07.16.2026 Audit Committee

Summary of the Audit Committee Meeting (07.16.2026)

1) Meeting logistics and governance

• The committee held roll call and confirmed quorum.
• Minutes from the June 11 meeting were reviewed and approved unanimously.
• The committee discussed extending Chair Leondre Tally’s term under policy (advisory chair limit of four consecutive years, with an approved extension process). The extension request was approved unanimously.
• Chair Tally announced this is his last year as chair (he will remain on the committee afterward), and the next meeting will include a vice-chair election.

2) Inspector General (IG) risk assessment and audit priorities

The IG presented an overview of the district’s operating environment and audit risk, emphasizing that oversight is constrained and must be risk-based.

Key drivers of risk discussed:

• Severe budget shortfalls, attributed to:
  • decreased enrollment
  • reduced state funding
  • further compression from rapid expansion of state vouchers enabling students to exit traditional schools
• Operational impacts of constrained capacity, including:
  • layoffs within the IG office
  • vacant audit positions limiting coverage
  • inability to “review everything,” requiring prioritization by risk

Top survey-identified audit priority themes (as reported):

• Artificial intelligence
• Legislative changes
• School capital outlay / sales tax issues
• Charter school financial oversight
• Threat assessments
• Compliance and regulatory requirements

Most targeted audit areas by priority:

• Facilities construction
• Charter schools
• Risk management
• Workers’ compensation (workers comp)
• (Additionally highlighted by discussion) IT security and school capital outlay

Mandated work constrains flexibility:

• The IG office must perform mandatory financial reviews of 177 schools annually.
• Charter schools must also complete CPA audits annually, and the IG plans to increase review focus and present findings as audits are received.
• Much of voucher/employment scholarship review and threat assessment work is managed at the state level, limiting local IG intervention.

3) Focus on why “administrative minutia” matters

A major portion of the presentation addressed pushback from schools/larger leadership who view compliance paperwork as “red tape.”

The IG argued that documentation requirements are protective controls, not nuisance tasks, and described how missing or repeated procedural failures contribute to:

• fiscal blind spots (untraceable funds)
• vendor/contract overcharges
• delayed detection of misconduct

Performance/data points provided:

• 71% of substantiated financial misconduct investigations referenced prior history of the same school-level weaknesses.
• Findings were more often uncovered via the escalation/investigation path than routine checks (presentation figures indicated most issues are not caught early).
• A five-year trend cited a 153% increase in annual findings (from 367 to 929), tied to recurring issues such as:
  • incomplete documentation
  • unauthorized card spending
  • incomplete inventory tracking
  • delayed deposits and missing approvals

4) Example: charter bus/transportation invoice overbilling

The IG discussed a specific risk pathway revealed during a charter bus-related audit:

• Pre-qualified vendors allegedly overbilled schools by over $167,000 (reported as 22% overcharge).
• Causes described included:
  • inconsistent verification of invoices against contract terms
  • acceptance of non-billable or unsupported line items (e.g., fuel charges and certain fees) when school controls didn’t validate them
• The IG noted this issue appears tied to contracting/payments compliance and the ability of staff to confirm what invoices should include.

5) Proposed local actions for the work plan (non-mandated risk)

Because the office is constrained by vacancies and required audits, the IG proposed focusing local capacity on:

1. School accounts: early diagnostic support to help onboarding principals and reduce repeat issues.
2. Vendor procurement compliance: help treasurers verify contract billing rates and related controls (including background check drivers where applicable).
3. Capital assets: compliance reviews related to district school capital outlay / related tax and asset oversight.

The IG emphasized there is no “budget space” for preventable contract overbilling or safety vulnerabilities, and framed administrative compliance as a protective “executive shield.”

6) Committee discussion: contract reading, training, and potential automation/AI

Members questioned how schools can reasonably interpret contracts and what support exists.

Key answers and developments:

• Contract support typically routes to the Purchasing Department (complex transportation contracts were singled out).
• Schools have high bookkeeper turnover (30–40% annually), which increases training and control-risk.
• After IG findings, Purchasing:
  • created a dedicated webpage for contracted transportation
  • summarized contract terms and payment conditions (hourly rates, fuel surcharge rules, payment terms)
  • provided direct contact points for questions
  • included this material in an opening-of-school checklist/template for principals

Operational proposal from committee members:

• Consider shifting responsibility for transportation invoice payment compliance more centrally to Purchasing (or providing a dedicated transportation compliance contact), since school staff turnover makes contract interpretation difficult.

AI / software discussion:

• A member suggested AI would help contract compliance.
• The CFO’s office responded that:
  • they already use OCR scanning of invoices (implemented ~15 years ago), which reduced accounts payable staffing previously
  • they are now piloting AI-enhanced OCR (upgrade work to capture invoice data more robustly even when formatting changes)
  • they are working toward a “contract warehouse” concept to compare invoices against approved contract terms (in phases due to cost, legal/procurement workflow complexity, and daily vendor payment volume)
  • full AI comparison of every contract line against every invoice at daily scale was noted as not feasible immediately without major staffing/processing changes, but improvements are being pursued.

7) Relationship-building and IG “pushback”/outreach plan

The IG addressed the need to reduce conflict with principals and district leaders:

• The IG framed outreach as education: compliance requirements are safeguards.
• The committee discussed improving communication channels with schools and suggested:
  • deeper engagement through deputy superintendent channels
  • scheduling IG discussions at division meetings (elementary division chair offered to coordinate time with principals)

8) CARES/anonymous complaint concern (retaliation risk)

A principal contributor raised concerns that anonymous reporting (through CARES-related processes) can enable false allegations and retaliation against administrators.

• The IG responded that complaints go through intake → investigations director → IG review, and not every complaint leads to substantiated findings.
• The IG emphasized careful review to avoid unfair career impacts and described internal handling procedures to “close the loop” responsibly.

9) Recommendation implementation status (quarterly report)

The committee received an implementation status update on outstanding IG/external-auditor recommendations:

• PeopleSoft change management (2023 audit): tracking improvements expected by September after moving to a new IT service management system to consolidate tracking.
• Subcontractor fault insurance / construction management review (October report):
  • management is revising standard contract language
  • legal has reviewed changes
  • external audit firm (CRI) input is being incorporated
  • contract language expected to be finalized around November (with progress noted toward earlier completion)

10) Closing

• Next meeting scheduled for August 21 (Friday schedule).
• The committee adjourned after chair remarks and thanks to outgoing chair leadership.

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Presenters / Contributors (as named in the subtitles)

• Leondre Tally (Audit Committee Chair)
• Joyce Sedison (IG Office)
• Michael Dixon (Audit Committee / member)
• Doreena Baereman (Audit Committee / member)
• Leondre Camel (appears as a roll-call entry; likely “Leondre” related)
• Frank Barbieri (Audit Committee / member)
• Mark Biomaster (Audit Committee / member)
• Alyssa Davin (logged on / member)
• Dave Tally (Audit Committee)
• Heather Frederick (Chief Financial Officer)
• Bob Bliss (Office of Inspector General)
• Randy Loss (IG’s Office)
• Tracy Shear (Inspector General’s Office)
• Teresa Michael (Inspector General)
• Gary High (Counsel to Inspector General)
• Stephanie Johnson (Director of Accounting)
• Ms. Branch (board member; present)
• Allison Hitsman (high school principal perspective)
• Corey (division chair; offered outreach idea)