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Poor Management, Weak Policies and Communications Problems Behind District’s Failure to Collect $8.38 Million
Columbus – Confusion caused by an overlap in reimbursement requests from the federal E-rate program and a change in the Cleveland Municipal School District’s E-rate administration led to the district’s failure to file for nearly $8.4 million in reimbursements for internet connectivity and communications equipment.
Auditors said the district’s E-rate policy did not include detailed procedures on the filing of applications for reimbursements, nor did the district update the policy when it hired an E-rate consultant in 2011. As a consequence, the district lacked information to meet some deadlines and failed to file in a timely manner for others.
The district was eligible to receive reimbursements totaling $9,656,887, but missed a number of deadlines that left $8,385,470 unreimbursed for equipment purchased and installed in new school buildings between 2007 and 2012.
Although the district “was the responsible party,” it did not file the necessary Federal Communications Commission (FCC) forms with the Universal Service Administrative Company (USAC) to request reimbursement for segments totaling $8,173,108, auditors said.
“This is a unique case where a school district lost out on nearly $8.4 million because of a number of factors, none of which are fraudulent or intentional activity,” Auditor Dave Yost said. “This was a combination of poor management, weak policies and a lack of communications that resulted in huge losses. It’s not criminal, it’s stupid – a very big ‘stupid.’”
The confusion over who was responsible for filing the E-rate rebate requests was caused in part by the move of former district employee Ilze Lacis to E-Rate Central, the contractor hired by the school system to handle the E-rate reimbursements.
“The overlap of the E-rate funding requests for the segments, in addition to the change in E-rate administration from the district to E-Rate Central, appeared to have contributed to a miscommunication of which party was responsible to complete the segment E-rate funding requests,” the audit said. “This miscommunication may have been compounded by the fact that upon Ms. Lacis employment with E-Rate Central, she continued to work out of the same office space in the district building.”
While there was concern expressed by the Bond Accountability Commission in Cleveland that the materials delivered were not of the standards listed in the proposal, auditors said the concerns proved to be unfounded. “The materials installed by the technology contractors for each school building examined were of good quality, industry-standard workmanship and in accordance with the project drawings and specifications,” the audit said.
A full copy of this report is available online.
The Auditor of State’s office, one of five independently elected statewide offices in Ohio, is responsible for auditing more than 5,800 state and local government agencies. Under the direction of Auditor Dave Yost, the office also provides financial services to local governments, investigates and prevents fraud in public agencies and promotes transparency in government.
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