School district credit cards abused by executives, audit says

Top Philadelphia School District executives failed to document expenditures on credit cards, and a half dozen employees may have inflated mileage expenses, City Controller Alan Butkovitz said in an audit released yesterday.

"We found no set policies or approval procedures for the use of executive credit cards," Butkovitz said at a news conference at his office in Center City.

Butkovitz also cited unnecessary late fees and finance charges on executive credit cards.

The office examined a sample of the monthly statements for nine employees for 2007. Auditors examined 18 monthly statements and found 17 lacked proper documentation such as receipts and explanations of how the purchase related to district business.

"This type of environment allows waste, mismanagement, and possibly outright fraud to not only exist, but flourish when permitted to go unchecked," Butkovitz said.

District officials said that they had taken steps to make improvements - including eliminating all executive credit cards except for that of the chief executive officer - and that they believed the amounts in question totaled less than $12,000 in a $2.18 billion budget.

"Overall, we believe that in a district with over 14,000 employees and over a $2 billion budget, there are going to be expenses that need to be reviewed and carefully analyzed," said district spokesman Fernando Gallard. "We are very transparent, and it shows by the amount of detail [the controller has] got and the way he has gone with a fine comb through these billings and the details we've provided."

Butkovitz, however, called the findings a "flag" that could signal larger problems.

Butkovitz said there were "questionable charges" to executive credit cards that lacked documentation: $6,734 for food and flowers, $3,912 for travel costs, and $432 for gas and supplies. The charges were made by six current and former executives: former School Reform Commission chairman James Nevels, former CEO Paul Vallas, former chief academic officer Gregory Thornton, former chief financial officer Folasade Olanipekun-Lewis, current chief of staff Claudia Averette, and Diane Guveyian, who is now director of strategic partnerships and used to work for the School Reform Commission.

Gallard said the district believed that the expenses were legitimate and that it did have adequate controls.

"We were able to gather an explanation and we're satisfied," he said.

Nevels did not return a call for comment.

Vallas, reached in New Orleans, where he heads the public schools, bristled.

"I incurred so many expenses that I never got reimbursed for," he said. "I'd rather take the financial hit than even enter into a gray area."

Butkovitz's audit also found that six employees in the capital projects department sought reimbursement for mileage that was higher than the actual miles of the trips they took. One employee requested reimbursement for a 754-mile trip that MapQuest showed only took 412 miles, Butkovitz said. The mileage payments overall were overstated by about 40 percent, he said.

School district officials told the controller's office that the matter was referred to the district's inspector general for investigation.

Gallard said that the amount in question was $523 and that the matter was still being reviewed.

He also said that interim chief executive officer Tom Brady had the sole executive credit card in the district under a new policy, and that Brady had not used it.

Butkovitz announced that his office also would look more closely at student activity funds and petty cash funds in the district, following recent reports about investigations into financial mismanagement at Germantown High School and Frankford High School. The office will audit more schools' funds this year, he said.

The audit, as the controller's office announced last week, found that nine of 24 schools sampled failed to submit proper reports on their student activity funds. It also found problems with petty cash funds at 12 schools.

The controller's office also plans to audit the district's contracts with community-based organizations for security services.