- The Washington Times - Friday, June 27, 2003

D.C. Council members singled out the public school system yesterday as the only agency that should scrap its government-issued credit card program.

The school system “has more than 275 credit cards with [few] checks and balances, and I am concerned that their program should be suspended,” said council member Vincent Orange, Ward 5 Democrat, who presided over a daylong hearing on credit card misuse by city workers.

The Washington Times reported Wednesday that city auditors found that school officials could not account for more than $1.6 million in credit card charges for fiscal 2001. The unaccounted-for charges — which include unauthorized purchases of hotel services, food, entertainment and rental cars — made up about one-quarter of the school system’s $6.3 million credit card expenses in fiscal 2001.

The Times reported Thursday that school officials are threatening to fire employees who have misused their government-issued credit cards and are trying to recover any money that was misspent on unauthorized charges.

Numerous instances of credit card misuse have also surfaced in recent weeks in the Office of Property Management and the Office of Contracting and Procurement.

The credit card program was designed to allow employees to make purchases of $2,500 to $10,000 without going through the rigorous procurement process.

Mr. Orange, chairman of the Government Operations Committee, said the city should expect better management and oversight of the credit card program, given the high salaries of numerous city officials, many of whom were entrusted with the cards.

“This government has in excess of 575 individuals making $100,000-plus salaries who are supposed to be worth the money, and yet it appears that frequently these folks are unable to perform their duties,” he said.

The Times reported in April that the District, with 572,000 residents, has more municipal employees earning $100,000-plus salaries than Chicago, with nearly 3 million residents, and Baltimore, with 651,000 residents. Of the District’s 34,000 municipal employees, about 575 make more than $100,000. By comparison, 419 of Chicago’s 40,000 employees and 33 of Baltimore’s 15,000 employees make that much.

The school system has 50 employees earning more than $100,000.

Mr. Orange said school officials plan to have a set of standards and controls in place by Sept. 30.

D.C. Auditor Deborah K. Nichols said the schools would be hard-pressed to have an adequate system prepared so quickly.

“The desire is there to bring some discipline to the program, but the problem is that Superintendent Paul L. Vance is not in control of the credit cards,” Mrs. Nichols said in testimony before the council committee.

She said the school system’s chief financial officer is not equipped to manage the program and that Mr. Vance should be in charge of distributing and accounting for the credit cards.

Mrs. Nichols testified that some school employees had credit limits she could not explain and that school officials seemed reluctant to recoup money from employees known to have made “purchases for their own personal use.”

“There are employees with annual credit limits of $60,000, $90,000, $100,000 and up to $280,000 in the schools,” she said.

Council member Jim Graham, Ward 1 Democrat, said he was shocked to learn that an employee at Eastern High School has a $280,000 line of credit.

“And what employee at [Alice] Deale Junior High could possibly need a $280,000 limit?” said Mr. Graham, who previously told The Times that the District’s entire credit card system should be dismantled.

Louis Erste, chief operating officer for the schools, said the improper charges are inexcusable. But he added that the most prevalent problem is school officials’ inability to receive and process credit card purchase reports and receipts.

The Times reported that school-finance officials could not provide documentation to support about $984,728 in credit card payments and had incomplete documentation for charges totaling $684,518 in fiscal 2001.

“We have had problems receiving reports and were following a system set up by our [chief financial officer] to pay upfront and then review the purchases on the back end,” Mr. Erste said.

He said the schools will no longer follow that method and that no payments would be made without documentation first.

Mr. Erste said the school system could void about 50 cards, but hasn’t yet decided to take back any cards despite reports of misuse.

Officials have suspended some cards for misuse during the five years the schools have used the credit card program, he said.

Mr. Orange said he was most displeased that numerous technological tools that could provide nearly up-to-the-minute oversight of credit card activity were never used.

“There is a computer program that allows us to turn a card off instantly, see on your screen what people are doing and buying right now, and we can tell who is doing something they are not supposed to,” Mr. Orange said during questioning of Deputy Mayor for Operations Herbert R. Tillery.

Mr. Tillery, who was hired a year ago to oversee day-to-day management of city government and earns $128,619 a year, said he was never made aware of the monitoring tools.

“We have new directors, managers and employees, and I’m not sure any of us knew these tools were available,” Mr. Tillery said. “What we need is a complete education campaign across the board on how to use the program.”

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