‘Education’ articles

CCSD’s systemic problem and
its expensive consequences

Part 8: District's internal financial controls revealed as effectively nonexistent

In October 2013, the executive director of the administrators union for the Clark County School District was highly agitated over draft policy guidelines being offered for the school board’s review.

Although the guidelines seemed normal for government officials — requiring them to publicly disclose conflicts of interest — Stephen Augspurger nevertheless was saying he took great offense at the draft rules.

Augspurger, chief of the Clark County Association of School Administrators & Professional-Technical Employees, thought he saw within one draft insulting “insinuations” that one or more district administrators might be doing something improper.

“Specifically,” he told trustees, “if you go to section 12, in 6.04 and read through that language, I hope that you, as I, will take offense to what is being said there.”

Whereupon — standing before the district board of trustees — Augspurger continued through a remarkable seven-minute public diatribe [mp3 recording here] lambasting the most recent editor of the heavily marked-up draft, Trustee Erin Cranor.

Augspurger’s criticisms that day, if examined, appear to largely reflect his own preconceptions: For months the board had been making changes in its governance policies to allow stronger fiscal oversight of the district. Part Seven of this series reported that board activity in some detail.

But what was perhaps most remarkable was that the union chief also seemed to object in principle to any board effort to state clear policies against corrupt activity within the district.

Said Augsburger, referring to section 12 of that draft:

Because I think the insinuation there is [that] there is wrongdoing occurring in the Clark County School District. And I think the only logical outcome, by reading that paragraph, is that wrongdoing is being done by administrators.

I think that’s a disservice to the people that I represent.

Multiple years of hidden CCSD administrator corruption

As would soon become public information, however, corruption of significant scope had been ongoing for a minimum of seven years in at least one corner of the district’s central office.

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CCSD’s systemic problem and
its expensive consequences

Part Seven: When reforms make headway, The Empire Strikes Back

In late September 2013, CCSD Trustee Erin Cranor came across information indicating that she and fellow trustees had been misled regarding the actual costs of an insurance contract the district was expected to sign.

Rather than falling, those costs were to rise between $6 and $7 million.

Also, differing from earlier versions of the contract, the pending agreement now tripled the commission to be received by the district’s consulting insurance broker, Business Benefits, Inc.

Whereas BBI previously received a 0.75 percent commission on deals negotiated for the district with insurers, the new terms — of which BBI had not informed the district — would have kicked the commission up to 2.25 percent.

Moreover, because commissions under the new terms were, as before, tied to the total cost of CCSD insurance deals, BBI now had an even larger financial incentive to get the district signed to the most expensive insurance contracts possible.

Concerned, Cranor asked the legal counsel for CCSD’s board of trustees to review the new contract language.

The board attorney’s recommendation? For CCSD to end its broker-of-record relationship with BBI.

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CCSD’s systemic problem and
its expensive consequences

Part Six: What the Bramby Tollen episodes reveal about CCSD

It was 2009 when CCSD’s purchasing director let employees and consultants know she was intent on keeping district trustees in the financial dark.

As reported earlier in this series, Bramby Tollen directed SAP programming consultants to disappear when “a board member was coming to the department and she did not want the board member to see the consultants working in the department.”

The trustee was Carolyn Edwards, CCSD’s board president at the time, according to a Nevada Journal source.

Ad hoc candor

For a powerful CCSD central-office director to maneuver to maintain trustee ignorance is certainly noteworthy.

In the long run, however, what may have been even more significant was the mere fact, in this instance, of Tollen’s candor — her frank sharing with mere employees and consultants of what she was up to.

Although most likely inadvertent and not consciously intended, it still suggested both confidence that her power in the district was effectively beyond challenge and also that misleading trustees was routine.

Four years later, however, when Tollen was involved in yet another revelation of information that might interest the board, the results for her would be more consequential.

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CCSD’s systemic problem and
its expensive consequences

Part Five: Disgusted and puzzled, a highly paid consultant walks away

During the first six months of 2008, Ken Forrest, an independent consultant and the principal of the LDRShipSolutions firm, was employed as a top-level Enterprise Resource Planning (ERP) project advisor to the Clark County School District.

Earlier, he’d been contacted by then-CFO Jeff Weiler, who’d called, saying, “I really need your help.”

Not only was Phase One of the project quickly burning money, it had also missed multiple go-live dates.

One of the first things Forrest and an associate did was to save CCSD substantial coin.

He says it became apparent to both of them “that SAP had all these consultants on site, but we couldn’t tie what they were doing to any significant work product.

“So we started tracking that and then went to Mr. Weiler and said, ‘We think we can get rid of a lot of these consultants and you won’t even notice.’ Which we did. As I recall, we got rid of about 13 of them. No one noticed that they were gone. They weren’t doing anything.”

Next was dealing with some difficulties the district was having getting the SAP Finance module “up and running and balanced.”

While CCSD had some good people working on the problem, in Forrest’s opinion, “some of the SAP consultants were less than effective, even at $367 an hour, which is, I believe, what they were charging…

“So we brought in Plante Moran, a national accounting firm. They’re big; you can Google them. They’re the guys the government brought in to fix everything after the Enron failure. I had worked with Plante Moran in Detroit. They’d been fantastic in helping me turn around what had been a qualified [accountants’] opinion to get” the Government Finance Officers’ Association Certificate of Excellence, among other awards.

“Anyway, we brought Plante Moran in, they assisted the district, and with the district’s significant contribution and help, they got that system balanced in six weeks, and up and ready to go.”

On other fronts, however — Payroll and Purchasing — Forrest says he saw significant roadblocks.

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CCSD’s systemic problem and
its expensive consequences

Part Four: District management’s ERP failure
is par for the course for government entities

“Change is hard for any organization, but especially so for employees in the government and public sector,” observes the 12-year-old independent Enterprise Resource Planning (ERP) advisory firm, Panorama Consulting.

“Long employee tenures, outdated and well-entrenched legacy systems and business processes, and lack of employee incentive to embrace change are all factors that commonly increase a government organization’s resistance to change.

“Without a clear and deliberate plan to help employees migrate from the ‘as-is’ of their old processes and systems to their ‘to-be,’ an ERP implementation literally has zero chance of succeeding.”

Panorama, based in Denver, offers ERP-specific consulting services on software selection, implementation, staffing, project management oversight, project recovery, business process reengineering and organizational change management, among other ERP-related specialties. The firm also provides expert-witness testimony when litigation involves SAP, Oracle, Microsoft Dynamics or Epicor ERP implementations.

Given the firm’s expertise and broad experience with both private- and public-sector ERP projects, its assessment of public-sector organizations in the face of ERP projects has great credibility.

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CCSD’s systemic problem and
its expensive consequences

Part Three: Internal district memo say ERP failure
‘directly related to the lack of proper management’

“The 17-year saga of CCSD’s highly expensive ERP adventure — where the estimated cost … ballooned from $15 million in 2001 to well over 10 times that amount today,” is how Part One of this series began.

Such runaway spending shows that Clark County School District — fifth-largest district in the nation — is no exception to the waste, incompetence and abuse that, as Part Two showed, plagues America's other large districts.

However, for readers and policymakers to fully grasp what went wrong at CCSD requires first understanding what the district was attempting.

Which brings up the question: What in the world is an “ERP”?

ERP stands for Enterprise Resource Planning, the corporate term of art for mainframe-based software systems that integrate the internal business-data operations of major enterprises, such as large corporations and government agencies.

When data from core divisions — usually purchasing, accounting, payroll and human resources — can be digitally organized and combined, enterprise leaders can get the critical reports they need much more quickly and accurately than through older, unintegrated, legacy systems.

A primary source of the new organizational efficiency that ERP systems can bring — and a major reason why firms install the systems — are the “best business practices” that are integrated into the software. Thus, a key part of an organization’s successful transition to its new ERP system is an initial process of re-engineering, or upgrading, the organization’s internal business practices to reflect the state-of-the-art procedures built into the software.

Not only do these “best business practices” facilitate quicker and more accurate decision-making. They also provide organizations with significant protections against internal fraud, theft and waste.

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CCSD’s systemic problem and
its expensive consequences

Part Two: Why large school districts facilitate waste, fraud and corruption

Why should it turn out that large school districts like CCSD are especially prone to fraud, waste and corruption?

Lydia Segal makes a very strong case that a primary root of the problem lies — paradoxically — in the particular way in which schools have historically tried to lessen corruption: through ever-tighter layers of centralization, bureaucratic oversight, detailed standard operating procedures, rules and regulations and the over-specification of money controls.

All of this was supposed to ensure against fraud and waste, but the result, she says, was that

… as urban schools grew larger, [these measures] have actually eroded oversight, discouraged managers from focusing on performance, and made it so difficult to do business with districts that employees and contractors have sometimes had to seek “creative” or illicit ways to get their jobs done. The result is the worst of two worlds: Crooks who want to bilk the system can do so because the top has little handle on what is going on below, but employees who want to improve learning must sometimes break the rules. (Emphasis added.)

How does it happen that superintendents and top managers in a large school district become effectively blind to misbehavior going on below the upper echelon?

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CCSD’s systemic problem and
its expensive consequences

Part One: Lydia Segal identifies the fatal flaw in America’s big school districts

Have you ever wondered why, year in and year out, the Clark County School District always seems to be short of money?

One answer frequently advanced, explicitly or implicitly, is quite simple: Nevada taxpayers are callous cheapskates, indifferent to their own children’s future.

Yet, the 17-year saga of CCSD’s highly expensive ERP adventure — where the estimated cost has ballooned from $15 million in 2001 to well over 10 times that amount today — suggests some kind of systemic problem.

Moreover, as this series will show, it’s a problem present not only in Southern Nevada but all across America’s larger school districts.

It is structural.

1. School district size correlates with the amount of waste and corruption

What researchers have repeatedly found is that waste, fraud and corruption flourish disproportionately in the largest school districts.

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Prominent Westside pastor prepares
to announce support for Nevada's ESAs

LAS VEGAS — At a school choice open-house scheduled for Tuesday, February 9th, 2016, Pastor Ron Thomas of the Reconciliation Apostolic Ministries will proudly announce his support for Nevada’s Education Savings Accounts.

“There’s a lot of misinformation about the program,” Pastor Thomas told the Nevada Policy Research Institute. “And the truth is, there is a lot of opportunity for minority communities with ESAs.”

Thomas has been a pastor for the past 20 years, and is also an officer with the Las Vegas chapter of the National Association for the Advancement of Colored People. Although the NAACP has not supported ESAs, Thomas said he personally felt it was important to speak out in support of the reform.

Sen. Scott Hammond, the author of SB302, will be featured, as will be a number of parents who have already enrolled in ESAs. According to Thomas, the evening open-house was conceived as a way to bring information about ESAs directly to parents, without any buffers.

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Language in Nevada state constitution reveals
19th century anti-Catholic consensus, agenda

U.S. Supreme Court justices, liberal and conservative, acknowledge the history

You might not expect it in this day and age, but Nevada’s Constitution still bears telling traces of a discriminatory 19th century doctrine the U.S. Supreme Court has characterized as “born of bigotry.”

Those traces can be found in the multiple appearances in the document of the word “sectarian.”

Contrary to the belief of many today, the term in the 19th century was not understood to simply mean “religious” — as in: “there shall be no religious instruction in the public schools.”

Instead, the actual understanding of the term in the decades when Nevada’s constitutional provisions were first written or later added was — as has been widely documented — “non-protestant,” or, most likely, “Catholic.”

Both wings of the U.S. Supreme Court, liberal and conservative, have repeatedly acknowledged this.

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