On Saturday, June 30, state Auditor Tom Schweich wrapped up a report that would later turn into Rockwood’s biggest nightmare—the district’s first state-run audit since 1994.
Prompted to conduct the audit by the urgings of citizen watchdog group Rockwood Stakeholders for Real Solutions (RSRS), Schweich gave Rockwood a credit rating of “fair,” only one step up from the lowest rating of “poor.”
Only a few days before Auditor Schweich presented his less than flattering findings on Wednesday, Feb. 27, the Board of Education
extended Superintendent Dr. Bruce Borcher’s contract by a narrow vote of 4-3. Rockwood soon found itself splashed across the front page of local newspapers and the subject of debate and discussion within the community.
Amidst it all, the seats of President Janet Strate and Director Stephen Banton of the Rockwood Board of Education are up for grabs on Tuesday, April 2. Both voted to extend Superintendent Dr. Borcher’s contract. That same day, voters will decide the fate of Proposition S, a $38.4 million no-tax rate increase bond issue on the ballot.
The audit had a large scope, addressing issues ranging from the mundane to the controversial. The primary concerns, however, were “deficiencies in internal controls, noncompliance with legal provisions and the need for improvements in managerial practices,” Auditor Schweich stated in his opening letter of the report.
The most serious problem, and the one that captured the attention of media and citizens alike, was a contract procurement process that almost always awarded the contract to Glenn Construction.
“I think that if it hadn’t been for this cozy relationship with Glenn Construction, it probably would have been rated good,” Auditor Schweich said. “Other problems were more typical of a large school district.”
Glenn Construction employed former Director of the Board Steve Smith from 1994 to 2012. According to the audit, during his tenure on the board, Smith voted for 12 additional projects from January 2011 to June 2012. This resulted in $189, 256 in additional
fees to Glenn Construction.
The audit stated the conflict of interest violated state statue 105.454 (4), wherein it is illegal for a member of the Board to vote regarding contracts that may benefit another institution said individual works for.
“The bottom line comes down to that if you’re sitting on a school board and you’re voting for contracts that will give your employer money, that’s a conflict of interest,” Auditor Schweich said. “I don’t really think there’s a serious argument to the contrary.”
The Board of Education would disagree. In the response to the audit report, the district cited emails from the Missouri State Board Association (MSBA) that stated there was no conflict of interest.
Auditor Schweich, however, said he does not think those emails contradict the audit findings.
Though the Board asked whether there was a conflict of interest, they never asked whether Smith could approve orders that would result in fees to Glenn Construction.
“You ask the wrong question, you get a bad answer,” Auditor Schweich said.
Following the public and private scrutiny from the audit report, former Director Steve Smith resigned from the school board, effective Monday, March 4. But throughout it all, Smith maintained he did nothing unethical.
“I will take this last opportunity to try and explain: I was not on the Board when Glenn Construction was hired by Rockwood for the 2010 Bond Issue package. I received an opinion from the MSBA that I could vote on construction matters that did not benefit Glenn; this opinion was seconded by former Superintendent Dr. Larson; when votes were needed, I left the room; I never knowingly voted to benefit Glenn construction; and I never cast a deciding vote on any Rockwood change orders,” Smith wrote in his March 3 statement of resignation.
Smith’s resignation was well received by Loralee Mondl and Jeffrey Morrell, two candidates seeking to take Strate and Bantor’s seats in April.
“Of course he did the right thing in stepping down,” Morrell said. “In my personal opinion it was a coordinated effort to preserve the Board as it stands today.”
In his resignation statement, Smith urged the community to focus on the students in the district and be less polarized and emotionally charged.
“Every issue has at least two sides. Please begin to listen to teach other,” Smith wrote in his statement.
But Rockwood’s problems weren’t contained to personnel hullabaloo with Glenn Construction.
Another key component of the audit’s findings was the size and scope of change orders to contracts.
Whereas change orders are normally small and related to the original contract, Auditor Schweich found fault with several of Rockwood’s large and seemingly unrelated change orders, the Weight Room and Library at MHS being two examples.
“This went way over the line in terms of the number of change orders, the size, the scope and the fact that some of them weren’t even for the same facility,” Auditor Schweich said.
According to Auditor Schweich, the change orders would often result in additional fees to Glenn Construction, fees that were supposedly already paid for in the original contract. The audit found an estimated $1,203,178 in overpaid dollars.
“The contracts are ambiguous and they are confusing,” Auditor Schweich said.
Rockwood has been using Glenn Construction exclusively since 1994. The district would bid out services, but the contract would almost always be awarded to Glenn Construction. In Schweich’s opinion, money could have been saved had projects been more competitively bid out.
“We have found based on our historic work that if you have a competitive procurement you’re going to get a better rate,” Auditor Schweich said. “There’s study after study that shows that.”
Auditor Schweich’s criticism of the Glenn Construction contract justified the concerns of Eileen Tyrrell, director of RSRS.
“We feel validated because we’ve taken a tremendous amount of heat from the Board administration and cabinet,” Tyrrell said. “We feel like we weren’t given any credibility and we feel validated. But there’s no cheering and there’s no clapping.”
After the Post-Dispatch exposé, Tyrrell said RSRS reached out to then-Chief Financial Officer Shirley Broz and tried to discuss modifying the Glenn Construction contract as a cost-saving measure.
Tyrrell said Broz was not responsive to their concens, and the response of RSRS was if district officials would not be open to solving the problem with Glenn Construction relations, they would have no other choice than to ask the auditor to take a look.
And that they did. RSRS asked the auditor to consider putting the district on the list of audits for 2012 after presenting their evidence deeming it necessary.
“He said we were a conscientious group of citizens, which was the greatest compliment to us,” Tyrrell said.
The audit didn’t stop with Glenn Construction. It also found issue with procurement cards given out to staff members to make school related purchases.
Many cards had excess credit, sometimes in the amount of $1.5 million. Auditor Schweich found some staff members had two and said there was no justification for discrepancies in the district’s files.
“Before you allow somebody a million dollar line of credit on a card, there’s got to be some justification for that,” Auditor Schweich said.
A team from the State Auditor’s office will be back again in roughly 90 days to review the audit.
The team consists of a few members from the original audit team who will sit with the Board and hammer out details of the audit point by point, marking whether the district seems to be improving, in progress, or regressing on all points.
Despite his unbecoming findings, Auditor Schweich seemed convinced of the district’s willingness to improve after a conversation with Janet Strate.
“I had a nice talk with the president of the Board and I think she appreciates the quality of our work and recognizes that this help was useful and eye opening,” Auditor Schweich said. “I got the impression that she was absolutely committed to fixing this problem. I am confident the recommendations will be implemented.”
Schweich’s opinion of the district’s willingness to change seems validated by Rockwood’s “Action Plan to Address the State Audit.” The action plan has five main points: to take the recommendations seriously, update current Board policies for construction management while complying with state law, attempt to collect any overpayment, form a Bond Oversight Committee and allow the community to
track its progress by encouraging transparency and allowing parents and patrons to track its progress in the district’s Audit Action Plan.
“We are committed to fixing all the recommendations before the 90 days are even up and making sure we are transparant in our response,” Dr. Borchers said.
But in Board contestant Mondl’s opinion, the findings of the audit were just the tip of the iceberg.
Mondl said Dr. Borcher’s hiring of colleagues from Minnesota was an issue that sparked it all.
Negative publicity manifested itself in Rockwood’s Fox 2 news feature on Elliott Davis’s show “You Paid for It.” Davis said Rockwood never showed up on his radar until Dr. Borchers assumed former Superintendent Craig Larson’s position.
“You Paid for It” first featured Rockwood after the revelation that the superintendent had given contracts to some of his consultants from Minnesota.
“One of the reasons the focus has been so intense is because of citizens group RSRS,” Davis said. “They really ratcheted up the pressure and took it to a new level. I love citizen activists, because they do more than complain. A citizen group cared and was actually doing something about it.”
RSRS certainly did more than complain—the organization called for Superintendent Borcher’s resignation after his contract was extended, an extension that was passed just days before the incriminating audit was released, and nine days after the audit
report was given to the Board.
“We feel completely outraged about the extension, and this is not just the reaction of the RSRS team, this is the reaction of the community. First of all, it’s outrageous because they knew on Feb. 12 in a private meeting the results of the audit report, yet
they still extended his contract,” Tyrrell said.
Tyrrell is not the only one upset about the timing of the contract extension. Susan Tiffany, Rockwood parent and MHS grad of ‘98, said she found it “shady.”
“If he was really worth it, why not extend it after hearing the audit report,” Tiffany said. “I’m not entirely opposed even to his contract being extended, but I do find the circumstances suspicious.”
Bill Brown, director on the Board, was one of the three votes in favor of not renewing Dr. Borcher’s contract, citing the reason for his dissenting vote, as the feedback he had received from Picture Rockwood and teachers and a desire for change within the community.
“There’s a human side to this I don’t think people take into account sometimes. It wasn’t an easy vote but I believed in my heart it was the right thing to do,” Brown said. “Dr. Borchers isn’t a bad guy. This is just a bad situation.”
But Strate maintains Dr. Borcher’s biggest priority has always been student achievement, and because of that, is deserving of another three years.
“We gave him five goals, and most of those he did accomplish,” Strate said.
Aside from the details of the contract, Tiffany said she was frustrated at the financial mismanagement by the Board and district alike.
“I run at a tight budget at home and if I were to misspend even 10 bucks it’s bad business,” Tiffany said. “If you have a Board elected to keep checks and balances, there shouldn’t be $1.2 million misspent.”
Tiffany said she was hopeful the district was making positive changes after sitting in on the March 7 Board meeting.
“I think a lot of these changes should have started earlier, but I like that I’ll be able to log in on a Saturday morning with my pajamas and coffee and check how the district is moving forward with the goals of the Audit Action plan,” Tiffany said.
Despite her frustration with the district and the Board, which she believes “needs some new blood,” Tiffany said she would still vote for the upcoming Proposition S which narrows in on safety, technology and structural improvements.
“Unfortunately, with the results of the audit and general sentiment in the community, I don’t think
Prop S will pass,” Tiffany said.
Dr. Borchers said he can only hope the community puts its frustration with the district aside and focuses on the students.
“We’ve had our challenges but we have got great people in place to meet those challenges,” Borchers said. “I want the community to know we are fixing things.”
Patrons can track the district’s progress at http://www.rockwood.k12.mo.us/boardofeducation/audit2012/Pages/ActionSteps.aspx