LAUSD IMPROVES ITS HIRING OVERSIGHT: Audit shows fewer conflicts of interest since 2006

By Connie Llanos, Staff Writer – LA Daily News | http://bit.ly/afLa1H

10/28/2010 - Lax oversight in the hiring of consultants in Los Angeles Unified's Facilities Department resulted in rampant conflicts of interest over a four-year period, according to an audit released Wednesday by City Controller Wendy Greuel.

The district requested the review this year after facilities consultant Bassam Raslan was indicted on conflict of interest charges for allegedly using his district position to hire employees from a company he runs.

The audit found some 225 instances between 2002 and 2006 in which consultants working in temporary management positions for the district hired others from their own firm, leading to potential conflicts.

The review also found that at least 80 consultants were hired without any kind of screening panel. And in four instances in which a screening panel was used, a member stood to benefit financially by hiring a specific consultant because they had investments with that consulting firm.

But the audit, performed by Sacramento-based Sjoberg Evashenk Consulting, also found that 2006 potential conflict of interest issues have decreased since 2006.

"Overall we found that from 2002 to 2006 the LAUSD's policies and oversight for the selection of contract professionals were lax," Greuel said at a press conference Wednesday at Miguel Contreras Learning Complex downtown.

"However since 2006, the LAUSD's oversight and adherence to its own policies have improved dramatically. While some policies still need to be strengthened, the district has done a much better job reducing the potential for a conflict of interest to occur and ensuring the integrity of the program."

The 24-page audit - the first the district has ever requested from the city controller - cost LAUSD $72,000.

It covered contracts awarded by LAUSD's $20 billion school construction program from 2002 through this year. During that period the district hired about 1,000 contract professionals.

Greuel's audit was far less critical then previous reviews by LAUSD's Inspector General, including one performed in 2007 that authorities said led to Raslan's indictment.

Raslan pleaded not guilty in April and his case is expected to go to trial this year.

Guy Mehula was the chief facilities executive from 2002 until he resigned in September 2009. He could not be reached for comment Wednesday.

District Superintendent Ramon Cortines, who could not attend the news conference, said he was pleased with the audit, noting it indicates significant improvements over the last four years including the last two that he has spent at the helm of LAUSD.

"In their review the auditors found consistent compliance with our district's policies and procedures for retaining contract professionals in place for the past three years, and appropriate and needed controls were in place to avoid potential conflicts of interest," Cortines said via a written statement.

"We are very pleased the results of the audit are generally quite positive."

The school district has used large numbers of contract professionals during its $20 billion building program - funded by four voter approved bonds and one of the nation's largest public works projects.

Voters also approved a fifth bond, Measure Q, in November of 2008, totalling $7 billion which will largely go towardmodernizing existing schools. That construction is not expected to start until 2016 because of the financial crisis.

District officials have defended the use of consultants in the building program, saying it allows them to attract top talent and hire only the workers needed for a given project.

Neil Gamble, LAUSD's deputy chief facilities executive, said as the district nears completion of its new construction bond program, the use of contract professionals has been sharply reduced.

The facilities department currently employs about 400 consultants, Gamble said.

However, several facilities consultants have been hired by the district in management positions, including Chief Facilities Executive James Sohn, who succeeded Mehula in 2009.

According to district officials, 32 senior facilities executives previously worked as consultants to LAUSD.

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The shift of consultants into district leadership posts has been a major concern for employee unions, who questioned the validity of Greuel's audit.

"It appears to our local union that only upper management and consultants were asked to provide information about whether they are doing a good job and apparently they have answered in the affirmative," said Lourdes Garcia, general counsel for Teamsters Local 527, which represents many district facilities workers.

"In our view the audit is incomplete and not a true reflection of what is actually going on in the facilities branch."

LAUSD general counsel David Holmquist said the district will investigate and take appropriate action on the four cases of direct conflicts of interest identified in the audit.

The names of the individuals or companies involved were not released, and Holmquist would not say whether the employees were still with the district.

Holmquist also said the district plans to implement the audit's recommendations, including a requirement that contract professionals file financial disclosure forms to reveal any potential conflicts.