Richmond school officials ordered 4,115 dictionaries for kindergarten classes two years ago. Problem was, there were only 2,063 kindergarten pupils.

School officials kept no inventory of books and no records of when used books were sold. That applied to elementary, middle and high school texts -- spending $1.2 million over two years on excess books, according to a scathing city audit, released yesterday.

Used books, however many there might have been, were kept in junk-filled warehouses the school system spends $300,000 a year to operate to handle about $600,000 a year worth of useful material.

But, City Auditor Umesh Dalal suggested, that may be just what to expect in a system that paid out on $18 million of unauthorized purchase orders and where checks for more than $38.3 million paid against invoices generated by school employees, rather than by the supplier, is standard practice.

Such "departmental invoices" can't be checked as easily to ensure they are for real goods and services.

"I don't think anybody likes to hear this kind of thing, but now we can start working on this," School Board vice chairman Lisa Dawson said.

. . .

The school system could save at least $6.7 million a year by tightening its financial controls and improving purchasing operations, Dalal said yesterday as he presented an audit of its purchasing and bill-paying operation.

His audit found the school system used a construction firm owned by a relative of a purchasing officer in charge of construction.

In addition, an immediate family member of a plant-services department employee had a contract with the school system. The two contracts were worth $357,000 -- and Dalal is continuing to investigate those contracts.

The audit found two former School Board members charged $485 in gasoline purchases in the Richmond area on their school-system credit cards, when they were supposed to fuel up at the city's own facility. Other charges included $10 for use of an inappropriate Web site and $175 for a Western Union money order. They submitted no receipts for these charges, which they were supposed to do. The audit did not name the board members.

In language that is about as stern as auditors get, the report spoke of "gross noncompliance" with procurement law; missing documents; few controls over spending; and misuse of the exceptions that allow governments to get around legal requirements that they shop for the best price.

"In graduate school, if you are going to get less than a B on a paper, your professor hands it back and says: redo. This is a redo," School Superintendent Deborah Jewell-Sherman said of the audit.

Asked about what grade, on a pass-fail scale, she thought the audit represented, she replied only:

"Redo."

. . .

The school system's interim chief finance officer, Jim Damm, said he's already started implementing about one-fifth of the more than 100 recommendations Dalal made.

Damm expects an additional 20 will be in place by the start of the next school year and promised what he called a major re-engineering of the purchasing and accounts-payable departments.

The audit suggested that using the state's electronic purchasing system could save at least $5.5 million year.

The audit said the School Board had given too much authority to the former assistant superintendent of finance and operations, Tom Sheeran, including unlimited power to obligate the school system financially.

In February, a similar audit of city government found many of the same kinds of problems. In that audit, Dalal said the city could save at least $5.6 million a year by tightening its procedures and using the state purchasing system.

Mayor L. Douglas Wilder reacted to the school audit findings by complaining that officials and the news media were focusing too much attention on money and not enough on the school system's high dropout rate and low graduation rate.
Contact David Ress at (804) 649-6051 or dressx@timesdispatch.com.

Contact Michael Martz at (804) 649-6964 or mmartz@timesdispatch.com.