RPS Recap: Feuds Pt 1
Happy Wednesday, Board Watchers! Today I’m chipping away at my backlog of Board meeting summaries with the first in a series about developing and/or escalating RPS Feuds.
This one is a doozie, and I have no idea what the fallout will be. But - as Dr Harris Muhammed says - “we’ve got to be comfortable with the uncomfortable, so… let’s get into it.
Feud #1 *Ding Ding*
Bus Drivers V. The Auditor
The Board hired an Auditor this Fall. The position had been vacant for over a year, ever since the last auditor falsely concluded that the RPS administration had purchased 20,000 extra chromebooks. Unfortunately for Mr Parker, the administration produced the receipts that disproved this mythical chromebook surplus theory. Turns out, all he’d really found was a poorly-maintained inventory management system.
The Internal Audit department had also been embarrassingly inefficient - only completing an average of one audit per year. (For reference, they should have been completing 8-11.)
All this to say, the post our new auditor - “Call me Doug” Graeff - inherited was a bit of a mess.
“The image and or perception of the IA [internal audit] department is deplorable.”Doug
Doug immediately went into clean-up mode. He spent his first weeks on the job (November) meeting with senior staff, flagging any notable irregularities, and compiling a “plan of audit engagements for 2024” for the Board’s audit committee to approve.
One irregularity on this list was the transportation department’s unusually high overtime expenses, which included an eye-popping $3M in unexpected payments made to bus drivers.
Doug found the problem immediately. Turns out, drivers weren’t punching out at the end of their shifts. They would work less than 8 hours, then go home and leave the meter running (so to speak).
3rd District’s Kenya Gibson explained the rationale this way:
”Ultimately, we have 8 hour drivers, but we’re not consistently providing them with 8 hours of work during a regular school day. If you’re contracted for 8 hours, then you’re going to make sure you get your 8 hours in… the bus drivers have done nothing wrong. They’ve just tried to get paid for the work that was promised.”
Except… this isn’t true. Drivers can work 8 hours in a day by driving after school routes. This brings us to problem number two…
It used to be really hard to find drivers, and harder still to find drivers willing to run after school routes. So the now-retired transportation director struck a deal. For every after school route you run, you’ll get paid 2 hours worth of overtime. (That’s 150% of their hourly rate.)
Unfortunately, these practices violate both federal and state law:
“Every employer… shall make, keep, and preserve such records of the persons employed by him and of the wages, hours, and other conditions and practices of employment maintained by him…” (Federal Labor Standards Act of 1938)
“…the Overtime Act obligates employers to pay one and one-half times an employee’s regular rate of pay for hours physically worked in excess of 40 in a workweek.” (Virginia Overtime Wage Act)
Falsifying timesheets to pay employees for hours they did not work is payroll fraud.
“Payroll fraud is when someone embezzles funds from a business utilizing the organization's payroll system. There are several methods wherein people can steal funds they are not entitled to, including falsified timesheets, issuing unauthorized bonuses and paying fictitious or terminated employees.” Source
Misrepresenting the hours worked as overtime to exploit higher pay rates is a form of “Employee Overtime Abuse” - and it plagues the federal and state governments, too.
“Abuse, while often present alongside fraud and waste, can itself cause substantial loss to the federal government. For example, the Veterans Affairs (VA) Office of Inspector General reported that potential abuse of overtime pay within one VA division cost the federal government as much as $23.8 million during fiscal years 2017 and 2018.” Government Accountability Office
All of this falls under the umbrella of “Embezzlement” which Virginia law defines as theft by an employee. These are scary words, and serious allegations.
“…if the amount of the loss to the [employer] is an excess of $200, they will be charged with felony embezzlement. Felony embezzlement is a theft crime that can carry a penalty up to 20 years in prison.“ (source)
Doug immediately alerted the Board and the administration of the driver’s misappropriation of public funds, which had already cost the division $1.2M since October - and would cost the division another $1M before the end of the year.
It’s important to note that nobody involved disputes these allegations. Not the drivers. Not the Board members you’ll see defending them. Instead, they employ the Beetlejuice strategy you’ve already seen above - Gibson repeatedly saying “the drivers have done nothing wrong” hoping that *poof* embezzlement will become legal - and rely on a series of justifications to defend the continued use of these illegal practices. Justifications like:
Dana Fox is a big meanie.
Chief Operating Officer Dana Fox oversees the transportation department. She took action right away, sending out a memo directing drivers to punch in and out at the end of their shift, and to only expect overtime payments after they’d worked 40 hours.
From now on, drivers are expected to follow division Policy 7-3.6 to the letter:
“Unless an emergency situation dictates otherwise, employees shall not work overtime without expressed, advance written approval from their building principals or department supervisors and/or the division superintendent or his/her designee. Using overtime on a continued basis for accomplishing regular services is prohibited.”
This memo drew immediate backlash from drivers and their union rep - who called Fox’s actions “unfair,” “unjust,” and “concerning.”
Gibson reads from the memo. She doesn’t point to any specific, inflammatory language, though. Just bad vibes.
”I read the memo - we see the memo - it emphasizes ‘all staff must clock in and clock out at the beginning of each shift, both AM and PM… I have to say that, reading the memo, the tone of this reads like the drivers are doing something that they should not have been doing. It’s as if they are stealing time, that’s how it reads.”
She says drivers were “offended that they had been told they were doing something wrong.” But, feeling like Dana Fox said “hey guys, you’ve been stealing $3M or whatever” (Gibson) doesn’t mean she did, no matter “how folks took it.”
Doug looked into the memo and found nothing inappropriate; Gibson “encourages the administration to apologize” anyway.
Policing the “tone” of Dana Fox’s memo spans two Board meetings and successfully distracts from what should have been a discussion about preventing and monitoring for further instances of payroll fraud.
The justifications continue. Gibson doesn’t think drivers should be shamed for participating in “an overtime practice that had been long standing.” In other words…
We’ve always done fraud!
I’m being glib, obviously, but I think this illustrates the absurdity of this comment.
I don’t doubt at all that drivers were taught to submit payroll this way, either from their former managers or from one another. But not knowing you were violating labor law is not a reason to continue violating labor law.
This is a victimless crime.
“If it’s gone on this long, it’s baked into the budget.” (Gibson)
Overtime overages are not baked into the budget. The division budgeted $13.2M for bus operator pay in FY23. When they counted up the receipts at the end of the year, the actual cost had exploded to $18.8M, at least $3M of which were *just* overtime payments.
This creates a strain on division resources. That $3M is taken away from other division priorities, and leaves considerably less money to invest in facilities upgrades, athletics programs, or additional educators to drive down class sizes and better distribute school workload.
Overtime abuse undermines the entire division experience for students and for staff. That’s why there is a lot of policy language to enforce “prudent stewardship of Commonwealth resources” - and to ensure government agencies like ours “[limit] overtime assignments to situations where it is necessary” There are also consequences for staff and management who do not:
“Employees who intentionally work unauthorized overtime may be subject to disciplinary action. Principals or supervisors who fail to prevent employees from working unauthorized overtime may also be subject to discipline.”
As far as justifications go, the last one is certainly the most sympathetic:
Drivers have come to depend on these funds.
Here’s some quick math:
Richmond Public Schools employs about 153 bus drivers.
If they’re receiving $2.2M - $3M in illegitimate overtime pay, that comes out to an extra $15,000-$20,000 per driver per year (pre-tax.)
That’s an extra $550 - $750 per paycheck; or $1,100-$1,500 a month.
This money has helped drivers cover the escalating costs of groceries, rent, childcare, etc; and, with a single memo, Dana Fox had ‘taken’ this money away. This upset several Board members:
“This can impact their salaries - their take home pay. $500 a month, $1000 a month. We’re talking about rent!” Gibson (4.8.24)
Dr Harris-Muhammed wants to know why the administration didn’t invite the drivers or their union representative to the table to discuss these considerable compensation changes. The transcript follows, but you’ll want to pop over and see the video for the full effect.
“[Drivers] have not been engaged - they have not been involved with the communication. I think that would help- I’m sorry, do you need me to clarify what I meant?”
Doug is a bit of a soft speaker, but he says yes, involved how?
“Sure. I’m not sure if the transportation team, the workers” - she lifts her hands and makes a steering wheel motion - “the people who drive the bus were actually in the room when these communications are being had. What I’m hearing is that they haven’t been…”
The simple explanation for this is that collective bargaining “does not include negotiation of items that are prohibited by federal and/or state law” and embezzlement of this magnitude is a felony.
If the shoe were on the other foot, and RPS had failed to pay a driver for $15,000 worth of work, they would “be found guilty of a [Class 6] felony and subject to a corresponding prison sentence.”
I assume Doug knows all of this, because he just sort of stands there, dumbfounded by the suggestion that RPS should have asked the driver’s union if they could pretty please address rampant employee theft.
This silence offends Dr HM. She is more animated when she continues:
“Talk to me. This is a call and response. I’m sharing with you as a school board member what has been shared with me. And some of these bus drivers - all of them are our constituency. And so if some of them have concerns about not being communicated with - we need to reflect and pivot accordingly. I didn’t say *you* had to do it, but they have to be involved in the communication. So I just want to say - I’m using an ‘I’ message - I’m not accusing you of anything. I’m not. And maybe I should have led with that. But we’ve got to be comfortable with the uncomfortable. That’s all I’m saying. How you’re looking at me, now I’m feeling some type of way, because I’m not accusing you of anything!”
Now, it is true that Doug had interrupted Dr HM to ask for clarity. He’d also interrupted other Board members throughout this discussion in order to provide clarity. This IS a misunderstanding of Board meeting protocol. Presenters are expected to ‘speak only when spoken to,’ or as directed by the Chair.
Dr HM’s escalated response seems to suggest Doug’s behavior read more like insubordination. She is encouraged by the crowd of drivers that filled the front seats of Board Chambers. They cheer her on and laugh heartily as she patronizes Doug.
I was floored. This Board had hired Doug to find waste and maximize efficiencies. He’d done that; now he was being ridiculed for it.
It was like watching the Tovar story all over again - the maligned Security Director who was forced to resign after being publicly debased and humiliated by the School Board a year ago: “I've never been treated so unprofessional in my life.”
Chair Rizzi and Vice Chair Doerr try to jump in a few times, offering Doug some back-up, and reminding their colleagues: The Board approved this audit, Doug kept them informed at every step, and he came prepared to answer all the Board’s questions tonight.
But their colleagues have made up their minds. They default to their usual no trust for the administration position. Doug and Dana were too hasty, the drivers had been wronged, and it is up to us to make it right.
Cheryl Burke motions to continue the old (fraudulent) overtime practice through the end of the fiscal year. No punch-out requirement. No 40 hour threshold to qualify for overtime pay.
Board leadership relents. Maybe they were motivated by driver sympathy too, maybe this was an extension of their earlier peacekeeping efforts, maybe it was a bit of both.
The motion passes unanimously.
The auditor, Chief Operating Officer, and Board attorney - who they never consulted on the matter, by the way - sit in disbelief.
It’s one thing to discover accidental or unwitting payroll fraud within your school division and move quickly and in good faith to correct the practice.
It’s another matter altogether that this elected body just knowingly perpetuated illegal practices that they were advised would cost the division another $1M before the end of the year.
The whole Board knowingly misappropriated a million taxpayer dollars.
I’m not a lawyer. I don’t know if they broke any laws to do this. But I do know that they broke their oath to ensure school division activities “are conducted according to law and with the utmost efficiency” (§ 22.1-79.2).
In theory, the courts could act on this. Virginia law gives them the authority to remove elected officials for misusing their office and demonstrating “incompetence in the performance of duties.” In which case, we could see the forfeiture of our entire School Board.
The entire School Board. It has been done before. (And for far less.)
Then what?
That would instantly destabilize an entire school division with 21,000 kids in it - including two of my own.
I guess we’ll find out soon enough. Auditors are mandatory reporters of fraud, so this story will find its way to the appropriate authorities eventually (if it hasn’t already.)
In the meantime, the Board’s battle for more school funding just got harder. They expect city council to award them an extra $25M this budget cycle, while simultaneously endorsing $3M in bus driver embezzlement, and making headlines for falling out of state compliance - which has jeopardized up to $15M in state funding.