Early Memphis schools audit findings ‘consistent with waste or abuse’

“Sign up for Chalkbeat Tennessee’s free newsletter to keep up with statewide education policy and Memphis-Shelby County Schools. An ongoing financial audit of Memphis-Shelby County Schools revealed “clear evidence of management failures,” Tennessee Comptroller Jason Mumpower said Wednesday after releasing interim results. Tennessee Republicans pushed t o release the incomplete audit report on the state’s largest school district as leadership plans to advance a state takeover effort in the coming weeks. The audit, which is only 25% complete, revealed more than $1.1 million in contract and payroll transactions that auditors say are “consistent with waste or abuse.” Another $1.7 million in transactions was found to violate district policies, though it did not rise to the level of waste or abuse, according to the comptroller’s office. That total is less than 1% of the Memphis district’s operating budget over the three-year period the audit covers. Mumpower cited an “absolute culture of apathy and carelessness” within district leadership, though there has been notable turnover in the district since the time period audited. Citing the audit, Memphis Republicans say they will move forward immediately to finalize legislation that would significantly intervene in Memphis district governance rather than wait for final results. “It’s such a failure that at some point, do you need more information to understand what needs to happen,” House Speaker Cameron Sexton said, though he noted he supported a state takeover before the interim audit results. Though details could change quickly in the coming weeks, Rep. Mark White’s initial plan would install an oversight board of managers. This board, which would be appointed by Republican leaders, would seize significant authority from the elected school board through major financial decisions like the superintendent’s contract. The early audit results revealed significant record-keeping breakdowns. The district couldn’t provide employment verification records for 100 of 250 employees requested for review, and auditors found employee records poorly maintained and secured. “With the high level of leadership and staff turnover — coupled with the lack of documented policies and procedures, and the erosion of institutional knowledge — resulted in a systemic challenge with record keeping and documentation, a challenge that we faced throughout this engagement,” said Folashade Abiola-Banjac, an attorney with the CliftonLarsonAllen auditing firm that is conducting the external audit. Mumpower on Wednesday accused district officials of being uncooperative with auditors. He said the audit raises “serious questions about whether the current leadership structure is capable of ensuring accountability.” It’s not yet clear when the audit will be complete, though the audit firm’s contract runs through early 2027. In an emailed statement, Superintendent Roderick Richmond said district leaders are still working through the preliminary findings and will present a report responding to each claim on Monday. “We are grateful for the preliminary audit and recognize the importance of fiscal and operational responsibility,” he said. “We also recognize that when systems or processes fail, whether past or present, trust is damaged. It is now our responsibility to repair that trust.” Richmond said he’s requested a meeting with Rep. White and Sen. Brent Taylor, the other sponsor of state takeover pushes, to discuss a plan moving forward. Board chair Natalie McKinney praised the superintendent’s compliance with auditors’ requests over the past eight months. She also said in the same emailed statement that while the preliminary findings are meaningful, they represent “less than one-tenth of one percent of the district’s approximate $2 billion annual budget over three years.” “This context does not diminish the need for corrective action; rather, it underscores that the primary issue is control effectiveness, not systemic financial collapse,” she said. Richmond last month presented a plan to MSCS board members to strengthen internal controls and modernize document systems in anticipation of audit findings. That includes making sure over 80% of the district’s employee files are complete in the next 90 days and reducing paper-based work. “We will be looking at some of these systems to see if we should try to improve upon them or if we should look at doing something totally new,” Richmond said. “As the [forensic audit] starts to come out, we’d like to already be moving forward in addressing some of those things that may be in that report.” Board member Amber-Huett Garcia said she was “surprised” to hear about systems that the district doesn’t have already in place, such as a checklist for human resources documents. Richmond chalked up a lot of those gaps to high turnover in district leadership positions and the merging of the city and county school systems that happened over 10 years ago. He said CLA, the audit firm, has also cited turnover as a barrier in recent meetings with district leaders. “We’ve really tried to be responsive to things that they’ve asked for,” Richmond said about CLA. “But we’ve also partnered with them in relation to having discussions about some of our systems.” Richmond said these changes, including his proposal to hire a district inspector general and an outside firm to help address audit findings, could cost around $2 million. Note: This story has been updated to include a response from district leaders. Melissa Brown is the bureau chief for Chalkbeat Tennessee. Contact Melissa at mbrown@chalkbeat.org . Bri Hatch contributed to this story.

Summary generated from the RSS feed of Chalkbeat. All article rights belong to the original publisher. Click through to read the full piece on www.chalkbeat.org.