Oak Harbor School District officials didn’t follow the letter of the law when it comes to bidding rules, according to the Washington State Auditor.
In addition, the district didn’t do a perfect job of tracking small items.
On June 5, the Auditor’s Office issued the district a management letter that outlined the problems; the audit covers a year beginning Sept. 1, 2015. The letter is not a formal audit finding, but represents deficiencies or instances of non-compliance that have a less-than-material effect on financial statements, according to the Auditor’s Office
One area of concern voiced by the auditors involved procurement and bidding.
The report states that asphalt projects for Broad View Elementary and Olympic View Elementary should have been combined into a single project, which then would have put it over the $300,000 threshold that requires competitive bidding.
Instead, the district awarded the projects through the small-works roster, a closed bidding system in which the district chooses which companies it wants to work with.
Superintendent Lance Gibbon explained that the two projects were for separate schools and separated by at least two and a half years.
As a result, district leaders viewed them as entirely different asphalt projects.
Gibbon also argued that using the small-works roster saved taxpayer money.
The Broad View project had a bid range of $248,105 to $423,139, and the Olympic View project had a bid range of $152,230 to $292,036. Valdez Construction was the low bid on both and thus won the business.
In the future, Gibbon said the district will expand its bidding pool.
Another area of concern was the district’s purchase of portable classrooms that the district was leasing.
The district purchased the two portables through a nationwide procurement cooperative, but failed to go through a formal competitive bidding process, which was required by law.
But again, Gibbon said the district was being frugal. Compared with the cost of new portables, the purchase of the two leased units likely saved the district as much as $144,000, he said.
“Nevertheless, the auditors say that the district should have asked for formal bids on the portables in order to prove buying the leased portables was actually cheaper,” Gibbon said in a statement.
Audit manager Deena Garza said she does not believe Oak Harbor Public Schools has participated in fraud or a misappropriation of public funds, but neither can she let the district slide on proper procedure as required by law.
Additionally, the auditors tested 21 “small and attractive” assets — small items at risk of theft — out of the district’s 8,500 items meeting that description. The auditors found that one asset was missing, two assets had been omitted and three had been disposed of prior to the test.
Gibbon identified the missing item as a fourth-generation iPod Touch, valued at about $50. A conference phone and portable PA system were mistakenly omitted from the purchasing list.
The disposed-of items were a faulty SMART Slate accessory to a previously-surplussed SMART Board, a non-functional LCD projector and an Apple TV devise previously returned to Apple under a recall.
In response, district officials established a division of labor for itemizing the small-and-attractive-items list as well as a “clearer criteria” for list inclusion, according to Gibbon.
Garza said the state auditor’s management letter was as extension of the accountability audit, but covered items that were not deemed serious enough to be considered official findings.
Despite these recommendations, the district’s financial audit was clean. Gibbon said he has full faith in district management’s ability to safeguard taxpayer money. He cited a lengthy history of perfect audit reports.
“Oak Harbor Public Schools has a proud history of strong financial audits and this year is no exception. Once again we have flawless financials, assuring taxpayers their resources are well-managed,” Gibbon said.