Audit finds ‘off the books’ account used by vendors to pay Montgomery Co. schools staff
Nearly a year after Montgomery County, Maryland, police reported they were investigating “possible financial improprieties” in the county school system’s transportation department, a new state audit offers details on what generated its investigation.
According to the September 2022 report by the Maryland Office of Legislative Audits, the Montgomery County school system’s own internal audit showed “questionable purchases” for gift cards, furniture and other items shipped to an unnamed transportation manager’s home.
The state audit also reports that Montgomery County Public Schools also discovered an “off the books account” maintained by a transportation vendor outside the control of MCPS’ Office of Finance. The report doesn’t identify the vendor, but states that the account that was used to make payments to several MCPS employees to buy goods and services in a way that was designed to get around the school system’s “established policies and procedures.”
After reporting concerns to Montgomery County police, MCPS hired an accounting firm in December 2021 to carry out an independent forensic investigation of the account.
That firm reported that nearly $1.2 million had been deposited into the “off the books account” and that approximately $649,000 in payments had been made either directly to MCPS employees or for purchases of goods and services “purportedly on behalf of MCPS for the period between October of 2017 and November of 2021.” Another $535,036 remained in the account as of November last year, according to the report.
In November 2021, MCPS put Todd Watkins, who led the school’s transportation department, and Charles Ewald, the assistant director, on leave. Both men are no longer with the school system, but MCPS officials have not commented on their status, citing their own ongoing investigation. The Maryland Department of Legislative Services states, “One of the employees was subsequently terminated in February of 2022 and the other employee resigned in March of 2022.”
In February 2021, the county school board approved a $1.3 million deal with Highland Electric Transportation to begin the shift to an electric school bus fleet. The plan included swapping the school district’s combustion-engine buses for the new electric vehicles. The stated goal was to have an all-electric fleet by 2035.
The audit also found a number of issues related to the school system’s financial oversight, and the report lists a number of recommendations.
One of the findings was that MCPS contracted with an unnamed vendor for a school bus camera system “without a competitive procurement process or a fixed total cost to be paid.” The audit also found the school system’s contract with that bus camera vendor “lacked sufficient details” to monitor the amounts invoiced and paid to that vendor.
Another finding in the report showed the school system didn’t always carry out inspections of construction projects or ensure needed information was supplied before making payments.
In the written response included in the report, Montgomery County schools Superintendent Monifa McKnight noted that the school system is audited “on or behalf of nearly a dozen other agencies” and that the firm the school system hired “did not disclose any material deficiencies.”
MCPS responses included statements saying it agreed with a number of the recommendations, and that in other cases, the findings were “factually correct.”
In an email to WTOP, MCPS spokesperson Chris Cram wrote:
The investigation in this matter is, in fact, ongoing and we are aware of the details available in the Maryland Office of Legislative Audits report. A great deal of work has been done by MCPS staff over the past year, including hiring forensic auditors and a significant amount of cooperative work with our police partners. Because of that work, to date, MCPS has recovered in excess of $800,000.
As a result of the MCPS internal investigation, the school system said that it has:
- Identified a new vendor for purchasing buses.
- Revised the internal structures that monitor finance and procurement.
- Reviewed purchasing card transactions.
- Provided retraining for staff who have purchasing cards.
- Evaluated employee access to purchasing cards.
- Decreased card purchasing limits.
“The two individuals associated with this matter no longer work for MCPS, but police may still apply charges as part of their investigation. Because there is still an investigation and work to be done, we cannot comment further at this time,” Cram said.