Deer Valley Unified School District Performance Audit Report (December 2006)

Az Auditor General

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A REPORT
TO THE
ARIZONA LEGISLATURE
Division of School Audits
Performance Audit
Deer Valley Unified
School District
DECEMBER • 2006
Debra K. Davenport
Auditor GeneralThe Auditor General is appointed by the Joint Legislative Audit Committee, a bipartisan committee composed of five senators
and five representatives. Her mission is to provide independent and impartial information and specific recommendations to
improve the operations of state and local government entities. To this end, she provides financial audits and accounting services
to the State and political subdivisions, investigates possible misuse of public monies, and conducts performance audits of
school districts, state agencies, and the programs they administer.
The Joint Legislative Audit Committee
Representative Laura Knaperek, Chair Senator Robert Blendu, Vice ChairTom Boone Senator Ed Ableser
Representative Ted DowningCarolyn AllenPete Rios Senator John HuppenthalSteve YarbroughRichard Miranda
Representative Jim Weiers (ex-officio) Senator Ken Bennett (ex-officio)
Audit Staff
Sharron Walker, Director
Ross Ehrick, Manager and Contact Person
Brit Baxter Tara Lennon
Harun Chowdhury Carla Taglarini
Lai Cluff Anil Watts
Leslie Coca-Udave
Copies of the Auditor General’s reports are free.
You may request them by contacting us at:
Office of the Auditor General
2910 N. 44th Street, Suite 410 • Phoenix, AZ 85018 • [phone]
Additionally, many of our reports can be found in electronic format at:
www.azauditor.gov


STATE OF ARIZONA
DEBRA K. DAVENPORT, CPA WILLIAM THOMSON OFFICE OF THE
AUDITOR GENERAL DEPUTY AUDITOR GENERAL AUDITOR GENERAL


December 20, 2006


Members of the Arizona Legislature

The Honorable Janet Napolitano, Governor

Governing Board
Deer Valley Unified School District

Dr. Virginia McElyea, Superintendent
Deer Valley Unified School District

Transmitted herewith is a report of the Auditor General, A Performance Audit of the Deer Valley
Unified School District conducted pursuant to A.R.S. §41-1279.03. I am also transmitting with
this report a copy of the Report Highlights for this audit to provide a quick summary for your
convenience.

As outlined in its response, the District agrees with all of the findings and recommendations.

My staff and I will be pleased to discuss or clarify items in the report.

This report will be released to the public on December 21, 2006.

Sincerely,



Debbie Davenport
Auditor General


th2910 NORTH 44 STR EET • SU ITE 410 • PH O EN IX, A R IZO N A 85018 • [phone] • FA X [phone]
SUMMARY
The Office of the Auditor General has conducted a performance audit of the Deer
Valley Unified School District pursuant to A.R.S. §41-1279.03(A)(9). This performance
audit examines six aspects of the District’s operations: administration, food service,
student transportation, plant operation and maintenance, expenditures of sales taxes
received under Proposition 301, and the accuracy of district records used to
calculate the percentage of dollars spent in the classroom.
Administration (see pages 5 through 8)
The District’s per-pupil administrative costs were 5 percent ($25) higher than those
for other districts of similar size. The District spent 8.9 percent of its total current
dollars on administration, higher than the comparison districts’ average of 8.1
percent, but lower than the state average of 9.5 percent. The District’s slightly higher
per-pupil administrative costs were due to higher staffing and salary levels.
Specifically, the District has a higher ratio of administrative staff to students than the
average for the comparable districts. To achieve the same ratio of administrative staff
to students as the comparable districts, Deer Valley would need to reduce its 307 full-
time equivalent administrative positions by 24. Further, the District’s higher number of
administrative staff negates its cost savings from using contracted administrators.
Deer Valley contracts for the services of 9 retired administrators, and by doing so,
saves money by generally paying a lower salary rate and by not paying certain
benefits. The District contracts for more administrators than the comparable districts,
but these savings are offset by having more administrative staff. Finally, the District’s
starting salary rate for administrative support staff was 5 percent higher than the
average of comparable districts.
Food service (see pages 9 through 11)
The District’s food service program was self-sufficient. The program generated over
$9.2 million in revenue, covering $8.6 million in operating costs, $315,000 in capital
Office of the Auditor General
page ipurchases, and $307,000 of indirect costs, such as electricity, water, and waste
removal. The program’s $2.01 cost per meal was similar to the comparable districts’
average of $1.99; however, its $269 cost per student was $29 higher than the
comparable district average of $240 per student. This is due primarily to the District’s
serving more meals per student. Deer Valley has closed campuses, which means
students cannot leave campus for lunch, which appears to result in more students
eating school meals. Because it serves more meals, the District spent 4.8 percent of
its available operating dollars on food service, compared to an average of 4.1
percent for the comparable districts. The District developed and monitored one
performance measure for its food service program, but should incorporate additional
measures to help manage the program and keep meal costs as low as possible.
Student transportation (see pages 13 through 18)
The District spent 31 percent ($64) more per student and a higher percentage of its
total current expenditures on transportation than the comparable districts. As a result,
the District subsidized its transportation program with $1.4 million that potentially
could otherwise have been spent in the classroom. A major factor in the District’s
higher transportation costs is that it encompasses three times as many square miles
as the comparable districts. However, several other factors also contributed to its
high per-student transportation costs, including inefficient routes and bus storage
locations and having more transportation employees than comparable districts. The
District operated its high school transportation routes at only 53 percent of capacity,
its buses traveled about 24 percent farther to begin routes, and it employed 48
percent more drivers and 57 percent more bus aides than the comparable districts
averaged. The District also counted riders improperly and did not maintain sufficient
documentation to support either the number of riders transported or miles traveled.
Performance measures would help identify inefficiencies, but the District has not
established such measures.
Plant operation and maintenance (see pages 19 through 21)
The District spent 10 percent less per pupil and 9 percent less per square foot on
plant operations and maintenance costs than its comparable districts. These lower
costs were not due to differences in square footage, as Deer Valley USD and the
comparison group both averaged about 127 square feet per pupil. The District’s
plant operations and maintenance costs accounted for 10.8 percent of its total
current expenditures, slightly less than the comparison districts’ and the state-wide
averages. Deer Valley has lower costs largely because it spends less than the
comparison group to contract for repair and maintenance services. This is partially
due to the District’s having newer buildings that need fewer repairs. Its average
building age was 12 years, while the comparison group average was 17 years.
State of Arizona
page iiHowever, district administrators also attribute the lower contract costs to having more
employees who are trained to perform technically advanced repair work, such as
chiller and air conditioner repairs. Having on-site expertise reduces the need for more
costly contracted services. Finally, the District dedicated 19 full-time staff to
implement its preventative maintenance schedule, compared to 5 staff, on average,
at the other districts.
Proposition 301 monies (see pages 23 through 27)
In November 2000, voters passed Proposition 301, which increased the state-wide
sales tax to provide additional resources for education programs. The District can
make several improvements in how it administers its Proposition 301 monies. Its
Proposition 301 plan did not state which positions were eligible for Proposition 301
monies or the amount of performance pay an employee could earn. Further, the
District did not maintain adequate documentation to support the propriety of its
Proposition 301 expenditures, may have supplanted about $1 million of expenditures
that should have been paid from other monies, and spent about $116,000 of menu
monies for expenditures not allowed by law.
Classroom dollars (see pages 29 through 31)
Statute requires the Auditor General to determine the percentage of every dollar
Arizona school districts spend in the classroom. Therefore, auditors reviewed the
District’s recording of classroom and other expenditures to determine their accuracy.<