and Wile E. Coyote
Audit for accountability…
[by Jon Coupal] 9/20/05
Los Angeles Unified School District learn from the misfortunes
of America's favorite coyote?
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
the first action the consultant would undertake would be a
review of the coyote's purchasing practices.
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.
Coupal is an attorney and president of the Howard Jarvis
Taxpayers Association -- California's largest taxpayer
organization with offices in Los Angeles and Sacramento.
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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
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
is an attorney and President of the Howard Jarvis Taxpayers
2005 Howard Jarvis Taxpayers association