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Unified may have itself audited
By Paul Sloth
Journal Times
Racine
- Today, the Racine Unified School Board will consider hiring an outside auditor to review the school district's relationship with a private consulting firm hired to manage the district's finances.
The decision comes just days after a Unified employee sent a roughly 250-page file to several state agencies seeking an investigation into the Public Business Consulting Group, which Unified hired in January 2006.
Consultants from the firm dispute Lucas' claims.
Roger Dickson, who serves as Unified's chief financial officer and the consulting firm's chairman, said Lucas' claim is not accurate.
Dickson said the district has already realized a significant portion of the savings from changes in accounting, health insurance and transportation, as well as energy savings.
Dickson said he and other staff members are reviewing the documents that Lucas turned over to School Board members as well as several state agencies, including the Department of Public Instruction's Audit Bureau and the state Justice Department.
Dickson said he is looking through the file, provided to him by a School Board member, to see exactly what Lucas is claiming. Dickson said he did not want to comment further until he'd had a chance to review all the documents.
Sue Kutz, Unified School Board vice president, requested the audit during Monday's board meeting.
"The thing is, unless you have somebody look at this there is going to be a lot of 'he said, she said.' To get an independent review is probably the best solution at this time," Kutz said. "There are a lot of allegations and innuendos. The sentence has been executed already, just on part of the documentation."
Milwaukee radio personality Jeff Wagner jumped on the story and has likened the situation to that of the accounting troubles of Enron, because PBCG's CEO and President Nick Alioto has charged the district for what amounts to potential savings to the district.
Kutz thinks the analogy is a stretch.
"Do I have questions about some of those checks? Yes I do. But I wouldn't call this Enron by any stretch," Kutz said.
Dickson said his company's contract with the district stated that his company would identify potential budget savings, which would be quantified as to what that would be on an annual basis. The first year PBCG would get 25 percent and the district 75 percent the following year, PBCG would get no incentive bonus.
The firm has had anywhere from nine to 12 employees working for Unified since being hired by the district.
Dickson said Lucas did not follow the district's normal procedure for addressing an issue like this and did not presume to know Lucas's motivation.
Lucas, who has worked for the district for 35 years, said his only motivation was to protect the community from what he believes are unethical business practices.
"This is not about people. This is about a process," Lucas said. "My intention is not to defame anybody. I'm certainly saying that, after 35 years, I've never seen anything like this."
Unified originally hired the consulting firm in January 2006, while officials searched for a full-time chief financial officer. Part of the district's original contract with the firm contained the possibility of a one-time incentive fee of 20 percent of annual savings that PBCG identified and district management accepted.
The district decided to hire the firm long-term and signed a five-year contract.
The firm has filled the CFO and COO positions at 90 percent of the district's total compensation costs - which include salary and benefits - and the outsourced positions don't qualify for expensive post-retirement benefits.
The contract, which took affect July 1, 2006, called for the consultants to receive $40,516.67 a month for providing three people to effectively share the two full-time CFO and COO positions and personnel to fill two full-time accounting positions and an administrative assistant position.
The contract also opened the possibility for outsourcing other non-union jobs that fall under the CFO or COO at 90 percent of the district's total compensation costs.
Brian Dey said this is an example of how the School Board's governing structure - known as policy governance - can backfire.
Dey said he also questions whether it is in the district's best interest to have a for-profit company running the finances of a public body.
"They're interested in their bottom line and not so much what may be the benefit of the district," Dey said.
"I won't say there are nefarious things going on. The bigger question is, did the board do its job putting the policy governance together to ensure that something like this wouldn't happen?"
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