October 31, 2006
Tribune Investigation - Part 4 of 4
Jerry Walker became one of the Maricopa County Community College District’s top officials in 2004 when the aspiring Baptist minister was elected to the governing board.
Unfortunately, Walker says, the title comes without real authority.
Walker says he must rely on Chancellor Rufus Glasper to keep him informed about what’s going on at the district’s 10 campuses, especially the two Walker represents — Scottsdale Community College and the Red Mountain campus of Mesa Community College.
For his part, Glasper says he meets every month with each of the board’s five members, keeps the elected officials well-informed and answers any questions they have.
But Walker says the chancellor has been less than forthcoming about problems within the district.
He says Glasper never told him that the district had conducted major fraud audits, let alone that a complex investigation at SCC’s performing arts program had uncovered falsified enrollment and scholarship misappropriation, among other things.
Glasper “has never given me a full run-down,” Walker says. “He just talks to me about things that I have a particular interest in bringing to him. He never brings things to my attention.”
The performing arts audit was finished in 2005, several months after Walker joined the board.
But Walker says he didn’t know about any of the concerns until the Tribune interviewed him.
The SCC performing arts case was just one of numerous audits looking into fraud, missing money and other concerns, along with more routine financial reviews, that district auditors carried out during the past five years.
Over the past two months, the Tribune has investigated the audit process, focusing on five major internal fraud reports. The Tribune examined thousands of pages of records and interviewed dozens of people involved in the cases. The newspaper has found:
• Auditors say employees stole money or equipment from the colleges — often worth thousands of dollars.
• Enrollment numbers were faked to save classes from being canceled and to steer teaching fees to some faculty.
• The district did not notify law enforcement when auditors uncovered evidence of theft and other criminal activity by employees. In one case, an auditor specifically recommended involving the police, but was ignored by college officials.
• Colleges routinely shifted troublesome employees to different jobs, allowed them to resign quietly and on one occasion granted an employee additional responsibilities and pay after violations were uncovered.
• Nepotism was common, and employees hired or provided perks to family members or romantic partners.
The Tribune investigation underscores shortcomings in how the district deals with problems unearthed by staff auditors. Other colleges, including Arizona’s university system, oversee and respond to audit reports far differently.
Glasper, who receives all the audit reports as soon as they’re final, acknowledges the district has had problems and says changes are needed to ensure that when wrongdoing is found, action follows.
Now, state lawmakers who oversee higher education say they plan to hold hearings in the coming year to look at revamping at least parts of the nation’s largest junior college system.
THE CURRENT SYSTEM
MCCCD has more than 200,000 students, about 11,000 employees.
The district’s governing board is charged with deciding policy, and the chancellor is responsible for its operations. The colleges are largely autonomous and are accredited individually, allowing each to decide what instruction to offer independently of the rest of the district.
The district’s enrollment has boomed along with the population of Maricopa County over the past 20 years. MCCCD plans to build three new colleges in the next several years on the Valley’s edges to follow the rapid growth.
But the auditor’s office has not kept pace.
Only one auditor has been added in the past 20 years, giving the district a total of three to conduct roughly two dozen inquiries a year.
The Tribune found that auditors frequently had to set aside one investigation in order to deal with a problem that appeared to be more pressing.
E-mails show that Sam Harris, head of the audit office and one of the three who conduct audits, is sometimes pulled from his duties to fill vacancies in the district’s budget department, leaving the auditors even more shorthanded. Another auditor, Jody LaBenz, temporarily takes over Harris’ administrative duties in addition to his own audit work.
Neither Harris nor LaBenz would comment for this article.
The auditors do regularly scheduled financial inspections for departments and programs at all the campuses as well as special investigations when the chancellor or college presidents request them.
“Just maintenance audits could take up all their time,” Glasper says.
The district has an Audit and Finance Committee that is supposed to make sure the auditor’s office operates effectively. Two elected members of the governing board, Ed Contreras of Chandler and Don Campbell of Phoenix, sit on that committee. Both are up for re-election next week.
In addition to the elected officials, seven others – district employees and county residents – sit on the committee. But the Tribune investigation found that the audit committee pays little attention to auditors’ reports.
To begin with, the committee receives only summaries of the auditors’ findings – not full reports. The summaries often oversimplify the findings. For instance, the summary of LaBenz’s investigation into the complex fraud at SCC’s performing arts institute referred to falsified enrollment and other problems simply as “irregularities.” None of the details were presented to the audit commit-Minutes of audit committee meetings show that members rarely even discuss the investigations when they are finished.
Campbell has not raised questions when presented with summaries, minutes show. Now he says he can’t recall much, if anything, about them.
Contreras has not attended a committee meeting for at least the past four years, although he receives the summaries via e-mail. Contreras says he can’t go to the meetings because he has to care for a sick daughter; she joined him at a candidates debate forum last Wednesday night.
He says he told the other governing board members that he couldn’t make the audit committee meetings. But, he says, no one wanted him off the committee.
Other governing board members who aren’t on the audit committee, including Walker, do not receive summaries or any other information about any audits.
In most cases, only Glasper, the perpetrators and their bosses, usually individual college presidents, receive the full reports.
Glasper says if any of the board members want audit information, all they have to do is ask. But Walker says they wouldn’t even know there was anything to ask for.
Additionally, the audit committee is only an advisory group. It cannot take action against an MCCCD employee who has done something wrong.
And the full governing board has authority only over the chancellor and cannot take direct action against any other employee without the chancellor’s cooperation.
Walker says MCCCD is too big and unwieldy, with Glasper overseeing 10 separate college presidents. He believes the district should be streamlined so that all employees fall under the governing board who are responsible to voters.
Despite being elected to represent SCC and the Red Mountain campus, Walker says he has no input into what happens there.
“What difference does it make if I’m the trustee responsible for those facilities if Larry Christiansen’s the boss?” he says, referring to MCC’s president. “And he doesn’t work for me. He works for Rufus.”
OTHERS DO IT DIFFERENTLY
The state’s university system has about half as many students as MCCCD, but employs 17 auditors — more than five times as many as the junior college district.
Rick Gfeller, the head of audit services for the Arizona Board of Regents, says his staff alone has four auditors to do annual financial checkups and investigate fraud. Additionally, each of the public universities — Arizona State University, Northern Arizona University and the University of Arizona — has its own investigative team.
This year, each university added an auditor position to keep up with enrollment growth, Gfeller says.
Besides having more investigators, the university system responds to audits more aggressively than MCCCD.
The regents also have an audit committee. But it is made up of five of the nine regents, who are appointed by the governor to run the universities and have the authority to force change.
If audit recommendations are ignored, there could be dire consequences, Gfeller says.
”Obviously the hammer, if it ever came to pass, would be the board of regents. If they want something to happen, it happens,” he says. “Just the threat of that hanging over the heads of our auditees makes that happen.”
The regents are provided complete audit reports, which go to the entire board when serious problems surface, says Ann Barton, a regents’ spokeswoman.
While the university presidents are largely allowed to run their campuses without interference, the regents do not rely on their presidents alone for information and can approve changes even when the presidents disagree.
Many of MCCCD’s board members and top officials say they did not realize the scope of the problem with the audit process until contacted by the Tribune.
Now they say they will likely revise policies and procedures to ensure employees who break the rules are held accountable and, when criminal activity is found, law enforcement is notified. Glasper says his office will follow up six months after an audit report is published to determine if the recommendations were enacted. Contreras says the auditors’ work should be distributed more widely and at least to all board members.
Glasper says he’s been comfortable with letting the colleges fix problems themselves. But that likely will change now, he says, because it’s clear there’s a need for an “intervening step” by the chancellor’s office.
“You can believe that we’ll be having those discussions with internal audit and others asking what are the most appropriate steps that ... we are not doing that we should be doing,” Glasper says.
CHANGE MAY BE FORCED
Regardless of what MCCCD does, the community college system might be in for a change.
Legislative leaders say they will look more closely at fraud and other problems within the junior college district when the legislature convenes in January.
Until 2001, the state had a board of directors, similar to the regents system, that oversaw all 10 of Arizona’s community college districts.
That state agency was responsible for ensuring the districts’ overall financial health and to oversee bond elections and construction projects even though each district had a locally elected board. MCCCD and the Pima County Community College District, in particular, frequently criticized the board and attacked it in the political arena, sending lobbyists to urge lawmakers to dissolve the oversight agency, says Donald Puyear, who was head of the community college board during the 1990s.
The state’s largest college districts contended it was inappropriate for appointed officials to tell locally elected officials how to run their campuses.
In 2001, Arizona was facing a multibillion-dollar budget shortfall and lawmakers were searching for cuts. The Maricopa and Pima districts got their wish.
The state board also made a big political mistake. It moved itself into new plush offices in a downtown Phoenix skyrise without telling the legislature, let alone getting approval.
Rep. Laura Knaperek, R-Tempe, says the state board was eliminated in part because of the political misjudgment but also because community college officials convinced lawmakers that the board was redundant.
Now, with the state working to coordinate instruction between the junior colleges and universities, Knaperek says she introduced legislation earlier this year to create an oversight agency.
The bill met heavy opposition from the districts, she says, and failed to gain enough votes to move out of committee.
“They follow their own star and they don’t want to listen and they don’t want to play,” Knaperek says. “And they don’t want to be held accountable by the state.”