NEW CASTLE Auditor questions school board trip

The district is relieving the assistant superintendent of travel responsibilities.
By LAURE CIOFFI
VINDICATOR NEW CASTLE BUREAU
NEW CASTLE, Pa. -- State Auditor General Robert Casey Jr. reports that a trip by four New Castle Area school district officials to New Orleans for a national education conference in 2002 appears to have been a misuse of district funds and resources.
Investigators in a 19-page report said that they could not verify that the assistant superintendent and three board members attended conference programs and that hotel rooms were complimentary for the officials and their guests, contingent on their gambling at Harrah's Casino.
The investigation also revealed the assistant superintendent's failure to disclose personal financial interests.
Casey made several recommendations to help the district avoid future improprieties.
Casey's investigation revealed the school board members attendance at a New Orleans education conference cannot be verified because the school district failed to register or to pay registration fees.
School board members told investigators they discovered they were not registered after they arrived at the conference. They contend they attended some conference speeches.
Travel arrangements for the school board members were made through a travel company affiliated with Harrah's Casinos.
The assistant superintendent, Nick DeRosa, who has been a customer of the travel company for six years, arranged a deal whereby the school representatives and their guests would be provided with complimentary hotel rooms if gambling at Harrah's in New Orleans could be guaranteed, according to Casey's report.
Casino records and interviews with the board members and the assistant superintendent confirmed all four individuals visited the casino during their stay in New Orleans.
Investigators found no evidence of a financial loss to the district based on the free hotel rooms. However, the district officials were reimbursed a total of $1,076 for meals and miscellaneous expenses.
Because their attendance at conference programs and events cannot be verified, Casey recommended the officials return to the district any reimbursements for the trip.
Casey said payment for the rooms being linked to the assistant superintendent's arrangement with the travel company could be viewed as a violation of the Public School Code's prohibition of gifts or donations to school board members from a school district employee.
Food for profit
Casey's investigators also found the assistant superintendent failed to report his interest in a real estate company and a local New Castle restaurant on forms filed with the State Ethics Commission.
In late 2001, the assistant superintendent bought boxed lunches from the district food service department and had them delivered to his restaurant without authorization or approval by the school board.
According to the assistant superintendent and the food services department director (who reports to the assistant superintendent), the arrangement was temporary until the restaurant hired a caterer. They said the food was delivered by school staff in a school vehicle and the amount charged per lunch was more than double the amount charged by the district for sales of food to other organizations.
The arrangement violated the Public School Code provision that school cafeterias sell food only to pupils, teachers, and cafeteria employees and raises questions of sales tax collection and conflict of interest, Casey said.
School officials noted that they were unaware of the food service arrangement until they received Casey's report, but pledged to adopt a policy concerning the sale of district food to outside entities.
Casey forwarded a copy of the report to the State Ethics Commission.
Increased oversight
The investigators said the overall record of the assistant superintendent regarding travel arrangements and expenses requires increased oversight on the part of the district.
In 1996, the Department of the Auditor General released a routine audit report that linked the assistant superintendent to questionable trips and expenses and, in 2001, his arrangement of personal travel plans to a conference in Las Vegas caused the district to incur more than $230 in unnecessary costs.
District officials said the assistant superintendent would no longer be responsible for travel arrangements and attendance at conferences or other school board or district functions.
The investigation was prompted by a complaint received by the Department of the Auditor General concerning the district's participation in the NSBA conference.
The department's Office of Special Investigations reviewed district participation in this event, interviewed school board members, district officials, and vendors and organizations doing business with the district, and reviewed the district's financial and business records.