State Auditor Stacey Pickering accuses the Mississippi Department of Education of purposefully attempting to circumvent state laws regarding contracts and procurement in a report his office released Thursday.
“They have blatant disregard at the Department of Education for procurement regulations,” Pickering said.
Concerns raised by Pickering followed a legislative report released earlier this week that was also highly critical of the Education Department’s contracting and spending practices. That report, independent of the audits released Thursday, called for additional scrutiny of the agency’s contracting procedures by Pickering, which he said he has already begun.
Pickering’s office released two audits on Thursday. One was a compliance audit, launched in June 2016 after his office discovered red flags in routine financial audits from previous years. The second was a limited forensic audit, done on behalf of the U.S. Department of Education following the termination of three employees who mismanaged federal funds last year.
The compliance audit confirmed many of the conclusions made by the Legislative Committee on Performance Evaluation and Expenditure Review Committee (PEER Committee) released earlier this week. It also highlighted internal Education Department policies regarding contracts that conflict with state laws and regulations, such as using a “pool” method of contract approval.
Pickering also said that based on his office’s review of contracts with several companies, “there does definitely appear to be contract splitting, (thus) avoiding our state procurement laws.”
The PEER Committee report had concluded that the Education Department entered into multiple contracts throughout fiscal years 2014-2016 “having apparent similarities in scope of work and for amounts that collectively exceeded bid thresholds, rather than competitively bidding contracts for such services.”
The Education Department’s Chief Information Officer Felicia Gavin said the pool method of awarding contracts, which was used to award many of the contracts highlighted in both the PEER report and the auditor’s report, was discontinued in May.
Mississippi Today highlighted some of the questionable contracting procedures earlier this year, exploring details around the awarding of a contract to former Education Department official J.P. Beaudoin’s company Research in Action through the pool process.
The Department is no longer using the pool method but a separate process that has been approved by the Personal Service Contract Review Board for contracts under the state’s $75,000 threshold, Gavin said.
Gavin also maintained that all of the contracts in question were for different services. However, the auditor’s report highlights several contracts with both Research in Action and Blue Sky Innovative Services that have nearly identical descriptions.
In a call with press Thursday afternoon, Gavin said she had not yet seen the report and could not address specific questions regarding contracts. Department spokeswoman Patrice Guilfoyle noted on the call that the auditor’s office released their findings to the press and via its website before delivering them to department officials.
Gavin could also not address questions regarding two invoices to The Kyles Company, each for just under $50,000 (the threshold for requiring a bid at the time the contracts were awarded was $100,000, according to state law). The auditor’s office said the Department could not provide any documentation regarding the equipment or services delivered by The Kyles Company because “the employee that had approved the purchases was no longer employed.”
“When MDE personnel were asked to account for the whereabouts of the $214,469 in commodity purchases, personnel stated that the purchases were given directly to school districts and were not tagged or inventoried,” the report stated.
“When personnel was asked to provide a list of the districts that should have received the equipment and what, per district, was to be received, MDE personnel could only provide a sign in sheet of a training held,” the report said.
Cerissa Neal, former director of the Office of Educator Licensure, who oversaw the purchases from The Kyles Company, declined to comment when reached by Mississippi Today.
Pickering said Thursday he was “not satisfied The Kyles Company is a legitimate vendor” but could not comment any further.
“If state law has been broken, that becomes an issue of law enforcement,” he said.
The audit also noted the Education Department did not have proper documentation of authorization from the Department of Finance and Administration for its bank accounts.
Gavin said the Department’s accounting team has since corrected that problem.
“It’s my understanding that our internal audit department was aware of the issue and documented that. And if you pull the information submitted to DFA for this year, all of our bank accounts are listed,” she said. “Since that time two years ago we’ve had a new accounting director and reorganized our accounting department. So that issue from two years ago is no longer an issue.”
Pickering, however, pointed out that if there is no proof of deliverables, state law authorizes his office to demand repayment of the funds.
The auditor’s office involvement with the Education Department is not over. Pickering’s office requested copies of the contracts mentioned in the PEER report, according to a release sent out by the state education department Thursday morning, making this the fifth audit Pickering’s office will conduct of the Department in the span of a year and a half.
The auditor also asked for contracts with Questar Assessment Inc., the testing company that administers Mississippi’s annual state tests, and Caveon Data Forensics, which assists the department’s investigations of alleged testing violations such as the one in the Clarksdale Municipal School District, the release said.
When asked why those contracts were also requested, Pickering said he could not comment on ongoing investigations.
State Superintendent of Education Carey Wright said she welcomes the inquiry into the contracts and will cooperate fully.
Wright said until the results from the latest inquiry are released, “the MDE will work on behalf of the students, teachers and schools to continue the improvements in public education that we’ve experienced over the last several years.”
The auditor also released a second report Thursday detailing its review of two federal programs in the state Education Department. The report came after former state education officials mismanaged Title I and 21st Century Community Learning Center, or after school, funds in 2016. As a result, the U.S. Department of Education enlisted the auditor’s office to conduct a forensic audit of the department to determine the exact amount of money misappropriated and whether the Department had properly repaid the Title I funds it had improperly used.
The report stated the Education Department has reimbursed the Title I program $7.5 million as of this month and that the auditor’s office “could not find any evidence that any personnel still employed at MDE participated in the collusion or circumvention” related to the misspending of the funds. Three employees were fired in the wake of the discovery.
The report also verified the initial misappropriation of funds was $11.6 million after the Department initially reported different amounts.