Questionable spending practices at Clemente High School, uncovered in 1995, continued for the next 18 months despite stricter financial oversight by school board officials, records and interviews show.
Paul Vallas, CEO for Chicago schools, acknowledged Friday that the board’s initial efforts to control Clemente’s finances were ineffective. Vallas said the state legislature should beef up the board’s power to intervene in cases of financial mismanagement.
The persistent spending problems at Clemente are detailed in an audit of the school’s finances, obtained by the Tribune.
The audit, by the accounting firm of Arthur Andersen, shows that irregularities, including hundreds of thousands of dollars of poorly documented payments to consultants and parents, continued after the school was placed on “financial probation,” making its expenditures subject to stricter surveillance by the board.
“We can only approve the school budget that is submitted to us,” Vallas said. “The financial probation team cannot guarantee that the money won’t be shifted somewhere else. They don’t have control on how the money is spent day to day.”
In September 1995, however, when Clemente was placed on financial probation, the board had the power to use more drastic measures to curb abuses at Clemente. The board could have declared the school to be in crisis and forced its local school council to dissolve.
But, Vallas said, a new council was taking over and he wanted to give it a chance to turn the situation around. Later in 1996, Clemente was placed on the probation list of Chicago’s worst public schools, prompting the central administration to send an operations manager to further scrutinize the school’s finances.
Clemente’s problems attracted renewed attention last week as an Illinois House Committee held hearings in Chicago on allegations that the school’s state poverty funds were used to promote the Puerto Rican independence movement.
State Rep. Edgar Lopez (D-Chicago), the committee’s chairman, said that $750,000 to $1 million in poverty funds may have been misspent at the school. Lopez’s figures cover a 5-year period, but the Arthur Andersen audit focused only on the period from April 1995 through January 1997.
Clemente’s troubles surfaced in a critical internal school board audit in mid-1995. The school was placed on financial probation three months later.
Vallas’ office didn’t order another audit until February 1997, when an official of the Andersen firm was installed in the school as finance manager. Vallas said he put off a new audit to give the new school council the opportunity to work on Clemente’s woes.
Unlike academic probation, which is spelled out in state law, financial probation is a board procedure, board officials said. In addition to Clemente, two elementary schools in Chicago have been subject to such scrutiny.
A school on financial probation is required to submit vendor invoices for approval by the central administration. Schools usually use the board’s computerized system for processing purchase orders without the need to seek approval.
Barbara Radner, director of the Center for Urban Education at DePaul University, whom the board hired to work with Clemente officials since January 1996, said financial probation won’t work if bills submitted to school board officials aren’t legitimate.
“An invoice is a piece of paper, and people can make up pieces of paper,” Radner said. “Nobody from the board comes around to see if they have the computer.”
Radner told the state committee last week that funds were allocated for textbooks in Clemente’s budget but that many books couldn’t be found. “Where did the money go? That’s the big question,” she said.
The Andersen audit, which included a six-month period before the start of the school’s financial probation, raised similar questions about the whereabouts of Clemente supplies.
The auditors couldn’t locate $115,862 worth of equipment, including computers, purchased by the school. Faculty and staff members are permitted to keep computers at home to use for school business but aren’t required to check them out, the report said.
The audit report also confirmed many previously reported allegations of spending irregularities involving consultants, travel and parent stipends.
For example, Clemente spent $164,054 for consulting services from artists and speakers, according to the audit. For $112,384 of those payments, auditors could find no invoices or time sheets to document the services provided, as required by school board rules.
Clemente spent $57,103 for travel, the audit report showed, including $24,932 in anti-poverty funds for student trips to Puerto Rico and Mexico in 1995–for which the required district office approval was not obtained.
On the trip to Puerto Rico, the father of one of the teacher chaperones was paid $4,165 for lodging, according to the audit.
The school spent $296,547–or 17 percent of its total state anti-poverty funds–on parent and student stipends in 1996, the audit report said. That compares with a state average of 2 percent. The audit found many cases in which participants’ files didn’t include the required criminal background checks.
