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Phila. school district was told of weak controls

The city controller said financial ills date back years. Two schools are being probed.

The Philadelphia City Controller's Office has warned the school district for at least the last decade that controls over student activity funds were "weak" and subject to abuse, officials in the controller's office said yesterday.

In its most recent audit of the 2006-07 school year, which is soon to be completed, the controller's office again warns that reporting requirements have not been followed.

The report comes as the district completes an investigation of Germantown High School, where up to $100,000 in student activity funds is missing. The district plans to recommend to the District Attorney's Office that a former chief operations officer at the school be prosecuted for the missing money, the district's inspector general, John F. Downs, said yesterday.

It also comes as the district and other sources confirmed another case at Frankford High School this year in which up to $20,000 was found in a recent audit to have been spent inappropriately.

District spokeswoman Felecia Ward said that an audit and investigation by Downs found evidence of "financial mismanagement," but that there was no evidence anyone spent the money for personal benefit.

The audit was completed in June 2007.

Frankford principal Richard Mantell acknowledged yesterday that he was paying money back out of his own pocket as a result of the audit. He declined to disclose the amount he was repaying.

"It's my responsibility. I'm the bottom line," Mantell said. "So the money has to be replaced."

The money, Mantell said, was used to pay students for performing tasks at the school. Such payments are not permitted to be made from the activity fund account, he said.

Ward said the case had not been referred to legal authorities for prosecution. She declined to say whether disciplinary action was taken against Mantell, calling it a personnel matter.

Student activity funds typically are collected from students and various fund-raisers to pay for activities related to graduation, the prom, and other extracurricular functions.

City Controller Alan Butkovitz said he was not surprised by the problems. "The school district does not have a very controlled oversight system. Where there are no controls, there is an environment for abuse," he said. "I think what you are discovering is really the tip of the iceberg."

The most recent audit found that nine of 24 schools sampled did not submit the required report on student activity funds. Five failed to submit bank reconciliations, and one did not submit bank statements with its report of the student activity funds. The schools were not named in the report.

The controller's report also noted problems with controls over petty account funds at 12 district schools sampled. Harvey Rice, deputy controller, said petty and student activity accounts often were overseen by the same school personnel.

In a written response included in the audit, the school district agreed with the controller's findings and said that actions were being taken to tighten security at the district's 270 schools.

A new "restrictive petty cash policy" went into effect this year, and disciplinary action has been taken against schools that did not complete student activity reporting and petty cash reporting, the district said.

The district also provided training and information to principals on how better to monitor the funds, it asserted in the response.

The Germantown case came to the attention of school district auditors earlier this school year and is being investigated by Downs. He said he was recommending that charges be pursued against one "person of interest" in the case, Robin Harkins, who resigned as the school's chief operations officer on March 25.

Downs said Harkins retired after he attempted to interview her about the missing funds. She has not returned phone calls or requests for information, he said.

Harkins did not return a call for comment yesterday.

The school district has suspended Harkins' final pay, pending the outcome of the case, Downs said. If the district prevails, the pay could be used to cover a portion of the missing Germantown money. The district also would seek restitution through the courts, he said.

The audit spans fiscal 2003-04 through February.

Principal Michael Silverman has assumed oversight of Germantown's finances, including the student activity fund.

In the Frankford case, Mantell said he requested the audit because he was concerned about the bookkeeping done by his former chief operations officer. That employee, whom he declined to name, went out on sick leave when he tried to pursue discipline against her, he said.

District officials declined to comment on Mantell's account.