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Audit Finds Purchasing-Oversight Problems in State Wildlife Agency

Some of the Tennessee Wildlife Resource Agency’s management practices open the department up to risks of fraud and spending abuses, a recent audit released by the state comptroller’s office said.

The most egregious example of a lack of oversight is with state payment cards, which allow TWRA employees to buy goods and services for the agency. According to the audit, between July 1, 2009 and Jan. 24, 2013, TWRA employees made more than 57,000 purchases, totaling nearly $13.3 million.

Tennessee Wildlife Resources Agency management did not maintain proper controls over State Payment Cards, increasing the risk that state resources will be used improperly due to fraud, waste, and abuse,” the audit found.

Employees were allowed to make purchases that should not have been permitted, and also to avoid purchasing limits because, according to the audit, supervisors failed to double check and approve receipts in some situations.

While TWRA policy requires employees to maintain logs of purchases that are then approved by supervisors, state auditors found that record-keeping was not always maintained and approved properly across the board, leaving an opportunity for fraudulent purchases.

Also the audit found cards are not always deactivated promptly after a cardholder leaves the employ of TWRA. “Management did not always promptly terminate cardholders’ payment cards, resulting in one purchase (totaling $55) made on a terminated employee’s payment card,” wrote the probe’s authors.

Agency overseers recognize a need to revise its policies to encourage better compliance and say steps are being taken to address the issues raised in the report, said Jeff McMillan, chairman of the Tennessee Wildlife Management Commission, which meets Thursday and Friday at Meadowview Conference Center in Kingsport.

“This is why we need to do an audit every year,” said McMillan, a dentist from Bristol. “We have audits to find where things need correcting and we’ve done that.”

McMillan maintained, though, that the agency overall is doing the job it was set up to do, which is manage wildlife. “We’ve got elk, geese, sandhill cranes. It’s like the good ole days,” he told TNReport this week, adding the agency manages the wildlife of Tennessee on a balanced budget.

However, one of TWRA’s most vocal critics in the Tennessee General Assembly, Strawberry Plains Republican Sen. Frank Niceley, said the audit is proof positive the agency’s leadership needs an overhaul.

“What people need to realize is, the TWRA is set up as a free-standing agency,” Niceley said in an phone interview with TNReport Tuesday. “It is the only agency that is set up that way. It was done as an experiment in the ‘70s and it has failed.”

Nicely noted that some of the issues found by the Comptroller have been found in the past and not corrected.

“Management has not been managing. They are having a big party on the sportsman’s dime,” Niceley said. He said he has no problem with the mission of the TWRA, he just wants to see it more efficiently run.

“It needs new management,” Niceley said. “It needs a commissioner (who should) answer to a standing committee.”

McMillan defended his volunteer post, saying the commission is removed from politics. “You get a non-political opinion on what needs to be done with wildlife,” he said.

In addition to failing to rigorously monitor purchases with state money made by employees, the audit found problems in how TWRA manages state-owned equipment, crop leases and computer security.

The audit found the agency doesn’t always carefully track equipment and suggested an annual inventory of the approximately $35.5 million worth of TWRA-owned guns, vehicles, boats and tractors. Auditors found not all state property was sufficiently documented and lost items were not always reported correctly or in a timely manner.

“Due to the sensitive nature of these items and the decentralized nature of the agency’s operations, it is critical that TWRA maintains proper internal controls over equipment,” the audit said.

The audit, which can be read in full here, also reported:

  • TWRA did not oversee crop leases properly, which increases the chances of lost revenue for the agency
  • It did not enforce its conflict-of-interest policies; and
  • It did not always protect its Remote Easy Access Licensing (REAL) computer system, which could open the agency to hackers.
Press Releases

State Audit: ‘Serious and Pervasive Problems’ with TNInvestco

Press Release from the Office of Justin P. Wilson, Tennessee State Comptroller, November 13, 2012:

Audit Finds Serious and Pervasive Problems with the Department of Economic and Community Development’s TNInvestco Program

Tennessee’s TNInvestco Program, which is administered by the state Department of Economic and Community Development (ECD), has serious and pervasive problems, according to report released today by the Comptroller’s Division of State Audit.

TNInvestco was launched in 2009 as a program that provides tax credits to businesses which invest in certain types of start-up companies. The program was launched as a way to create jobs, foster entrepreneurial activity and infuse fledgling companies with capital. Recipients of the tax credits are chosen through an application process that requires them to meet certain criteria in order to qualify.

The Comptroller’s report details that the program was launched without adequate safeguards in place to determine that the companies receiving start-up funding were actually eligible to do so. Those safeguards are still lacking.

Auditors found that ECD failed to:

  • complete adequate annual reviews;
  • complete its annual report; or
  • evaluate program risks in its annual risk assessment.

Auditors also found that ECD did not ensure that the companies receiving tax credits:

  • completed statutorily-required investment strategy scorecards;
  • provided required accounting reports of specific procedures; or  provided audited financial statements in a timely fashion.

Without adequate documentation, top ECD officials might have difficulty determining if the required investment strategy benchmarks are being met and if investments are free from fraud, waste or abuse. Furthermore, the lack of documentation raises questions about how accurate reports can be provided to the governor’s office.

The audit also highlighted some other issues with ECD that are unrelated to the TNInvestco program. To view the report online, go to:

Press Releases

Comptroller Report: Homelessness Rising Among TN Public School Students

Statement from the Office of Tennessee Comptroller, Oct. 29, 2012:

Since the start of the nation’s economic downturn in late 2007, the number of homeless students in public schools has significantly increased both nationally and in Tennessee. Between the 2006–07 and 2009–10 school years, the number of homeless students identified in public schools increased by about 38 percent nationally (from 679,724 students to 939,903 students). In Tennessee, the number of homeless students in public schools increased by about 74 percent during the same period, from 6,565 students in the 2006–07 school year to 11,458 in 2009–10. The increases may in part be a consequence of job losses and other difficulties related to the economy that have affected families, but may also result from some school districts’ improved efforts to identify homeless students. This legislative brief describes the federal requirements under the McKinney-Vento Act for states, school districts, and schools concerning the education of homeless children and youth; the effects of homelessness on children and youths’ education, as well as effects for districts and schools; and some characteristics of children and youth in Tennessee who are homeless and enrolled in Tennessee schools, including their academic achievement.

Legislative Brief (pdf):

Press Releases

Comptroller: State Worker Stole $53K from Morgan Co.

Press release from the Tennessee Comptroller of the Treasury; June 4, 2012:

An administrative secretary used a variety of schemes to steal at least $53,412.78 from the Morgan County Soil Conservation District, an investigation by the Comptroller’s Division of Local Government Audit has revealed.

The administrative secretary, Sharlene Justice, forged signatures of the district board’s chairman on checks and timesheets dating back at least to 2008. The administrative secretary wrote checks to herself and to family members.

A portion of the unreceipted cash collected by the administrative secretary was eventually deposited and a forged check written by Ms. Justice was returned by the bank due to insufficient funds. This reduced the cash shortage to $44,727.08.

The report noted that the soil district’s board of directors failed to provide adequate oversight over the district’s operations and that safeguards that might have detected the thefts sooner were lacking.

For example, auditors noted that Justice was responsible for all aspects of financial transactions, which meant no one on the district staff double checked her work. Also, the district issued only generic receipts, which made it difficult to determine if office funds were being properly receipted and deposited. The lack of oversight was further illustrated when the chairman of the board advised that his signature had been forged on checks and timesheets since at least 2008.

“It is very important that government entities practice good internal controls in accounting and bookkeeping,” Comptroller Justin P. Wilson said. “Internal controls are basically a set of checks and balances that help make sure that public dollars aren’t subject to fraud, waste or abuse. As this case clearly illustrates, there can be consequences for governments that don’t have good internal controls.”

The findings of the report, which was released today, were forwarded to the local district attorney’s office.

On May 21, the Morgan County Grand Jury indicted Justice on one count of theft over $10,000. On May 23, she was arrested by officers from the Tennessee Bureau of Investigation.

To view the report online, go to:

Press Releases

State-Commissioned Study: Pre-K Boosts ‘School Readiness’; Long-Term Benefits ‘Negligible’

Executive Summary of “Assessing the Impact of Tennessee’s Pre-Kindergarten Program: Final Report,” Released May 31, 2011 by the Strategic Research Group:

In 2007, the Tennessee Office of the Comptroller contracted Strategic Research Group (SRG) to conduct a study to investigate the short- and long-term effects of state-funded Pre-Kindergarten (Pre- K) participation on academic outcomes in Kindergarten through Fifth Grade through an examination of existing school records (i.e., secondary data). The evaluation was structured to take place over a multi-year timeframe and in a series of reporting stages. The overarching goal of this effort over the series of reports submitted to date has been to identify Pre-K participants in existing school records and to determine, to the best possible extent given the data available for analysis, whether there is evidence to suggest that Pre-K participation is associated with a positive effect on student performance in Grades K-5 relative to students who did not participate in Pre-K.

On the whole, the results of analyses conducted to date in this series of analyses of outcomes in Grades K-5 point to an initial near-term advantage associated with Pre-K participation in Kindergarten and First Grade—primarily for students who received Free/Reduced Price Lunch (FRPL) or are considered “at-risk” due to socioeconomic status. Longitudinal analyses conducted in two previous reports have found that this initial advantage tends to be followed by a pattern of convergence, although a slight advantage of Pre-K participation appears to be maintained among economically disadvantaged students through the Second Grade. For students in Grades 3-5, analyses have found either no significant effect of Pre-K participation on assessment scores, or, in some cases, have found that students who attended Pre-K, on average, score lower than their non-Pre-K counterparts on some assessments.

The goal of this final report has been to maximize the number of student records that can be included in the analysis, providing opportunities for longitudinal analyses that were not possible for previous reports in this series. This provides valuable perspective considering that each previous report has varied in terms of the program years covered as well as the school years/grade levels incorporated into the analysis. Thus, this final report includes all possible student records from the years specified in the study period.

In order to evaluate the short- and long-term impact of Pre-K on student outcomes, a sample of non-Pre-K students was randomly selected that mirrored the Pre-K group with regard to school or school system, gender, race, and FRPL status.

Data were analyzed using random effects analysis of covariance models, also referred to more broadly as hierarchical linear models or multilevel models. Analyses controlled for demographic characteristics such as child race and gender, as well as FRP status, special education, English as a Second Language (ESL) status, and retention.

Combined results across ten cohorts of students who participated in Pre-K indicate that on standardized assessments in Kindergarten, Pre-K students—particularly those who experience economic disadvantage—perform better than students who did not participate in Pre-K. No overall differences were found between Pre-K and non-Pre-K students in First Grade, although again, Pre-K students who experience economic disadvantage tend to perform better than their non-Pre-K counterparts. However, this same pattern is not consistently observed for students who do not experience economic disadvantage, and the initial advantage attenuates and is largely diminished by the Second Grade. Among students who do not experience economic disadvantage, the initial advantage of Pre-K is less evident, and the models suggest that they may experience slower academic growth over time.

The results of the analyses of long-term effects (i.e., Grades 3-5) find that the differences between Pre-K students and non-Pre-K students are negligible, particularly when examining assessment outcomes for students who experienced economic disadvantage. By the third grade, students who did not experience economic disadvantage performed better on standardized assessments than Pre-K and non-Pre-K students who had received FRPL, although not as well as students who had not experienced any known risk factors.

This study has faced some challenges. One of the greatest is that no assessments were available for students as they began Kindergarten. Instead, assessments conducted end-of-year in Kindergarten are the earliest indicator available that we can use to gauge the most immediate impact of program participation. However, even this indicator is impacted by factors outside of the control of the Pre-K program, including the fact that these data were only available when school systems elected to administer assessments at the Kindergarten level. The majority of Kindergarten students did not complete standardized assessments; more students are assessed in First Grade, but still not the majority.

Arguably, the greatest limitation of this study is that educational records do not indicate whether students participated in any Pre-K program other than Tennessee’s Pre-K. Throughout this series of studies, analyses have not been able to determine whether students in the non-Pre-K group attended another type of Pre-K program, nor have the analyses conducted here been able to control for additional interventions students may have received (or have not received) beyond Pre-K. These remain the most significant issues in terms of interpretation of the results because it is quite likely that the benefits of Pre-K are underestimated in the models presented here.

Despite the limitations of this study, however, the overall conclusions to be drawn from this series of reports and the cumulative analyses presented in this final report have been consistent: students who participate in Pre-K reliably show better outcomes on Kindergarten assessments than students who do not participate in the Pre-K program. These results provide evidence that the objective of Tennessee’s Pre-K program – school readiness – is being met.

Education News

Senate, House Taking Up Haslam’s Teacher Tenure Initiative

In debates over education reform this year, Gov. Bill Haslam’s push to make it harder for teachers to earn and keep tenure hasn’t been as starkly polarizing as other Republican-backed legislation.

But it is nonetheless provoking resistance from the Tennessee Education Association, the union that represents more than 50,000 of the state’s public school employees.

Eight Republicans and one Democrat in the House Education Subcommittee voted Wednesday to approve Haslam’s tenure reforms. Four Democrats voted against the bill. The full Senate is expected to vote on its version of the legislation Thursday morning. (UPDATE: the Senate bill passed 21-12)

The tenure measure would require new teachers to spend five instead of three years in the classroom before earning tenure, which generally offers job protection. A series of evaluations would determine whether an educator could be put on probation or have her tenure revoked.

The legislation would not affect teachers who currently have tenure. If passed into law, teachers who have tenure as of the next school year would continue to use the current system while those who have yet to receive tenure will be subject to the new rules.

The proposal is a centerpiece to Haslam’s education-reform agenda, which also calls for lifting restrictions on charter schools and allowing students to use lottery scholarships for summer courses.

The governor says it is currently difficult to get rid of public school teachers who aren’t performing at a level of proficiency deemed adequate by their superiors.

According to a 2008 Legislative Brief from the Tennessee Comptroller’s Offices of Research and Education Accountability (pdf):

The number of annual teacher dismissals and cost per dismissal hearing cannot be calculated with any precision. The Tennessee Department of Education retains no records of the number of dismissals. Despite a lack of concrete data, the estimated number of dismissal cases is fewer than 50 per year – less than one-tenth of a percent of Tennessee’s total teaching force – according to the Tennessee Education Association (TEA) and the Tennessee School Boards Association (TSBA), with the majority of hearings occurring in the state’s largest school systems. Although only an estimate, this number suggests a very small percentage of Tennessee’s teachers are ultimately dismissed from their teaching duties.

Haslam said Wednesday that OREA’s report — issued when John G. Morgan, now chancellor of the Tennessee Board of Regents, was the state’s comptroller — reveals why tenure reform is necessary.

“I think that does show that maybe the way it’s set up now, it’s too hard to replace teachers who aren’t effective,” said the governor. “I think way more of our teachers in Tennessee are good than are bad. I want to be really clear about that. But we need to have the mechanism to replace teachers who aren’t working well.”

Given the bundle of bills that more directly aim to pare the influence of the TEA — banning collective bargaining, eliminating payroll deductions of union dues, doing away with TEA’s ability to select members of the state retirement board — the prospect of curbed tenure protection has provoked relatively little controversy. When about 3,000 union demonstrators marched on Capitol Hill Saturday to protest the mainly Republican-driven education reforms, tenure was hardly mentioned.

But the TEA is by no means unconcerned with Haslam’s plan — as evidenced by a strong showing of union members sitting in on Wednesday’s hearing and the fact that most of the House subcommittee’s Democrats opposed the bill.

Union leaders worry that the plan will base teachers’ probationary period on a set of largely untested measures. The system will leave holes for teachers who can’t be measured by standardized test scores, known as Tennessee Value-Added Assessment System or TVASS, and may leave other teachers continually in a “probationary” status, TEA President Gera Summerford said.

“Not every student can be an ‘A’ student. And not every teacher can be a top-level teacher,” Summerford said. “It depends on so many conditions, the students that you teach, the environment in which you teach, the community in which you teach.”

She said the TEA is willing to look at some aspects of the tenure law, but wants to make sure teachers still have rights to challenge potential dismissals.

Democrats are too, said House Minority Leader Craig Fitzhugh, D-Ripley. But they’d like to put off some of the bill’s changes until the state can thoroughly vet the new teacher evaluation system.

Studies in other states show it’s both difficult and expensive to give failing teachers the boot. In Illinois, which is home to some 95,000 tenured teachers, only one or two are fired each year for poor performance, according to one analysis.

Memphis Rep. John DeBerry, the lone Democrat who joined with House Education Committee Republicans in voting for the tenure bill Wednesday, said TEA needs to accept that when they signed on to reforms as part of the state’s desire to win $500 million in Race to the Top education funds last year, they were agreeing to an all-out education overhaul.

“Part of Race to the Top was changing tenure and changing education as we know it,” said DeBerry.