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City audit of L.A. Unified is released; report focuses on systemic problems

October 27, 2010 | 10:00 am

The $20-billion school construction program of the nation’s second-largest school system was rife with conflicts of interest, but most problems were eliminated after 2006, independent auditors have concluded.

These findings emerged from a long-awaited audit, released Wednesday morning, that was conducted under the supervision of Los Angeles City Controller Wendy Greuel. The review was commissioned by the Los Angeles Unified School District after the April indictment of senior manager Bassam Raslan for allegedly funneling business from the district's massive school-building effort to a company he co-owned.

The school district has relied heavily on contractors to supervise projects, defending the practice as a way to attract higher-quality employees while providing the flexibility to increase or reduce their numbers as needed.

This latest audit named no individuals, nor did it accuse anyone of wrongdoing. Instead, it focused on serious systemic problems.

“Overall, we found that from 2002 to 2006 the LAUSD’s policies and oversight for the selection of [contractors] were lax,” Greuel wrote in her cover letter.

The audit found 225 instances in which consultant hiring panels included people from the same company as the applicant. Eighty hires were made without using the required panels at all. And auditors identified four instances in which someone participating in a hiring panel “stood to receive a direct financial benefit because they selected a [consultant] from a firm in which they had an investment,” Greuel wrote.

In some respects, this latest review was tamer than some others. This year’s grand jury report alleged criminal wrongdoing and returned indictments. An earlier audit from the school district’s own inspector general singled out specific companies as having engaged in alleged improper conduct.

“Because the LAUSD is our client, we can't name the names independently,” said deputy city controller Ben Golombek. “We've turned all of our findings over to the district for additional investigation.”

Previous audits by the district inspector-general have led to some changes in the use of consultants, which the controller cited as largely effective. The controller's audit, however, include recommendations for additional safeguards. Auditors suggested that contractors be required to fill out additional financial disclosure forms and that senior district administrators should review them more carefully.

So far the school system has been billed $72,000 for the work, which was completed by Sacramento-based Sjoberg Evashenk Consulting.

-- Howard Blume