LAUSD and Wile E. Coyote
Audit for accountability…
[by Jon Coupal] 9/20/05

Could the Los Angeles Unified School District learn from the misfortunes of America's favorite coyote?

While watching a Roadrunner cartoon, most of us are too busy laughing to look for lessons, especially lessons in business management. Nonetheless, it has occurred to us that Wile E. Coyote could increase his chances of success -- catching the Roadrunner -- if he were to hire and take the advice of a management specialist to show him why -- time and time again -- his efforts are doomed to failure.

Very likely the first action the consultant would undertake would be a review of the coyote's purchasing practices.

Let's take a look at how Wile E. does business now. First, he limits his purchases to only one firm, the "Acme Co." Second, despite his long history of being burned -- as well as impaled, blown up and crushed -- he still fails to inspect adequately the merchandise. Third, when the products turn out to be defective, and nearly lethal, he takes no action to recover his costs or compensation for his damages.

Chances are the consultant would urge consistent and aggressive oversight and monitoring of Mr. Coyote's purchasing, with periodic audits to measure results.

With his current business practices, if Wile E. Coyote were a corporation, he probably would have produced the Edsel or New Coke. If he were a movie studio, he likely would have backed the 2003 cinematic bomb, "Gigli." And if he were a school district, he most assuredly would be the Los Angeles Unified School District, best known for sinking $300 million into the Belmont Learning Center, an uninhabitable high school constructed on ground that is leaching toxic chemicals.

In 1997, voters within the LAUSD approved proposition BB, a $2.4 billion dollar bond measure. Several years later, the district's inspector general, Don Mullinax, announced that more than one quarter of the bond proceeds had been spent inappropriately on budget items like salaries and consultants rather than the capital improvement that voters had been promised.

Turns out, the LAUSD has very little idea of how much of its money is actually wasted or is being siphoned off through fraud in ongoing operations because, as the district's budget has grown, the number of auditors has decreased. If the district discovers problems, it is more likely due to luck than design. New top auditor Jerry Thornton, who has an FBI background, has told the press, "If you're only doing 3 percent of billions of dollars, well, 97 percent of that is not being looked at."

The LAUSD has a budget of about $13 billion -- larger than many states -- as well as a nearly $16 billion ongoing construction program. To review thousands of contracts there are fewer than 60 auditors. Last year a review of just 200 contracts netted $5.4 million in savings. We can only imagine how much more could be recovered if Inspector General Thornton's office were fully staffed.

It is rare for taxpayers to call for greater spending. However, considering the potential return, it is hard to argue against the inspector general's request for full funding of his department. In addition to the millions of dollars in savings that may be uncovered, the strengthened auditing practices should provide an increased incentive for companies to deal honestly with the school district. After all, it may be ok to cheat coyotes in the interest of humor, but not many businesses want to be exposed as trying to rip off school children and taxpayers.CRO

Jon Coupal is an attorney and President of the Howard Jarvis Taxpayers Association.

copyright 2005 Howard Jarvis Taxpayers association

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