Shelby County Schools: “making progress on righting the ship” in internal audit operations

October 30, 2015 – It is probably not uncommon for new administrators or consultants to cite failures of their predecessors. How much is valid and how much is self-promotion, or both, might be debatable.

scs-cafr-coverThe former long time internal auditor for Shelby County Schools (SCS), Melvin Burgess, was reassigned to another job at less pay within the school district during the first quarter of 2014.

Recently, Leon Pattman was hired as Chief of Internal Audit at SCS. His previous position was Chief Audit Executive/City Auditor for the City of Memphis.

Pattman, had a number of things to say about the past practices of the department at SCS and that he was “making progress on righting the ship.”

Pattman says the requirements in the Internal Audit department “were set forth to meet the floor,” meaning the minimum.  Noting that he has done peer reviews all over the country, Pattman went on to say, “[A]nd then the audit  documentation required, in my estimation, could not pass a peer review.” He said “… there were simply statements being made in audit reports I could not prove.”  Pattman says that for his six or seven weeks on the job he’s had to validate all the things that the audit department is doing and begin to retrain the way the Internal Audit staff members think.  In addition, he has asked for and gotten additional personnel from a temporary employment agency to help in finishing individual school audits by the target of November 21. He expressed confidence in meeting the deadline and also in his permanent staff. “I have good people and I anticipate that every last one of them will be – I will help them raise the level doing professional development – but they were doing things to meet what they were expected. With low expectations you get low results. So I’ve raised the expectations. So we’re going to continue to make sure that each audit report will be called adequate, sufficient, and reliable audit evidence to prove what we’re talking about.” He went on to say, “[A]nother thing we’ve done is, as opposed to putting these canned audit statements in there about what’s going on, [we’ve] told the whole story… We’ve had a lot of issues in terms of bring that audit quality level up… we’re working our way through these challenges right now to get us beyond this point where we are. And then once we get beyond this point we will begin to fully implement the new plan for how we’re going to do the next cycle of school audits which I anticipate we’re going to deliver significant quality – you’ll see the difference to be able to see what’s really going on.”

Pattman also said he will be recommending the hiring of a information technology auditor. He says he believes if SCS had had a full blown security audit … we would have known we had a vulnerability. The SCS payroll system was hacked earlier in the year and direct deposit payments for about ten employees were redirected to pre-paid cards.

After hearing reports from Pattman and newly hired Chief Financial Officer Lin Johnson, Shelby County Board of Education member Chris Caldwell, who is chairman of the board’s Audit, Budget and Finance Committee,  said he was “very encouraged, we’re very close to getting all this right.”

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Possible Poor Procedure “Passes” Parking Project

butler-garageOctober 7, 2015 – The Design Review Board (DRB) today approved a new building which will house a parking garage and 15 apartments across Tennessee Street from the Tennessee Brewery and part of that restoration project. The building is known as the Butler Parking Garage & Bottle Shop Apartments and would be at Tennessee Street and Mina Avenue in downtown Memphis.

The approval, however, came after the proposal apparently failed on a tie vote, an unusual proclamation by the chairman that the motion remained on the table after the initial vote, lectures by two staff members, including the Downtown Memphis Commission (DMC) president, and the chairman of the board, and a then a roll call vote.

While the DRB staff supported approval of the project, three citizens or their representatives spoke against it as proposed.

In common meeting rules, including Roberts Rules of Order, a tie vote on a motion means the motion does not pass. It fails. Consideration of the matter is then completed. The only way it can be considered further is if a board member who was on the prevailing side makes a motion for reconsideration and that motion is approved by the body. Since only two people voted during the original voice vote, the one board member voting no would be the only person who could have moved for reconsideration. There was no such motion from anyone, including the member who was on the prevailing side.

Instead, the chairman declared the original motion to approve the proposal as presented by staff was still on the table for consideration.

From that point, the DMC Development Project Manager who had given the staff report recommending approval again emphasized the project matched the Design Review Board’s guidelines and the staff fully supported the proposal. (It might be noted that when the One Beale Street project recently came before DMC boards of directors the staff did not object to its height violation of the South Main District guidelines. In fact, DMC staff supported the violation. )

The president of the DMC chimed in saying that while the arguments of the neighbors who appeared before the board to object to the project were appreciated, the points they made were not new. He went on to say those objections had been considered by the staff but the overall project’s value to downtown weighed in favor of the development. The chairman of the DRB added that it would be unusual to expect neighborhoods in an emerging downtown to remain unchanged.

The chairman then called for a roll call vote on the motion which, by typical procedure, had already been defeated and would no longer be up for additional consideration. At that point, all six votes were in favor of the project.

Whether the lack of objection to the procedure followed mitigates the apparent violation of common rules of order is questionable. That seems to raise the question, did the Design Review Board really approve the project if it was not, at the time of the roll call vote, properly before it?

Big Step in Trolley Return Expected in October — Perhaps Bigger Step Remains

October 5, 2015 – Memphis Area Transit Authority (MATA) expects the Federal Transit Administration and the Tennessee Department of Transportation to sign off on the MATA’s plans to restore trolley service to downtown Memphis.

Last week, Carl Robinson, Director of Trolley Operations & Maintenance, said those government approvals should come within two to four weeks.

Tom Fox, Deputy General Manager, warned, however, that there was much work to do after those approvals before the steel wheeled trolleys are returned to service. For months, MATA has said that the cumbersome process of getting federal and state approvals were a major drag on the time line of getting trolley’s running again.

There is still one bigger step even after FTA and TDOT approvals: money.

Ideally, MATA has said it would like to have 20 trolleys to service the Main Street, Riverside Loop, and Madison lines, as well as have one or more on reserve for use when maintenance takes one of the trolleys out of service. MATA owns 17 trolleys now and estimates it will cost about $400,000 each to fix them. Officials also say that of the 17, only 9 or 10 are likely in good enough condition to be restored to service. All of the trolleys were taken out of service in June, 2015, after two caught fire.

Memphis has allocated $2.25-million for trolley restoration, to be used as a match for federal and state funds. At the moment, however, there is no known pending grant from the federal government for this purpose. Typically, federal funds cover about 80% of the cost and the local match is 20%.

MATA still hopes to resume the steel wheel, rail based trolley service sometime in the first three months of 2016. That service, however, is likely to be piecemeal, a trolley or two coming on line at a time as repairs are completed and a source of funding is acquired.

In the meantime, four trolley buses, rubber wheeled vehicles that look similar to trolleys, are rolling on the trolley routes with four more, MATA hopes, by the end of this month. It appears the trolley buses are attracting good ridership although official counts will not be available until later this week.

Veteran Administrator Leaving

Tom Fox, the Deputy General Manager of MATA has accepted a position as Director of Transit for Blacksburg, Virginia, effective in early November. Fox is a 25-year veteran of the Memphis system and served as interim general manager for much of 2015 after the retirement of the previous office holder. Blacksburg’s system provides 3.7-million trips per year, many of them to students at Virginia Tech. Memphis reports it accommodates 9.3 million passenger trips per year.