YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

June 16, 2003

Report No. 2003-52

The following problems were discovered as a result of an audit conducted by our office of the El Dorado Springs R-II School District.

The school district did not solicit proposals for a construction management firm for the recently completed construction project to expand and remodel the elementary and middle schools.� The Superintendent indicated the contract with the construction management firm was simply renewed in 2000 because the terms of the contract were the same as the original one signed in 1996; however, the terms of the contract did change.� Given that four years had passed and the contract terms had changed, the district had no assurance that construction management services were being obtained from the most qualified vendor at the lowest and best cost.

The board indicated it renegotiated the construction management contract signed in 2000 numerous times without formally amending the contract.� The Superintendent stated that the construction management firm was paid in excess of the renegotiated contract amount due to the length of the project.� The Superintendent also indicated numerous problems have been encountered during construction, and the district has contacted the construction management firm repeatedly to ensure the subcontractors' work has been completed.� The project was substantially completed in March 2002, however, the district was still holding the final check of $4,608 to the construction management firm as of April 15, 2003, pending completion of various punch lists and warranty issues.� Given the overall concerns that the district has regarding the quality of work and that final payments have been made to all of the subcontractors, it appears questionable whether the district will be able to ensure that the project is completed timely and satisfactorily when they are only withholding $4,608 from the construction firm.

The district has not conducted a selection process for its Certified Public Accountant (CPA) firm for five years.� In addition, the district has not solicited proposals for attorney services.� Also, the district does not have a contract with its attorney and does not require the attorney's office to submit detailed bills to the district.�

Various board members violated the district's nepotism, conflicts of interest, and financial disclosure policy.

The district violated its current bidding policy for construction projects over $12,500, and the district's policy does not require bidding for any other items.� In addition, no bids have been solicited by the district for food service vendors since March 2000.

The district paid bonuses totaling $1,100 to fourteen district employees which is an apparent violation of the Missouri Constitution.� The district also expended funds including the bonuses which did not appear to be a necessary or prudent use of public funds.

Although the district's policy provides for the Superintendent to review all expense accounts, there was no documentation that anyone reviewed his expense account for accuracy or propriety. Reimbursements made to administrators for travel expense were not always supported by adequate documentation of actual expenses incurred in accordance with district policy.� An invoice submitted for reimbursement by the Middle School Principal for the purchase of a wreath had been altered to "black out" the name of the person it was sold to.� The altered invoice was reviewed and approved for payment by the Superintendent; however, there was no documentation that the invoice was ever questioned.� By approving the altered invoice, the Superintendent did not provide an adequate review of the expense account submitted to ensure it was a valid use of school district funds.

The Superintendent's travel allowance and fringe benefits which totaled $4,521 for 2002 were not reported on his W-2 forms.� The board also approved an increase of 3 percent in the Superintendent's salary based on the consumer price index (CPI); however, the CPI was only 1.1 percent.

The open meeting minutes do not always document all business conducted during the board meetings and do not always adequately document the specific reasons for closing the meeting and actions taken by the board in the closed meetings.� In addition, the issues discussed in the closed meetings did not always relate to the items the board indicated would be discussed, and it is questionable whether the district complied with the provisions of the Sunshine Law when discussing some items in closed session.

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