas and accounted for almost 70 percent of the miles reported by the District for state
funding purposes, but transported only eight of the District’s 186 eligible riders. According to
district officials, in an effort to increase efficiency, the District used two of its smaller buses
instead of an 84- or 77-passenger bus for these routes, but other alternatives could be
considered to increase these routes’ efficiency. For example, the next time the District needs
to purchase buses or vans, it could consider purchasing minivans to use for the two remote
routes because they would use significantly less fuel than school buses. The District could
also consider contracting with parents to pay them to transport their own students to school
or to district bus stops closer to the schools.
District lacks proper preventative maintenance documentation
According to the State’s Minimum Standards for School Buses and School Bus Drivers (Minimum
Standards), districts must demonstrate that their school buses receive systematic preventative
maintenance and inspections. Following the Minimum Standards helps to ensure the safety and
welfare of students and can help extend buses’ useful lives. Preventative maintenance and
inspections include items such as periodic oil changes, tire and brake inspections, and
inspections of safety signals and emergency exits. Although records indicate that the District
conducted regular preventative maintenance inspections on its school buses, the District did not
maintain documentation, such as a checklist, to show what was inspected and/or repaired. The
lack of such documentation means the District cannot demonstrate that its school buses are
being properly maintained according to the Minimum Standards.
District did not conduct random drug and alcohol tests
According to the State’s Minimum Standards, districts are required to ensure that drivers are
tested annually for drug usage and randomly throughout the school year for drug and alcohol
usage. For random tests, the Minimum Standards require testing 50 percent of all drivers for drug
use and 10 percent of all drivers for alcohol use annually. Although district officials ensured that
each driver received annual drug testing, they did not have a process in place to ensure the
page 7
Office of the Auditor General
required random testing of bus drivers. As a result, none of its drivers were randomly tested for drug
and alcohol use in fiscal years 2010 and 2011.
Recommendations
1. The District should review its transportation staffing levels and see if they can be modified to
produce cost savings.
2. The District should review its bus routes for further cost savings and efficiency.
3. The District should develop a checklist to document that its buses receive required preventative
maintenance as specified in the State’s Minimum Standards.
4. The District should ensure that it conducts all required random drug and alcohol testing as
specified in the Minimum Standards.
page 8
State of Arizona
page 9
Office of the Auditor General
District should review plant operations staffing levels for
further cost savings
District had higher plant operations costs per square foot
Although Superior USD’s per-pupil plant
operations costs were similar to peer districts’,
other efficiency measures are not as favorable.
As shown in Table 3, the District’s fiscal year
2010 per-square-foot plant cost of $6.34 was
79 cents, or 14 percent, higher than the peer
districts’ average. The difference relates to
plant staffing, including the total number of
plant employees and the number of custodians.
Specifically,
•• More plant employees, each
maintaining fewer square feet—The
District employed 8 plant full-time
equivalent (FTE) positions, or one plant position for every 12,499 square feet, while the peer
districts averaged 6.7 plant FTEs, or one plant position for every 17,352 square feet.
•• District custodians maintained fewer square feet than national average—Superior
USD’s custodial staffing levels were higher than industry standards. Five of the District’s
plant employees were custodians, and each maintained about 20,000 square feet, which is
below the national average of approximately 32,100 square feet per custodial position.1
Recommendation
The District should review its plant operations staffing levels and determine if they can be
modified to produce cost savings.
1 “38th Annual Maintenance & Operations Cost Study-SCHOOLS.” The American School and University, April 2009.
[http://asumag.com/Maintenance/school-district-maintenance-operations-cost-study-200904/]
FINDING 3
District Name
Cost
Per
Pupil
Cost Per
Square
Foot
Square
Feet Per
Plant Staff
Superior USD $1,433 $6.34 12,499
Average of the peer group 1,473 5.55 17,352
Table 3: Comparison of Plant Operations Cost Per
Pupil and Per Square Foot and Square
Feet Per Plant Staff
Fiscal Year 2010
(Unaudited)
Source: Auditor General staff analysis of fiscal year 2010 Arizona School
Facilities Board and district square footage reports and district-reported
accounting data.
page 10
State of Arizona
page 11
Office of the Auditor General
Some employees received performance pay despite
goal not being met
In fiscal year 2010, Superior USD spent its Classroom Site Fund (CSF) monies for purposes
authorized by statute.1 However, 19 of the 34 employees receiving CSF monies received
performance pay for a goal that was not met. Eligible employees at the high school were paid
performance pay monies for a school-wide student achievement goal requiring 75 percent of
high school students to show improvement in district math test scores. However, only 54 percent
of the high school students showed improvement. According to district officials, the committee
that developed and oversees the performance pay plan, which consisted of four high school
teachers, decided to modify the criteria for this goal to include math class grades and AIMS test
scores rather than the stated district math test scores. The committee did this once it became
apparent that high school students’ test scores were not sufficient to meet the goal. However, the
committee did not notify the governing board of this change in goal criteria. Therefore, the
governing board did not have the opportunity to review and approve or reject the revised goal
criteria.
The District’s performance pay plan lacked sufficient detail to allow a determination of how much
performance pay was inappropriately awarded to high school teachers. The District’s performance
pay plan established six goals for receiving performance pay, but it did not specify how much
each goal was worth, nor did it clarify whether partial payment would be provided if all goals were
not met. Instead, the plan provided only an approximate total amount that employees could earn
if all goals were met.
Recommendations
1. The District should ensure that it pays eligible employees only for goals met in accordance
with its governing board-approved performance pay plan.
2. The District should ensure that its performance pay plan clearly specifies the amount of
performance pay each goal is worth and whether partial payment should be awarded for
goals not achieved or not fully achieved.
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 monies, may be spent only for specific
purposes, primarily increasing teacher pay.
FINDING 4
page 12
State of Arizona
OTHER FINDINGS
page 13
Office of the Auditor General
In addition to the four main findings presented in this report, auditors identified one other, less
significant area of concern that requires district action.
District did not accurately report its costs
Superior 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 errors
totaling approximately $474,000 of the District’s total $4 million in current spending.1 When corrected,
these changes decreased the District’s reported instructional expenditures by over $140,000, or 2.3
percentage points. The dollar amounts shown in the tables in this report reflect the necessary
adjustments.
Recommendation
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 14
State of Arizona
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 Superior 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 Superior 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 Superior 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 Superior
USD and the 17 other high school and unified school districts that also served between 200 and 599
students and were located in town/rural areas.2 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. Superior USD’s student
achievement peer group includes Superior USD and the 17 other unified districts that also served
student populations with poverty rates between 23 and 32 percent. Additionally:
•• To assess the District’s computer information systems and network, auditors evaluated 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.
1 Current expenditures are those incurred for the District’s day-to-day operation. 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.
2 The operational peer group excludes two districts that each received such high levels of additional funding that they skewed the peer-spending
averages.
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State of Arizona
•• To assess whether the District’s transportation program was managed appropriately and
functioned efficiently, auditors reviewed and evaluated required transportation reports,
driver files, bus maintenance and safety records, and bus capacity usage. Auditors also
reviewed fiscal year 2010 transportation costs and compared them 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 operation and maintenance costs and district building space, and compared these
costs and capacities 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, properly accounted for, and remained within statutory limits. Auditors
also reviewed the District’s performance pay plan and analyzed how performance pay was
being distributed.
•• To assess the District’s financial accounting data, auditors evaluated the District’s internal
controls related to expenditure processing and reviewed transactions for proper account
classification and reasonableness. Auditors also evaluated other internal controls that were
considered significant to the audit objectives.
•• 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 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 food service program was managed appropriately and
functioned efficiently, auditors reviewed fiscal year 2010 food service revenues and
expenditures, including labor and food costs, and compared costs to peer districts’,
reviewed the Arizona Department of Education’s food service monitoring reports, and
observed food service operations.
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 Superior Unified School
District’s board members, superintendent, and staff for their cooperation and assistance
throughout the audit.
DISTRICT RESPONSE
DISTRICT RESPONSE
SUPERIOR UNIFIED SCHOOL DISTRICT #15 RESPONSES TO AUDITOR GENERAL PERFORMANCE AUDIT
FINDING 1: Inadequate accounting and computer controls increases risk of errors and fraud
District agrees with finding and will implement recommendations.
Payroll process lacks proper separation of duties:
New employee paperwork and payroll distribution is now being handled by the District Office Clerk, and
time slips will be edited for coding and pay rates by the Superintendent.
Increased risk of unauthorized access to critical systems:
Upon obtaining a report listing employees with access to General Ledger, Payroll, etc. from the County
School Data Processing Office, we asked Jeff Miller, to remove and/or modify a total of six (6) employees
that had access to different parts of the system that were not needed in their work. We have also asked
for an updated report after this process is complete.
Weak password requirements:
The District has revised the network password policy requirements. The new policy for password policy
requires eight (8) characters and the combination of alpha and numeric characters. In addition, the
requirement to change the password is every 180 days. See attached: Superior School District IT Policies
and Procedures
Lack of disaster recovery plan could result in interrupted operations or loss of data:
The District has created and adopted a disaster recovery plan. The plan addresses the needs of a
recovery plan in case of a disaster. In addition, it addresses the need to periodically test the backups to
ensure the integrity of the backups. See attached: Superior School District IT Policies and Procedures
FINDING 2: Improvements needed to lower Districts significantly higher transportation costs
District agrees with finding and will implement recommendations.
District had high transportation costs:
District Mechanic will be utilized in other areas such as bus driver, maintenance and landscaping duties.
Next school year 2011‐2012, some bus pickups will be eliminated and the district will run two (2) school
buses instead of three (3).
District lacks proper preventative maintenance documentation:
The district has ordered a “Driver Daily Report” (see attached form) that will demonstrate that our buses
will receive systematic preventive maintenance and inspections as required by the state’s minimum
standards for school buses and school bus drivers.
District did not conduct random drug and alcohol tests:
The District Office will schedule random drug testing to ensure that 50% of all drivers are tested for drug
use and 10% of all drivers for alcohol use annually beginning 2011‐2012.
FINDING 3: District should review plant operations staffing levels for further cost savings
District agrees with finding and will implement recommendation.
The following changes have been made to the Plant Operations for the District in order to decrease the
spending cost in the department for 2010‐2011.
1. Cut three (3) full time employee departmental positions
2. Transfer one (1) full time position to a part time position
3. Cut four (4) part time positions
4. Maintain two (2) schools instead of three (3) per last year
FINDING 4: Some employees received performance pay despite not meeting goal
District agrees with finding and will implement recommendations.
The Superior Unified School District 301 Committee and the District Superintendent has put in place
several safe guards to ensure the part two (2)(40%): Student Improvement and student/parent
satisfaction performance pay goals will be according to the plan. Schools who do not meet their goals
for Writing and Math will not receive 301 money.
Clarification of the issue is as follows:
The High School Teachers were paid although they did not meet their specified goal of 75% of the
students showing improvement. Only 54% of the high school students showed improvement in Math.
However, the high school resource students were not removed from the data pool. Consequently, this
would have altered their percentages. Since this finding, the resource students are placed on a separate
list to prevent this error in the future.
The 301 allocations vary year to year due to the fluctuation in taxes. Therefore, to protect Superior
Unified School District, the 301 committee has only stated percentages for each portion of the plan:
Part I (20%) Employee Compensation
Part 2 (40%) Student Improvement and Parent/Student Satisfaction
Part 3 (40%) Discretionary
The plan does state approximate estimates for each of those parts. The teachers are advised throughout
the year as information is available of what they should expect.
OTHER FINDINGS: District did not accurately reports its costs
District agrees with finding and will implement recommendation.
The district is aware of the findings and is using the Uniform Chart of Accounts to assist in the coding
procedure.