001Okay, call the meeting to order and we will begin with the introduction of guests and I'm going to ask that you give your name and also your role. You just wind around. >> [snorts] >> High school director. >> Okay, welcome everyone. First item on the agenda, adopt the agenda with flexibility. Do I are there any adjustments to tonight's agenda? >> Okay, I hear a motion to approve the agenda as presented. >> Second. >> All right, we're going to move right on in. And for those of you that weren't here last month, we're actually operating on a new software system, so it gets a little interesting for some of us up here. All right, we're going to move right in to the administrative reports and I will open it up to board members for any questions.
002Okay, no questions and [snorts] I'll turn it over to the superintendent. Is there any additional information uh that you would need to share with your report? >> Um just that we finished up the school year and uh graduated a bunch of Wildcats. I'm so excited about that and it took a whole village to get them across the stage and hosted a Wildcat stadium. I couldn't have done it without my director for sure and high school principal orchestrating it all and community members like fire department and sheriff's office. So very appreciative of that. We've had some kids go to nationals and they have represented us very well with behavior and academics and all things. So, and just getting our next couple of weeks vacation start [laughter] >> starts right back up. >> Yes. And certainly uh
003congratulations Mr. Williams on another graduation getting those kids across. But I know it's a lot of moving parts. So, thank you. Wind or no wind, we figure out a way. So, uh, absolutely. You guys did a great job and and made it easy for us. So, thank you very much. Anything else from the superintendent? >> Okay, let's move right on into routine matters. We'll take items one through four as part of the consent agenda. Do I hear motion to approve as presented? So, >> move second. >> Okay. Any questions on any of those items? All right. Motion in a second. >> It's not. >> Did yours pop up? No. [laughter] Apparently, Do you want to just do a roll call? Is it >> So, they all voted yes. >> We all voted yes. Okay, there
004we go. Got a lot of new technology. All right, so it shows up as we all voted. Yes. >> Yes. [snorts] Okay, next item on the agenda, budget adjustments. I'll turn over the superintendent and the >> CFO. We have for this meeting three, budget adjustment request. One is for fun115, which is for our private schools. >> Oh, thank you. For our private schools. So that's the initial bar for that. The reason you see the offing decrease for Q4106 was it was all part of the same um unified application. So we're just moving that and then an increase bar per carryover award for fun 24189. >> Okay. Thank you. >> Questions from the board. >> Do I hear a motion to approve the bars as presented? So move. Okay. >> [snorts] >> Oh, okay. I see
005what I got. Okay. It's that little blue box that says show voting. Okay. This is all new. All new to us. Okay. All right. Is it complete? Okay, moving on to the next item, donations. President Maker, I would just like to thank um Lovington, the city of Lovington. They're just very giving. And then we also have HF Sinclair and Navajo refinery who um does huge donations to our robotics program. And you will see there the amount very generous and so we're very much appreciative of what our community does for us. >> Absolutely. >> All right. Thank you. Do I hear a motion to approve the donations as presented? >> So move I guess I'm mine. Oh, there it is. Okay. Did you get your vote at? Okay. Okay. We'll move into old business. First item
006is second reading to consider policy advisories 273 and 274. >> Yes ma'am. This is the second reading and uh advisory 273 is um addressing that we can uh we might require an employee to complete a medical exam and advisory 274 is just some changes changes to um misleading language potential misleading language for the Okay. Do I hear a motion to approve policy advisories 273 and 274 is presented? >> So move. >> I hear a second. Okay. Yay. Yay. Thank you. All right. Next item. Second reading. I'm really hating this new system. I'm trying to second reading to consider policy revisions to section G. >> Yes, ma'am. So, we are um working through section section G to make sure it aligns with our new 4-day calendar and that the language there within. >> So, nothing has
007changed from what you presented at last month. >> No, ma'am. Okay. >> All right. Any questions from the board? >> All right. Do I hear a motion to approve as presented? >> Some move. second. [snorts] >> Okay, we will now move into new business. First item is consider approval of the findings from the special audit. Madame President, members, so the board um as you are aware uh and I believe it was about a year and a half ago, two years ago, we began the journey and process of a special audit. Um I kind of stepped right in the middle of it. So I do appreciate Jag being so helpful with catching me up, Sean Beck from the state auditors, um Tony Ortiz, our um legal counsel. So through that we what you have is the
008report that has been written by JAG. It has been um approved by the state auditor. I believe they both have some notes and comments. So I will we're blessed to have the state auditor who's Joseph and he will give some comments. >> Good afternoon madam chairman members of the board. It's a honor to be here with you this afternoon. Uh my name is Joseph Mestasan, the the state auditor. Um before I get into my remarks, I just want to remind everyone that it's actually a requirement that I uh attend these public presentations of the state audits when I'm invited. And uh there's an old antiquated requirement that requires a state auditor to visit all 33 counties. So, um, I think we we did some damage today. Um, so I I I I want to recognize
009some of my staff that are here that were integral to this whole effort. Uh, behind me is, uh, Sean Beck. He's our special investigations division director. Uh, he handles all the anonymous intake of fraud, waste, and abuse complaints, and he is the office liaison for special audits such as these. Um I call him sheriff because he's all business. He's a serious guy. And then we also have uh David Pena. He is my policy director and PIO. Uh David is very experienced in legislative affairs uh and dealing with the media. So with that, uh Madam Chair, my remarks are going to be very brief. Um and then um Miss Haramo will follow with a more detailed presentation of the special audit. So, if I may, and I u to anyone that's online, hello. I I know
010your legal counsel, Tony, very well. She should be here in person, so uh you might want to dock him on that. Anyway, um we're [clears throat] here to talk about something uh fundamental to every family in Lovington. Uh how our schools public money is managed and how public trust is protected. And I know um I've been an elected official uh for over 20 years now and I also served my country for over 30 years in um federal civil service. And I took the oath of office. But in that oath, there's no mention of upholding the public's trust or assuming fiduciary responsibilities for taxpayer money. But guess what? When you all took that oath, it's embedded in there. It's silent, but it's very prominent. Um, and so that's what this is really all about. It's it's
011trying to uphold and preserve the public's trust and fulfill your fiduciary responsibilities. So, the Office of the State Auditor has a responsibility to look closely and act appropriately when concerns are raised about the misuse of public funds. In this case, we received allegations involving procurement contracting and a longstanding vendor relationship within the Lovington Municipal School District that led me to designate the district for a special audit. What is a special audit? It's a a process designed to investigate allegations, review documentation and processes, and establish facts. This process seeks to to determine whether systems intended to safeguard public money worked as they should have. This review looked at several years of activity specifically from 2017 until the end of 2024. What did it focus on? It focused on procurement and contracting practices, oversight of long-term technology
012vendor, documentation and internal controls, and how decisions were made, approved, and reported. Uh, this work was conducted by an independent forensic professionals using established auditing standards and state law. What did the audit find? The audit found significant and sustained weaknesses in oversight, documentation, and internal controls. These were not isolated issues, but were systemic. Specifically, the audit identified breakdowns in procurement practices and vendor oversight, incomplete or missing documentation supporting spending decisions, limited independent verification of work perform and cost build, weak contract management and fragmented records, and insufficient board visibility into recurring expenditures. The audit does show that over time a vendor relationship became deeply embedded in daily operations without a consistent reassessment of cost, competitiveness, or structure. When that happens, risk increases to the school district and to the appropriate use of public funds. Some of
013the findings were the report identified approximately 949,000 in questioned or insufficiently supported costs associated with labor and travel expenses. More than $500,000 in travel related expenses lacking adequate documentation. Almost $300,000 in labor charges lacking sufficient supporting documentation. more than $150,000 in differences between vendor reported amounts paid and district invoice records and more than $140,000 in labor discrepancies attributable to differences between invoiced labor hours and supporting documentation. The audit also found gaps in tax compliance. These are all indicators of weak systems that elevates the risk to public resources. The findings of this audit are important because public educ education depends on trust. Parents trust that resources are going to classrooms just as taxpayers trust that spending is accountable and employees trust that systems are fair and consistent. This trust is maintained through controls, transparency, and oversight.
014So, what happens next? When an audit identifies breakdowns like this, the governing body must take action to correct the problems to restore public trust. I commend the district for taking swift initial action in December 2024 to cease all operations with the vendor in question. And since then, you have all continued to implement a significant number of corrective actions to address compliance deficiencies, including strengthening oversight, improving documentation, and reassessing procurement practices. [snorts] That corrective work must continue to ensure ongoing accountability every day and every financial quarter. So, at the end of the day, this is about something very simple. Public money must be handled with care, and the systems that protect it must work consistently, transparently, and without exception. My office will continue to monitor this process closely, and will expect full cooperation, transparency, and follow
015through. The students, families, and taxpayers of Lovington deserve nothing less. Thank you. And I'd like to have um Audrey Hadil come up and if it's okay with you, Madam Chair, to begin a more detailed presentation of the audit. >> Thank you. >> Okay, we have a very good executive summary there already. I will not be going through the whole entire report page by page. Thank God. [laughter] We'd be here all night. Um, and you'll see a lot of sections, you know, to have a lot of detailed information and then some summary areas as well. Um, thank you for having it up on the screen for whoever is joining us online and I know each of you has a printed version. So, let's just start with the table of contents and we'll get familiar with uh
016the structure of the report here. So, first off, we have um an executive summary and then we go over the engagement objectives and scope of the engagement. Um this was agreed to by the district and the state auditor's office and then we were contracted and then performed the procedures obviously. Um and there's details on those procedures following. We make reference to the findings in this front part of the report and give some definitions of what is fraud, what is waste, what is abuse, you know, those types of things. Um, when dealing with taxpayer funds, like the auditor mentioned, it's just so important to have those strong controls and compliance over that. and I have sat where you all are um for eight years and I know how much the boards rely on administration and um
017it is a lot of trust but also verifying as well and you'll see later in the report um and one of the findings about the audit and finance committees and I think that the legislature um years ago recognized that there were additional checks and balances he needed needed. And it's not that this is this any administration is really going to intentionally do anything incorrectly, but just having those checks and balances between all of the the branches of government or the parts of the government and the operation is really helpful. So as you all go through corrective action, I would just encourage you to um really lean on the committees as well because they have a statutory duty. And then as board members, you all should feel free to ask for whatever you would like to
018look at and just keep your eyes open and um then you know maybe something like this uh wouldn't have have slipped past for so many years. Um we do dive into the detailed areas of risk and testing and those follow the scope of work exactly and then we have a conclusion part and then corrective actions that the district has taken already. Um then we have our exit conference page and our exhibits. So the exhibits are the schedule of findings and responses, the district or charts just for reference for any of the users in the public or anyone um wanting to see how things are structured within the district. We have our detailed testing of the district vendor payments and then just reference um manuals, one from peed's PAB and the other that's the district's business
019manual. So, if you all are in the future ever wondering how is finance supposed to do this or that, you can always refer to this. Um, it is online on the state auditor's website and I'm not positive if the district has put it on their website, but of course it's available through or or on the state auditor's website. Uh, this engagement I'm starting on page two. If we could scroll scroll to page two. Um we just do point out the standards that we performed the engagement under here [snorts] and the standards for forensic services um established by the AICPA which is the American Institute of Certified Public Accountants. Um I won't go too far into the executive summary since auditor did a great job with that already. Uh again the period on page three is
020covering uh July 1, 2017 through December 31st, 2024. We'll go to page five and there's a bullet point list that's also in the findings that we'll look at. Um, but that does identify some of the bigger picture discrepancies um and differences between what was charged to the district and and what we saw. On page seven, we have a chart that shows some of the timeline of actions. And I know it probably feels like this has been going on forever. [laughter] That might be an understatement, but um these things uh while they do take time are very healthy I think to actually open up the wound so to speak, dispel any rumors, um get the truth and really with DAG that is our goal is to provide truth and answers to government leaders and stakeholders and
021um just try to shed light on things that may be in question and say, "Okay, what really did happen?" Um we started our fieldwork I believe in May um to August of last year and then while all of the districts um and agencies across the state were working on their external auditors the vendor was pulling information and that continued into the winter. The district had a little bit remaining but it was mainly the vendor that we wanted to give every opportunity to provide as many documents as possible. And so that wrapped up roughly sometime in March and then we would provided the initial findings to the district in March and then the district scheduled um these meetings in in May and June respectively. So um it feels probably like a long time but we are
022through it and at the end of the process here and now you all have a road map for you know making any corrections. Uh, I just want to say we're happy to answer any questions um anytime. So, Superintendent, if something comes up or Curry, if you need anything at all, feel free to reach out to us in the future um as you go through this. And I know the audit committee will be very involved in um monitoring the corrective actions and reporting back to the board the progress of [clears throat] of the board as is their statutory duty. You can see on page nine um [snorts] some of the uh scope of work um on the page before we don't need to go there but we just had to identify and analyze the processes and
023procedures both official and unofficial of working with the vendor. And then on page nine you can see in the scope of work we looked at vendor procurement purchase orders and boycene signatures um the goods and services provided or performed and try to correlate all of those. Uh we looked at vendor licensing and insurance, the relationship which was longstanding, and then anything other that came up to our attention as far as documentation and risks. Pages 10 through 12 just go over some of our forensic procedures that we performed. Um I believe we have it in here, but I did want to add we also looked through some IT emails um to kind of determine the relationship again between district staff and the vendor and didn't see anything inappropriate there. Um and so for the findings, those
024are in exhibit one and let's jump to page 13 under definitions. And so there's a definition of fraud there and we did not note any fraud per se or misappropriation of assets. Um however we did see um items that could have been determined to be wasteful and um and services that provided that we could not uh prove out through the documentation that was available. So with waste um just it's important to remember that wasteful spending of taxpayer dollars doesn't have to be you know fraud per se and it doesn't have to be abuse of funds or abuse of position by somebody. Um, but it can relate to mismanagement or inadequate oversight. And I think that may be partially what occurred here. And it did seem a [clears throat] little fragmented is the word um that
025the auditor used. And I think that that's that is true with the documentation. Finance did a great job of having the purchase orders and the invoices. um it had some of the information but not all not all of the receiving information was retained and so that could have led to some of it also the statements of work uh the it had with the vendor and there were communications through email anyway it was a little fragmented right it was in different places so it did take a little while and the vendor did work very cooperatively to provide what they did have um and so there were many parts and pieces to the puzzle to put all of this together. But back to the definitions um waste and abuse are also areas to look out for uh
026not just fraud and the district will have to do you know make their own determination on that. We don't make conclusions on the guilt or innocence of any party. Of course, um but with some of the overcharges that it appeared to us, you know, your attorney can advise you on how to address those overcharges and um items without reporting documentation. So, okay, now jump past the definitions and we will go to page 17, please. And here we have a chart that lists um what we saw from the purchase orders, statements of work and invoice activity for these IT functions for the district through this vendor. The district paid the vendor a total of 6.1 million um 1.5 million or 25% was labor related. there um were travel costs of 8.3% um or 510,000 963,000 or
02715.7% in support and other services and then also goods were purchased through this vendor as well for approximately 2.2 2 million in supplies and materials and then software licenses also. And I think everyone knows, but I'll just say it for those who may not know that this vendor was procured um through a cooperative purchasing agreement um through Texas. We did do the work on that and determine that it is not illegal to do that by any means. It's acceptable to do that. Um it's just that it the it was never coming to the board for approval except on -ate and due to the longstanding nature of it we felt like for fair and open competition that periodically it would be a good idea for any government really to kind of check and see especially with
028these numbers of travel expenses. I know the vendor is coming from El Paso and so they were charging I think five hours um for travel even though sometimes it's only four hours and um you know things like that direct travel costs as well not just labor to where if you had a local vendor that did have the expertise hey at least give them the opportunity to bid. It doesn't mean you have to choose them but it means that you would at least see what's in the marketplace for open and fair competition. So while this didn't directly violate um the procurement code from a technical sense perhaps in you know um in a way you know the procurement code is all about best obtainable price and fair and open competition and so to get that best
029obtainable price how do you know for sure? Um, but the procurement that was used was a legal procure procurement vehicle I guess you could call it or a method. So I did want to add that too. Any questions on that part of it as far as the procurement goes? Okay, we go into a lot of detail on that in here, but I will skip past that. the district did not have um if you go to page 23 and we do note that there was not an overarching contract with the vendor. So while there were individual I think of them as task orders maybe you know like with an engineer or you know like task orders for things um that were reviewed and approved on the district side. There weren't final signed copies always by the
030vendors on their side. Um, and there wasn't an overarching contract with with the district that would kind of protect the district's interest, go through legal sufficiency review and and things like that. So, that was one thing that we definitely recommend [clears throat] to ensure. And remember that your finance committee by state statute is supposed to have oversight and accountability and oversight over procurement as well. So it's not just the board um it's also the finance committee by statute and and the CPO of course. On page 25 is the section that starts the discussion on the historical procurement and contracting practices. And I think uh you know this was the sense that we got from our interviews is that the working relationship with the vendor was very good and over time the vendor did know the
031district's operations and did know the district's infrastructure and it seemed to be a cohesive effective um and efficient relationship. Um again, we did see that there were discounts that were not applied that should have been um travel costs, the limited competitive reassessment that I mentioned, and then other concerns with um the number of hours charged that we weren't able to prove out that are shown in the report as well. I believe that that is why the relationship was so long longstanding is because of their history with the district. And of course, there's nothing wrong with having vendors supplement your operations. There's nothing wrong with that at all. It's just that there could have been stronger controls over checking um the charges, the invoices, and then bringing the procurement to the board as required. there was
032some concern that purchase orders were just kind of being used up um and then a new one would be open and so that would be something to keep an eye on for the future. [snorts] Okay, we'll skip to page 38. [clears throat] And this just shows the amounts of labor and the estimated GRT rate and the amount of penalty and interest in gross receipts tax that may have not been collected on the goods and services provided to the district. And we do agree of course that's the vendor's responsibility. Um, when invoices are reviewed though, uh, just for state compliance reasons, it's something that can be on the radar of AP in the future as they're looking at invoices and then they could follow up with a question. Hey, I noticed that, you know, GRT wasn't
033charged. [clears throat] So, I would guess that this may be um something that's referred to um to tax and tax and wear. On page 42, we know that the district finance files lacked the receiving reports or packing slips and delivery verification records, um, reconciliation documentation, infrastructure [snorts] maps or other supporting materials to independent We verified that goods build to the district had been received. We tried to do our best to verify that what was being build to the district was actually here and that was very very difficult um because without the engineering the district did pay for engineering but we didn't have maps of exactly where everything had been installed. So the statement of work would give a general area but it wasn't like we can go into walls and ceilings and you know find
034exactly which what had been installed when and where and by who. So um so it was very hard to prove out. Um we also did as much diligence as we could in proving out the software licenses but sometimes you know the scope of work went back to 17. So sometimes licenses have been replaced and the district didn't have a good centralized location of all those agreements and there is an accounting standard um gazby 96 on what's called submitas the subscription based IT arrangements and so those all have to be tracked very carefully and listed out and their terms and all of their you know so the district has some improvements to make there as well as with tagging which I believe had already started Um by the time of our field work the district have
035been making improvements on tagging asset and um as far as the the infrastructure I would just say that if you are using a vendor of this nature that ensuring that the district personnel know exactly as well what is put in where and then have good records of that um with the in with the I guess you could call network or infrastructure ming uh so that you know exactly that something was put in in 2020 and you know it's only going to last this long and that way they can project and and look at okay when is this going to need to be replaced again things like that and also for your capital assets because your capital asset records um may not actually be complete uh because we didn't see that all of this infrastructure that
036you were creating was put into your capital assets and depreciated over time, which is an accounting requirement under Gazby 34. So, oh, and then I just wanted to add on the um receiving reports um and speaking to it. I think they normally when they received a box of items, they would, you know, get it, check it off, but that wasn't always retained. And so, good audit trail and for finance to know, hey, we can go ahead and pay [snorts] this. Um, it's good to to have the proof of the receiving aspect of it because I know everyone trusts each other, but at the same time, it's good to, you know, make sure that some iPads didn't walk off or something, right? And those tags need to be there and everything. So, okay, we did verify
037um what the former former finance director had stated is the vendor did not have all of the requirements that they needed or copies here at the district anyway as far as insurance and um there wasn't a licensing requirement as far as an engineer because it engineering is different than an actual engineer. So that wasn't required. Um, but they also hadn't uh registered with DWS until all of this came up. Um, so we weren't really sure as far as um, well, we, let me put it this way, district wasn't sure. We verified that they weren't registered and that wage decisions weren't occurring through DWS during that time until the issue was brought up. until that issue was was questioned. We did also find during the course of our procedures that the background checks for the vendors
038staffing that were on site in schools were not performed. And so that is an area of improvement as well that the um district should make sure that any vendor that's working on site with um in proximity to children of course have their background checks. And on page 52, um, we did not identify any direct financial ownership interests, familial relationships, or anything like that prohibited under district policy or the governmental conduct act or nepotism arrangements or anything like that. But there were concerns um of the risk of you know kickbacks or or anything of that nature. And so that is where we went ahead and sent a confirmation to the vendor. And you can see what they checked off here in their response that the vendor stated that they and their employees, contractors or representatives did
039not subcontract or pay amounts, discounts, provide perks, training, travel, donations in kind, or any other benefits to any district employee, their family members or related businesses to a district employee. and then they did not receive anything back um from any district employee, their family members and door related businesses. Um some of you may be aware there's a special audit um in northern New Mexico that uh did have issues with this. So it it does happen and um it is something to to definitely look out for. Um but our engagement did not identify evidence to establish the existence of something like that happening. Um, I know that there were concerns about, oh, the district staff possibly, you know, Facebook friends or traveling or their families being friends or things like that. So, just always be aware
040of the appearance of any conflicts of interest, I suppose. Um, making sure that you have all of your governmental conduct act internal controls checked and that procurement is checking before they award contracts to those listed. um governmental conduct act forms that HR collects and connecting those dots between procurement, issuing contracts and then what you all collect as far as GCA compliance and and making sure you know because it could happen with you know um anyone not pick on the principal the principal's you know family member could have a a business and the principal's ordering something and you know So it it sometimes does happen where uh procurement does need to check for those types of relationships. Okay, think we will jump back to um corrective actions on page 63. in this section. These were things
041that we were aware of that the district had already begun to correct. They were following up with the vendor um implementing additional requirements. They stopped work at with the vendor when all this came about. Um they took a look at the Omnia purchasing arrangements and began reassessing things. So that continues on to page 64. Um other items that they did is is consulted legal counsel um just increased schoolboard awareness and began um looking at policies and procedures etc. On page 67 we have a summary of the findings and we'll just start going through them. Um the first finding is on page 68 and this one just discusses the long-term procurement practices limiting the competitive [snorts] market evaluation and created possible waste of public funds since the goods and services could have been obtained at a
042better obtainable price possibly. And um there was a lot of reliance on the vendor which again is not illegal or wrong per se. It's just that there needs to be additional checks and balances on those decisions. And the district does not maintain a central log of contracts and procurements to ensure that terms and conditions are met and that everything is going to the finance committee and the board. um as it should although I think they have started doing that since the scope of on page 72 we have our second finding and this is issues in connection with the expenditures um paid to the vendor and um so there's a chart here that has the breakout we did note some unsupported travel expenses and invoiced hours that were not adequately supported by the weekly status reports,
043the time reports. That was a pretty big undertaking is comparing the number of hours um between all of the invoices and this and the S. So, these WSRs, the weekly status reports, it was it was a lot to go through and we had a lot of followup with the vendor on that. But at the end of the day, we could not out 141,000 of the those hours and that's in exhibit 2. And then we did see estimated discounts of um approximately $85,000 that were required, but we didn't see the discount being taken by the vendor on the invoices. The missing receiving reports and packing lists were the total of approximately 2.2 million. Of course, it doesn't mean you didn't receive it. It just means that we didn't have the documents to prove that you had
044received it. There were, like I mentioned earlier, some unexecuted statements of work. Um, POS were pretty general in nature and didn't always have a lot of detail. and then the overarching executed contract needing to be there and then project acceptance forms are not completed. So when a project is completed, it's a good idea to go through check everything off, sign off, you know, make sure everything is on record, tagged, all of that. We mentioned the cabling maps on page 74. um the cabling maps and other infrastructure details um signoffs project management um there were a few some after the fact purchase orders and after the fact POS means they were issued subsequent to the commitment for goods or services and then we're unable to trace it capital asset purchases into the additions or capitalization in
045the capital assets listing um not including items under 5,000 which which total to about 3.2 million. So again something for the audit for this year is to make sure that your capital assets has all of the instructure infrastructure in it and that those assets are being depreciated. Okay. Page 78. Our third finding is on the board meeting minutes and quarterly financial information not posted on the district website. I know the district has um gone through some changes in the [clears throat] platform, right? And so that is something that I think contributed to that but um state statute does require us these items here to be on the website for transparency purposes and for the public. on page 81 um procurement methods and vendor contracts not presented for board of education approval and actually it would
046be to the finance committee as well but that is something the CPO needs to ensure that things are coming to the board by state statute the board does need to approve contracts um most districts and I can't recall yours offand right now but they do delegate a certain threshold of dollar amount of contracts and madam chair do you know the dollar amount >> 60,000 >> 60 for here okay so [clears throat] the superintendent is delegated the executive power by the board to go ahead and sign off on those contracts over 60 that is something that you can consider if you want to keep that way you can change it you can say just give us a report of what you signed off it is completely up to you um but you all the board the
047board, the executive power comes from the board that you delegate to the superintendent and so you can make policy changes at any time in relation to procurement threshold, what you want to see, what you don't want to see, those kinds of things. So just being an extra check and balance and it's not always um that anyone has intentions of doing something. It's just always always good to have the third set of eyes for sure. On page 83, we do have some recommendations for it and backup restore um testing. You hear about this all the time, but with ransomware, this is a very a very high-risk area. And so, we just encourage all of our clients that test your backups. I can't tell you how many times it when we go and they they will say,
048"Oh, yeah, yeah, we have our backups." But then when ransomware does happen, weeks, months, you know that they can't access their information and it really disrupts the operations of the entity. Um there are other environmental things um fire suppression systems, alarms, generators, um environmental monitoring and things like that uh that need to be improved and of and some obviously budget could be allocated there. Um, a strategic plan would be great as far as replacement and other strategic items the district wants to do. Um, tracking the software licenses, the maps, and there were some crossovers between IT functions and maintenance that weren't entirely clear to us, but that might just be something to look at with job descriptions and um, strategic planning. And the IT director used to have a low voltage license. It's not required
049by his job description, but we just this is just a recommendation. We thought it would be good to have somebody who is aware of that area checking a vendor and what they're doing and signing off on what they did was correct. Um tagging of the assets of course and then your asset listing. And I can get this information to you Carrie if you remind me. But there are a lot of fields that the MMA require. I mean everything from condition to the asset, the funding source of the asset if it was federal or state. Um many many many fields uh that are required in your asset listing. Um and then we didn't see disposal of capital assets in the minutes. So that was finding five on page 87. We have vendor registration, which I already
050talked about, and the district didn't have documentation demonstrating the vendor's compliance with the New Mexico prevailing wage requirements. If it applied, it may not have applied to everything this vendor was doing. Um, but certainly um construction and installation of things. On page 89 with GRT not assessed for services and page 91, vendor certificates of insurance not maintained. That's an easy fix, right? And 90 page 93, internal audit function not established. This one is a recommendation and it's I think outside the box for New Mexico and to where I think it's APS and I'm not sure how many other districts, probably not many, um, have an internal auditor. But with that being said, um, I don't think that that should hold you back from having an internal auditor. They normally pay for themselves. uh they identify
051um many risk areas and many areas of fraud, waste and abuse. And so if you all had a successful internal auditor, you could contract or have an employee. The higher education entities do have internal auditors and it is very very helpful. Um it's just that K12 for some reason just has not typically had one. But we do recommend it and they are great for um putting aside, you know, any rumors um any, you know, anything that comes up through a hotline, through a risk assessment, through a report, um just concerns the superintendent may have or the board may have hearing from the public. they can do targeted um little mini audits really throughout the year and then report directly to the board, but of course administratively to the superintendent um and in conjunction with the
052audit committee so that things can be addressed timely and that way um things are come to your attention quicker and are resolved more timely. And when you do have an internal auditor, they are the number two way that fraud is discovered. And so if there is fraud, um it's it's really really helpful to have an internal auditor because they have a much higher chance of catching it than an external auditor that only catches things about 4% of the time with a regular audit. on page 96. Um this relates to the IRS forms uh the W9 forms and for for this um we have um the district did obtain um or I'm sorry did issue the form 1099 for the fiscal year 2024. [snorts] Um, but the district, I mean, I'm sorry, the vendor did not
053need a 1099. And so there seemed to be uh a lack of controls over having those W9s on file. And on the W9, it'll say if it's a corporation and they can see if a 1099 needs to be issued or not. So that that was the piece of the puzzle that was missing in the district's records there. A pretty simple compliance fix. Page 99 is a finance and audit committee monitoring and oversight and the district has had these committees. Um, we noted it didn't always have the required numbers. Uh, but also they are this intended to be very strong monitoring and oversight forces for the district. And um they do sign now they do sign non-disclosure agreements to protect confidential information. And so we're just recommending and you can see on page 100 the that
054the um the statutes have a lot of requirements for these committees. So we're just encouraging that the district, you know, have an audit committee charter um and strengthen the checks and balances and oversight through these two committees like the legislature intended. on page 103 um formal risk assessment, identification, monitoring and corrective actions. This is a common um area of recommendation that the district um periodically sit down and take a look at internal controls, take a look at different risks. If you had an internal auditor, they would be doing this with you. Uh if you don't, it's something that the district would have to pick up maybe during strategic planning. But monitoring and oversight are requirements. Um we do refer on codes or 104 to KOSO and the integrated framework which is in another in another
055words called um green book and risk assessment is a very key part of your internal control cycle. On page 107, we're recommending the um fraud, non-compliance, waste and abuse anonymous reporting tools or a tip hotline. You can use the state auditors on their website, but tips are the number one way that Broadway's movements are identified. And page 109, internal controls over compliance with the Governmental Conduct Act. And that's what I had mentioned earlier just making sure that those disclosure forms are checked during procurement and governmental conduct act is a lot more than just um moonlighting as far as employees have to disclose in writing you know their other their outside employment. It also covers things like honoraria for speaking engagements. It covers um political activities that are prohibited, things like that. So, it's a good
056one to to really review and be familiar with. And page 112, we're recommending that the employee handbook and training should be strengthened to address ethical conduct and conflict of interest expectations. And this is just a best practice or a recommendation. But I did want to add that um our state audit act and audit rule require us to put even recommendations as findings. So if there's something that we do see while we're performing work, [snorts] we do have to add it in as a finding. And usually they're classified as other matters. And then For this, we are recommending that anyone who is um allowing their signature to be used on checks or other documents that they review what they're allowing their signature to be used on um and give their blessing for their signature to be
057used, right? Because otherwise, what is the point of an internal control of a check if it's just printed out? anybody, not anyone, but people can print them and then you're not the one actually signing them. I mean, I do know governmental entities that the board members who are the signitories, um, usually there's at least one, but they will they will come in and sit down and review every single voucher packet and sign the check. Well, that may not be realistic, right? But at least at a very minimum, I would think that finance could provide a check run um with the details and then if there were any questions by that person who's signing, they could follow up with questions. And really, it's just to prevent any auto pen type of things. I mean, checks are
058legal tenders. They're a legal instrument. Um and it should really be informed consent as to what they're signing. So, okay. uh page 118 and is I believe our last finding and vendor employee background checks um on site uh work at school facilities. And so this is um definitely an area of risk that we we happen to notice uh for not having those background checks performed for the vendor since they were on campuses. Okay, so that is the findings and then I just want to point out the long schedule that starts on page 124 and it's the landscape version. And this just has all of the details of um voucher numbers and the dates paid for all of these different fiscal years for the vendor. And so if you're curious about any of that, that's what
059the invoice totals up to on um page 130. 6.1 million roughly. And then there's the two reference um guides in the back. And that's the end of the report. So I'll be happy to There any questions for you? Any comments? Scott, can you think of any other comments we need to add here? Anything on your mind? >> Just report it home tonight. [laughter] >> Fall asleep. No. >> Superintendent, anything I can any comments? >> Okay. >> Questions from the board? Um I do want to thank the team for their patience and um everyone's cooperation and patience uh while we collected everything from the vendor and made it through the testing. So um been great to work with. Very good. Thank you. Thank you, Audrey. Before I take a motion to approve this, I will read
060a statement on behalf of the board. The Lovington Municipal Schools Board of Education takes their job of ensuring the appropriate use of public funds to support the education of all students very seriously. It should be noted that the district selfreported this issue and upon that action the superintendent immediately ordered all work with this vendor to be ceased pending the completion of this investigation as well as notifying the board. This process has been a long and sometimes uncomfortable one. However, we are appreciative of the feedback and support that has been given to the district regarding this matter. Moving forward, we have already begun implementing several of the recommendations and will continue to assess, monitor, and adjust if necessary all components of our procedures in order to continue to utilize all dollars for the school district in
061the most efficient and effective manner. And so with that, do I hear a motion to approve the findings of the special? >> Second. >> Okay. Okay, thank you. We'll move forward with the meeting and you all are welcome to stay or if you need to hit the road to Roswell, whatever, whatever works for you all. So again, thank you. All right, we're going to move right on in to the next item. Consider approval for the open meetings notice. I'll turn it over to the superintendent. >> Um, just this is an annual thing we do and so just want to keep it on Mondays at 5:00 if that's okay with you guys. The second Monday of the month. >> Okay. Any comments from the board? >> All right. Hearing none. Do I hear a motion to
062approve the open meetings act notice as presented? Second. All right. Next item. Consider approval for removal of statedated stale dated I'm sorry Carrie. Sorry about that. staledated checks over one year. M president, members of the board, um every year we are required to look at any checks that were over a year old. So what you're seeing are any checks that are dated prior to June 30th of 2025. And uh we have reached out to some of those. I will reach out one more time. Uh as you see, there was only one that was over $400. And that one we actually believe they've been der was bought by another company. So, it was probably the rest you can think like $40, $50. So, I'm just asking your approval to remove those from our GL and get
063those off our books. All right. Thank you, Carrie. Questions from the board? Hearing none. Do I hear a motion to approve the stale dated checks as presented? So, move second. Is it working? >> She's in a different view. >> Okay. And I'd say any of those that you just need to verbal with Vanessa, that's fine. Okay. Thank you, Petty. >> All right. >> Next item. Consider approval of Honeywell service agreement addendum. >> Yes, ma'am. So, you guys have that um in your well, not packet, but on your computer screens. And u I'll stand for any questions. Mr. Van Hooser is not here tonight, but it's just the contract through um June of 2027. >> All right. Questions from the board. >> I'm answering our attorney just so y'all know. >> Are we deducting the firearm?
064>> Because um Honeywell is we need to go with a different company. That's not something in the unit. That's correct. So, we just need to update what we've been doing. >> Uh, we are looking into it. Chris, >> they said they were looking into a new company. Okay. Any other questions? Okay. Do I hear a motion to approve the Honey Well service agreement addendum as presented? Okay. Next item. Consider approval of school improvement and transformation grant. I will turn this over to Miss Stevens who has been helping us uh write this grant. That's one of her responsibilities. So, so this grant falls under title one um school improvement grant and the reason for the grant is the status of the MRI grad status of New Hope High School. Um the monies are set aside for
065school improvement staffing, those sorts of things specific to New Hope High School. Um, currently for the 2627 school year, we're looking at an award of $200,000. Um, we are looking to use that that funding for professional development for those teachers as well as um consideration for a night school credit recovery model. Um, we sat down with Miss Hudgins, Mr. Mes, Dr. Parker, Miss Q and I uh looking at dates. It looks like we're going to offer two six week sessions where students could um earn up to three credit hours um using egenuity accelerated coming in guided with teachers um and an administrator to oversee that. And so we're looking at um using some of the funding for that purpose as well. >> The population of New Hope High School is unique in that they're trying
066to obtain credits rapidly. So it looks a little than Lington High School. And so we're hoping that the night school will offer that opportunity for those students most at risk. >> So up to three credit hours, >> three and then three in the spring. >> They would have they would go so one session would go like from 5 to 6:30. Another session would go from 7 to 8:30 and then the potential on a third night so that we would have um the opportunity for them to do it. So, and it aligns with how long like an egeneuity course uh takes to complete the number of hours that a student would have to work through it. So, we did all the mapping on that and came up with that kind of format. So, >> other questions
067for Stephanie? Oh, I'm sorry, Stephanie. >> Sorry. We would um we would compensate those teachers at our standard rate of additional hours. So just like we do summer school, just like we do tutoring, just that that same rate for consistency. And there um is a document that's uploaded for you and um an assurance that will need to be signed ensuring that we as an LEA and you as a board will adhere to the title one expectations for using those funs. Um oversight of those funds and those documents have to be uploaded before the grants can be approved and we have it until the end of months. >> So this is not considered a reorganization. Correct. >> Okay. >> Correct. >> Okay. would be more supplemental >> adding the night class >> for the school because
068of the status that they've been designated by the peed. So this is our last chance. This is our last hope. Any other questions? >> Okay, hearing none. Do I hear a motion to approve the school improvement? Thank you, Stephanie. Uh, improvement and transformation grant as presented tonight. >> So move. >> I'll second. >> Okay. Final item on our public portion of the meeting tonight is public comment time. At this time, is there anyone here to speak for public comment? Okay, hearing none, we will this will conclude at this time uh the open portion of our meeting and pursuant to section 10-15-1 and MSA1 1978. We will convene to executive session following a roll call. Do I hear a motion to move into executive session? >> Yes. Yes, ma'am. >> Yes. All right. Thank you everyone.
069We're going to take a fivem minute recess.