City controller finds improper use of student activity funds

Student activity funds at city public schools - worth $5.3 million in all - are widely mishandled, the city controller said yesterday.

An audit by City Controller Alan Butkovitz found improper use of the money and poor oversight, but no criminal wrongdoing, in each of the 15 schools he studied. The problems ranged from $44,000 worth of bank certificates of deposit that could not be located at Edison High and student funds diverted toward staff salaries at Central High to students keeping the books at Furness High.

Money raised by class dues, fund-raisers, grants, and student fines go into the funds, which are in place at all 281 district schools.

"In the course of our review, we found significant breakdowns that invite fraud and allow irregularities to persist and go undetected," Butkovitz said at a news conference at his Center City office.

In a written response to the audit, the school district said its own periodic checks of the funds revealed similar issues, but fixes have been made, including bolstering school-level financial oversight.

"Overall, it is our belief that student activity funds are safeguarded and adequate controls are in place," the district said in its response. A new student activity fund manual was introduced this year, it said.

The district also said that volunteers often control the funds, and "if requirements are enforced too rigidly, this could result in schools not being able to find volunteers and sponsors to support student activities . . ."

The school district is on spring break, and efforts to reach individual school principals were unsuccessful. But Sheldon Pavel, the Central principal, said his school's issues were quickly ironed out and never involved misuse of student money.

The controller's audit of funds for the 2007-08 school year revealed purchases made without receipts, payments made for goods that were never received, and large contracts awarded without a bidding process, all flying in the face of district policy.

Butkovitz, a frequent critic of the district who is up for reelection this year, pointed out irregularities at several schools, including Edison High, where $43,723 in bank CDs couldn't be located by school personnel.

"Bank officials would not confirm the existence of the certificates to the school because no one currently on Edison's staff was listed on the certificates," the report states.

Butkovitz also highlighted problems at Central, where a student account was used to pay for $14,300 in salaries. Central also has more than $33,000 sitting unused in class dues bank accounts for the classes of 2003 through 2006, the audit found.

Reached last night, Pavel, the top administrator of Central High, said that the school fixed the mistakes when the controller's office pointed them out last year, and that no money was ever lost or misspent.

"There was never anything where we were using money raised by kids or for kids for any other purpose than what it was supposed to be for," Pavel said. The salary payments - for employees who did things such as tutoring and helping students prepare graduation essays - came out of a fund designed for that purpose, but are now paid from a different account.

The leftover class dues, he said, are typically kept on the books for a year after a class graduates to handle any outstanding bills. The accounts from 2003 through 2006 have already been moved to the alumni association account, Pavel said.

Central, a large high school with many student activities, keeps about $500,000 in its funds, Butkovitz said.

At Furness High, students kept the books for one fund.

"Although students are to be involved in the budgetary process and overall activity management, accounting duties are the responsibility of staff sponsors," the report said.

Butkovitz made several recommendations to Superintendent Arlene Ackerman, including halting salary payments from student activity funds, keeping students out of accounting work, keeping closer track of bank documents, and requiring activity sponsors to keep closer track of their money.

The 15 high schools in Butkovitz's sample have $1.8 million in student activity funds all together, Butkovitz said. In general, high schools have much larger funds than elementary schools; the average high school has about $70,000 in funds, he said.

The audit was triggered by the arrest last year of a Germantown High staffer. Robin Harkins allegedly stole $100,000 that students collected from fund-raisers for graduations, proms, and other extracurricular activities.