Friday, May 11, 2012

EGUSD Truancy Audit - The Truth

Elk Grove School District is accused of “Bogus Billing” by local TV news. A black eye for our schools, but is it true?

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Elk Grove Unified School District has been called out for allegedly participating in false billing to the state. However the report is rich is sensationalism and suggestions, and weak in fact and fairness.

The full story, with resources below.

EGUSD Truancy Audit - The Truth

A recently completed audit of the Elk Grove Unified School District's Notification of Truancy Program revealed disallowed claims of over $305,000. This was for a four year period from July of 2006 through June of 2010.

This story was reported as an exclusive by KCRA 3 in Sacramento under the headline “Bogus Billing” The online version ran the headline, “School District CaughtOverbilling Taxpayers”. This was yesterday, May 10th.

In the report, KCRA reporter Mike Luery said that the EGUSD quote, “...ran into trouble,” then quoted State controller John Chaing who implied wrong-doing on the part of the School District saying, quote, "They asked for money for services they did not provide."

Did the district do wrong? Were the District's actions something hidden for which they had to be “Caught”? Did they “overbill” taxpayers for money they knew they didn't deserve?

In the KCRA report, Liz Graswich, of the EGUSD was quoted with the District's side of the story. She stated the errors were made by their Consultant Firm, Maximus. Maximus reportedly verified this in writing to KCRA, saying they acted without the District's knowledge and apologized for the way things were handled.

But this didn't stop the news agency from spinning the story to appear that Elk Grove Unified was guilty of trying cheat the system.

In all the innuendo and sensationalism of this story, there are a lot of facts conveniently missing, and a lot of perspective thrown out of focus. We decided to get the whole story.

This story is based on a audit report released by the State Controller's office on April 20th – about 3 weeks ago. As stated, it's for the period from July of '06 to June of 2010. It's for truancy notifications made during that time, in which EGUSD was using the services of a well established, international consultant firm, Maximus, with corporate operations around the US, Britian, Austrailia, and Canada. In other words, most of the English speaking world. (See their website: ). It seems fair for the school district to believe this company could be trusted.

The first thing for us to understand in this The Process. How does this whole reporting process work, and where did the District or their consultant, Maximus, go wrong?

The reporting spoken of here is all about Truancy. Each district is allowed public funds for each day a child goes to school. If the child has an unexcused absence for 3 days consecutively, that's defined in California as truancy. The state allows public funds for each student who is truant for a total of 3 days AND whose parents are notified by mail. The students parents MUST be notified by mail after 5 days of truancy.

But Elk Grove doesn't do it that way According to Liz Graswich of the EGUSD Office of Information,

Elk Grove Unified has long used an automated phone system to notify parents as soon as a student is missing class and has an unexcused absence. We don't wait for 3 days which is the number of days the student has to (miss) before being truant.”

According to Graswich, Elk Grove Unified has a higher standard that is better for the students.

The School district has decided to use an automated phone call instead of a letter after the three (absences). The problem with the letter is, though it's good to notify the parents in writing, it takes another 2 or 3 days for the parent to get the letters. In that situation the student could be out 3 more days...By using the auto-dialer system we're notifying the parent that day that their student was absent. We believe that's a better notify parents as soon as possible.”

So the automated system calls the student's home number every day, and - after 5 straight days - sends a letter, which they then report to the State.

But first they send all their data to a consultant who verifies the information and creates the report for the School District's approval before going in as a claim.

And that's where Maximus decided to change the data.

When the company Maximus decided to use numbers and submit them to the state, they used (numbers) based on 3 absences, which is when a student is officially truant, rather than the five day absences which is when we actually send the letter. So the “mandated cost” is (based on ) the letter itself. 

"When the company decided to go with 3 instead of the 5, they were inflating the number of truants we had and it was certainly not in line with the information we had provided them. Because we do not charge the state for mandated cost until we have 5, not 3.

Those reported numbers were changed, month by month, over four years time, and the changes were too small to create a red flag.

Which brings us to the next important point: The Numbers. The Controller's report disallowed $305,782 in claimed fees to the district. Over 4 years time that is about $75,000 per year, enough to fund ONE teacher and ONE support staff.

Of that amount, about $243,000 was directly a result of the changes made by Maximus. This is crystal clear in the government findings on page 5, “Findings 1”. It says that truancies, NOT notifications of truancies, were reported. That's the phone call on day 3 versus the letter on day 5. The letter is the official measure of the number of truants. That's what the district sent to Maximus. That's what Maximus changed.

Maximus' changes, accounted for almost 80% of the disallowed fees.

But John Chaing was quoted in the KCRA story saying that quote “it wasn't just Maximus at fault. ” and citing "dozens" of other claims made by the district that were disallowed.

Here a little perspective is needed. Every school district in the state is audited for a whole host of these “Mandated Cost” items, not just for Truancy notifications, but for everything imaginable, from Star Testing , to collective bargaining, AIDS education, to reports on Chemical Removal. You can see the list here in this link. List of State Mandated Cost Audits.

These audits are done because mistakes are common, and in some ways, unavoidable. Every district has a margin of error that shows up in audit. Liz Graswich:

When we present these numbers, we know we're going to be audited – that's very important to know. We anticipate the audit, we anticipate that there'll be questions. That's part of the process. 

"That 7% [accurately 7.68% - see “Adjusted” figure on chart] margin of error represents that the state only allows for claims for students between the ages of 6 and 18 be submitted. So for instance, if we had submitted a claim for a 19 year old senior or a 5 year old kindergartener, we are not eligible for reimbursement. So that's where that margin of error came from.

Without the changes made by Maximus, the Elk Grove Unified made disallowed claims for another $62,493. If you look at the 6 school districts audited for that same period, you'll see that EGUSD is the lowest disallowed amount of any school district. (See chart.)

In fact, once adjusted for the consultant's bad work, Elk Grove actually had the lowest truancy report claims, and the lowest percentage of disallowed errors, and the lowest margin of error. For the Biggest school district in Northern California, it seems Elk Grove is way ahead of the curve.

There's link to an Audit Comparison table we did on our website, and it's all drawn from the government reports. Click Here for the spreadsheet. List of Truancy Audit Reports, click here.

A final number that is important is the number five. The school district policy sends the actual notice out at five days, when by law, they could send it out after 3 days, AND get all of the $243,000 that the state disallowed. Instead, they've INVESTED in a system to cut truancy, often before it happens.

Now there's a final point that has to be looked at: Accountability. There's no way around it, the School District staff sent out one set of numbers to Maximus, and got a totally different set of numbers back. Then they signed off on them. Graswich is clear about their role in this.

While we do sign off on the final information submitted to the state, in the past we didn't look at the numbers year by year, so there wasn't anything that would necessarily flagged this as an error to the person who signed off on those claims.

But Graswich says, they use outside consultants for a reason

We hire consultants because of their level of expertise, and when you hire a consultant for their level of expertise, generally you're anticipating that the information that they provide is accurate and correct.

The district learned about the misreporting when the audit was started, but they only had limited options.

Yes, we learned of the error that Maximus made in about 2010 during the audit. The audit has been going on for approximately 2 years. Unfortunately, because the audit had already started, there was not a way of correcting the audit at that time. We did end our relationship with the company [Maximus] that had made the error, but it was too late to change the audit itself, (or) the final result of the audit.

A final item has to be looked at here. It's fairness.

The audit that we're talking about was for a period ending in 2010. The district correctly billed the state for this item in the amount of $751,694. As of today, the audit report states that just under $153,000 has been paid by the state. With almost $600,000 still owing on this one item, the district in no way ever received even one dollar for any service incorrectly billed.

In fact, Graswich says that the state has failed to pay almost $41 million dollars in funding that is owed to our schools. Those are monies that should have been paying our teachers, keeping our libraries open, and supporting our field trips, sports teams, and special programs.

The school district didn't do anything wrong, despite the self serving comments of elected officials, or the yellow journalism of local television. If anything, they've shown themselves a leader in education by putting students first, and reducing truancy through the creative use of technology.

Their mistake? Trusting a company with an international reputation for excellence without sufficient over-site. Trust has to be earned daily. That mistake is probably not going to happen again soon.

You can see the KCRA report by following the link on our posting. Click here.

You're listening to RadioElkGrove.


Sarah Johnson said...

This is disappointing because I think of KCRA as a reliable news source. If this analysis is true, it makes KCRA's report pure spin and we don't need more spin in the world.
I applaud RadioElk Grove for shining a light on this story and bringing true facts to the fore.

Anonymous said...

More of these audits should be televised. Shine a bright light on these so called "errors." There should be a penalty for these claims. There is no way to audit all claims. Counties, cities, and school districts are getting away with funds they are not entitled to. The State Controller should fine the school district and the consultant.