A Maryland state audit report indicates that transportation management personnel in Montgomery County Public Schools may have used an “off the books” account to spend about $649,000 on goods and services “purportedly on behalf of MCPS from October 2017 to November 2021.”

An ‘Off the Books’ Account

Last November, as School Bus Fleet reported, MCPS put then-Transportation Director Todd Watkins and his assistant director, Charles Ewald, on administrative leave pending an investigation into those purchases.

“One of the employees was subsequently terminated in February 2022 and the other employee resigned in March 2022,” the report stated.

The account, maintained by a transportation vendor “outside the control of MCPS’ Office of Finance,” apparently was funded with about $1.2 million due to the school district for liquidated damages because the vendor hadn’t delivered goods on time “and credits for certain items included in the original bus procurement contract and paid for that were subsequently cancelled.”

After an internal audit and the account’s discovery, the district reported the situation to the Montgomery County Police Department and hired an accounting and advisory firm to conduct an independent forensic investigation.

The firm reviewed about $572,000 in spending by transportation department employees “that were considered questionable or required additional review,” the report stated.

Some reported purchases included gift cards and furniture shipped to the management employee’s home, according to the district’s Internal Audit Unit.

The audit report indicates that the MCPD and State Attorney’s Office were investigating the issues.

“The two individuals associated with this matter no longer work for MCPS, but police may still apply charges as part of their investigation,” said Christopher Cram, director of the school district’s communications office. “Because there is still an investigation and work to be done, we cannot comment further at this time.”

The report also delved into irregularities with the procurement of a school bus safety camera system. Wrote legislative auditor Gregory Hook:

“Our audit also disclosed that MCPS did not competitively procure or establish a fixed cost to be paid on a contract to use a vendor’s school bus safety camera system to assess violations against drivers that illegally pass a stopped school bus. In addition, the contract lacked sufficient details to enable effective monitoring of the amounts invoiced and paid to the vendor, which totaled $21.9 million as of June 30, 2021.”

Investigation Leads to Changes

However, Cram noted that the MCPS staff has done much during the past year to remedy the situation with the “off the books” account, including hiring the forensic auditors, working with investigators, and putting in place new safeguards, such as:

• Identifying a new vendor for purchasing buses.

• Revising internal structures that monitor finance and procurement.

• Reviewing purchasing card transactions.

• Retraining for staff who hold purchasing cards.

• Evaluating employee access to purchasing cards.

• Decreasing limits on purchasing cards.

He said that the district has recovered more than $800,000 so far because of staff’s work.