In a scathing report, Pennsylvania's auditor general this week said he would refer a complaint to the state Ethics Commission about the Duquesne City School District.
But the state-appointed receiver for the district said the practices flagged by state Auditor General Eugene DePasquale have now been "prohibited" and that the problems have not affected "instruction, programs and services" provided to Duquesne's 331 students in kindergarten through sixth grade.
"Full funding has been maintained for all student instruction, programs and services," Paul B. Long said Thursday in a letter to parents and the district's elected school board.
At issue in the 42-page report released by DePasquale this week were payroll advances that administrators --- including a former school superintendent --- made to themselves without any oversight from the elected school directors or Long.
DePasquale said the advances amounted to "personal no-interest loans" and called the practice "total insanity" and "outrageous."
The auditor general's report, available online, also criticizes:
- The district's poor documentation of the number of foster children being educated, which the auditors said has been a "recurring" problem in the district's last four audits;
- The district's inadequate procedures for tracking the number of students traveling by bus, which DePasquale's office said resulted in an overpayment to Duquesne City School District of $180,431 by state taxpayers between 2012 and 2016; and
- The district's failure to verify that all school bus drivers had valid driver's licenses and had passed criminal background checks.
In regards to the last point, DePasquale's office said they reviewed the records of all of the bus drivers involved, and that no deficiencies were found.
But, the auditors said, "merely relying on a contractor to obtain licenses and clearances, reviewing the clearances, and providing that documentation to the district does not satisfy the district's legal obligations."
Duquesne City School District currently serves 561 students in kindergarten through 12th grade, including more than 200 who attend school in neighboring districts under a tuition-reimbursement plan.
The district was declared financially stressed in 2000 and placed under state oversight in 2012, the same year that the middle school was closed. Duquesne High School closed in 2009.
Given the district's precarious financial state, DePasquale called it "outrageous" that between 2013 and this year, then-school superintendent Barbara McDonnell authorized $41,250 in interest-free personal loans to four district employees, including herself.
Auditors found that McDonnell obtained $23,150 through payroll advances in a four-year period.
According to the auditors, the loans were given in the form of payroll advances and were not authorized by Long, the school board or the state-appointed recovery board.
Instead, McDonnell authorized them, or made her own requests directly to a payroll clerk, the auditors said, "thereby essentially approving her own loans."
DePasquale said district officials told auditors the loans were offered to help employees suffering from "financial hardships," but that auditors in most cases found no specific reasons for the advances.
In one case, DePasquale said, McDonnell requested an advance of $1,000 to help with "the holidays."
“It is outrageous that the staff of the Duquesne School District --- including its former superintendent --- used this district’s general fund as a piggy bank for personal no-interest loans,” DePasquale said in a prepared statement.
McDonnell came to work for Duquesne City School District in 2000 as dean of discipline, according to her biography on the district's website, but resigned last month, citing "personal reasons."
The district advertised for a new superintendent three weeks ago.
In a written response to the auditors, the school district said that the practice of making payroll advances has been discontinued, and that advances were made to assist employees with "health care, college tuition and a theft of personal property."
"At no time was the intent to be fraudulent in nature, abuse district funds or violate ethical practices, as is evidenced by the full repayment through payroll deductions fo all salary advances in a timely manner," Duquesne school officials wrote, adding that the district will ask those employees who received advances to repay interest on them.
Long said Thursday that "all payroll advances were paid back in full" and that the administrative "problems have not affected the instruction, programs and services" that children receive at Duquesne Elementary School.
Nevertheless, the auditors said, the loans represent both a conflict of interest and a potential violation of the state Ethics Act.
In other findings, the auditors found that although Duquesne City School District received more than $1.3 million in transportation reimbursements from the state Department of Education, it had no independent documentation of the number of students being carried by school buses.
Instead, it relied on reports from school bus contractors. As a result, the auditors said, "some reporting errors were so blatant" that the district was overpaid at least $180,431 during the four-year period.
The district also failed to ensure that bus drivers had the proper endorsements on their driver's licenses, or that they had passed criminal background checks, relying on the contractors to provide that information.
At least six drivers of 18 used by the Duquesne district had no information on file.
District officials said that they do not have a transportation department and have relied on the bus contractors to collect and report the information.
The auditors urged the district to be "significantly more proactive" in "obtaining, reviewing and maintaining all transportation documents."
“For the sake of the students and the taxpayers of the Duquesne School District, I certainly hope that the board and district officials get their house in order," DePasquale said.
Originally published December 15, 2017.