Okay, good morning. I think we'll go ahead and start the meeting. Uh, Joyce, if you do the roll call, please. >> Dave Tally, >> here. >> Mark Bmaster. >> Doin, >> here. >> Michael Dixon, >> here.
Darina Bowerman >> here. >> Leandre Camel >> here. >> Frank Barbieri >> here. >> We have quorum. >> We've got the whole group here this morning. Thank you all for coming. I appreciate it.
Okay, then we'll do introductions. Patricia, we'll start with you as always, please. >> Good morning. Patricia Morales from the Office of General Counsel. >> Heather Frederick, chief financial officer. Alyssa Davin, audit committee.
>> Joseph Sanchez, chief operating officer. >> Supervisor of audit. >> Before we get to you, we'll take the people in the back, please. >> Good morning. Dave Dolan, chief of facilities management. >> Okay, now you're up. Bob Bliss, Office
of Inspector General, Randy, Inspector General's Office. Tracy Shear, Inspector General's Office. >> Dave Tally, Audit Committee. >> Terresa Michael, Inspector General. >> Carrie High, Council Inspector General. >> Joyce Edison, Executive Assistant at IG.
>> Christina Daniels, Inspector General's Office. >> Barbary, audit. >> Michael Dixon, audit committee. >> DeAndre Campbell, audit committee. >> Mark, audit committee. >> Darina Bowererman, audit committee.
Brett Freeman, partner RSM. >> And who do we have online? >> Gloria Bryant, school board member, >> Alison Castellano, principal of Spanish River. >> Burke, chief operating office. >> Okay, guess that's it.
>> Well, also Rob Rob Brolene, uh, partner with and Ingram. >> All right. >> And Holly Han, Office of the General Counsel. >> If not, welcome. Uh, I'll accept a motion. Are there any additions or deletions to the agenda?
>> None. >> Okay. >> Excuse me. Excuse me, Mr. Chair. Um, for the agenda, um, are we going to comment at all on the communication from Monday to bring us up to date other than what was emailed to us? Just a comment.
>> Yes, I will. >> But okay. Where is that on here? >> I'll be under the IG comments. Yes. >> Thank you. Thank you. >> Accept a motion to approve the agenda. >> I'll approve the agenda. I'll make a second. >> All in favor? All oppose? Passes 70. Uh
take a minute if you will and review the minutes of the September 19th meeting. And after you've had a chance to review it, I'll accept the motion and a second to approve. >> Leandre offer that motion to accept the minutes as presented. >> I'll second.
>> Any discussion? All in favor? All opposed? Passes 70. Public comments hearing none. Now we'll move to the inspector general report. Terry, >> good morning. Before I start, I do want
to introduce our newest IG employee. We have a new audit supervisor, Diana Garza. We like to welcome her. Um, Diane is a CPA, so we we have a CPA now on staff. Uh, she has over 20 years working with the AG's office and and she was, I
believe, a supervisor over at the AG's office. And as we all know, the auditor general's office produces some excellent auditors and working I think two years or is it two years here at the school district. Um, we kind of stole her from
Miss Frederick's and and I apologize very very much for that, but she's good. So, uh, but we'd like to welcome and if you'd like to say a few words. I don't want to put you on the spot too much. She's looking at me like really my first day. >> All right. Thank you very much. Um,
>> welcome. over the um we've been we've been working on a lot of uh policies within the IG's office uh that I think the whole school district is updating their policies and um as the policies go
through the different processes you know we bring it here goes to workshop and then it goes to the board um and then I believe it comes back two two or three times to the board for actual votes. Um the audit committee uh policy was pulled
um not the last meeting, the previous one with some questions about the jurisdiction or scope of the audit committee and where we fell. And I wanted to make sure and to reassure um the audit committee that the recommendations and the and the issues
that we've brought forward are in line with what IG's do and they're also in line with what auditors do. And to make sure that I addressed everything and I did it very concisely, I went to YouTube, had YouTube do a uh transcript
of the discussion. I then took that transcript, plugged it into chat GPT, which is my new best friend. If it was in college, my grades would have improved a lot better, and asked general questions about is are we stepping out of bounds? Are we um doing overreach?
Are we reaching into areas that we shouldn't be? And are, you know, basically getting a second opinion on the things that we proposed. and chat GPT did an excellent job as it always does and went through and stated that
the the changes that we are putting in about unrestricted access to records um about uh looking at safety and security or the issues I believe there was another one on on immediate access to different information was all in line
with not only the association of inspector general um Florida statutes the Florida Department of Education uh requirements as well as the um government accounting and audibility uh government accounting office
requirements and they gave all the links and they gave an overview of that we're in line. So I just wanted to reassure everybody I'm not trying to step out of line. I'm definitely not trying to put the audit committee in any type of a
position. Um, the access to records that we were requesting is strictly for my staff. It's not for anybody here. The the people here don't direct or do audits or investigations. One of the reasons why we use the word
IG staff and not auditors, investigators, is because number one, we have different people with different titles. I have intake people that need records. I've got um contract review specialists that need records. So to put down every single title and when titles
change quite often it we would be changing our policy all the time. But I want if anybody has any questions or any concerns that I am I am trying to move the audit committee or trying to give you all um bad advice. I mean I really I
mean I've been doing this for 29 years. Um I do make mistakes but I do I am familiar with what IGS do. And if you have any questions or any concerns, I just want you to to please ask me. >> I don't have concerns about what is the
context of what we're talking about. It was pulled. >> Yes, >> it was pulled. >> Yes. >> Two board meetings ago. >> Yes. >> Was it brought back with an explanation? How's that work? How prelim procedurally? Help me understand.
>> So, um, there was some concerns about it. So, it was pulled from the consent agenda. It was discussed. It was voted on and it passed. Um 61 in favor. So, it goes to the next reading. Um it could be pulled again. I don't know. So, I don't
know if it's it's not fin it's not finalized until it's adopted. Um but I just wanted to to reassure. >> Thank you, Michael. I' I'd like to uh I'd like to ask uh Miss Branch a question. uh I listened to the uh that
former uh meeting and it appears you have concerns about the jurisdiction of the audit committee and I'd like for you to share with the committee briefly what your concerns if any you have about the audit committee in terms of what we are or are not doing.
>> Thank you Mr. Tally. Um Miss I got my questions answered. Um, but as far as really security of why IG would be over, that was my question. And it seems like in talking with a lot of people that the
IG was trying to um not really over set the boundaries, but why would they be have security in that um policy? Well, >> I think Carrie answered those questions,
did he not? Yes, but I still don't agree with it being in the policy. So, that's why I voted against it. >> But, but specifically, I'm asking now about our committee. Uh, you seem to to think that we might have overstepped our
boundaries somehow, and I'd just like to have you share with the committee >> what you think we are doing or not doing that we shouldn't be. I'm just a little disturbed. >> For me, I look at it as fraud, waste, and an investigation. So, it's hard for me to understand why security would be
in there. >> All right. Fine. Okay. Whatever. Okay. Fine. >> All right. Thank you, >> Mr. Chair. Leandre here. One question. You say it goes from a procedural space. It goes for one vote and then it comes
back. >> So, how does Basically, we have one more reading. There's there's two readings. >> Two readings. >> Yeah. Two readings. So, we we made it through the first reading. There's a second reading coming up. I believe it's November the 5th. It might be November 19th. One of the two. We have four different policies, >> but it's going to be on consent.
>> Yes. >> And is there any reason that it'll come off this time now that all questions have been answered? >> I can't speak to that. I I won't know until the the vote is held, but the board members have the discretion as well as the superintendent to to remove items if they
>> But as of right now, you don't see an issue with it? >> Not that I'm aware of. >> Thank you. Right, that's it for me. Um, I do want to thank everybody for being here. This I this is a packed crowd and uh hopefully we'll keep everything moving for you because I
know all of your time is very important. But thank you all for taking the time to be here. >> Okay, thank you Terry. Moving right along, we'll go to item five, the audit of the transportation services for ES students. Who's going to
present that? That is a she's the auditor for this project. >> You need to use your microphone. >> Good morning. Good morning everyone. I'm going to review the audit of transportation services for special
needs students. >> Basically, the background of this audit is schoolboard policy 2.23 23 and it basically states that students with disabilities are eligible for district transportation services. Uh students
must have an IEP plan on file and um be identified as having a disability within section 504 and transportation services. these specific um statistics. Uh we received this information from
transportation services and also um the profile on um uh Florida uh DOE. So it basically says the number of students that are transported on a whole the uh ESSE students and then also uh we broke
it down further for the two vendors that uh we have contract the district has contracted for those services. So the important part here is because this is an audit of a contract, we're going to focus on the ever driven and the med aid
down at the bottom and the number of students they are transporting. So if we look at FY21, there was just a few 39 and 25 for a total of 64 students transported to uh FY24
which is now 473 students that were transported under this contract. Okay, the purchase contract uh number 21 C13A, it was signed in October 2020. The
contract was for three years within uh two additional years of extension. The objective of this audit was student safety requirements and billing accuracy.
The first conclusion that I have is 12 vendor 12 employees of the two vendors did not have the required satisfactory background screening. What that looks like is they uh the
district does a background screening and they are provided with a um identification badge that they should be wearing when they are um on any of the district campuses and transporting students. So, one of the uh drivers, she
was actively driving during the on-site observation. She had a a felony record on file. um and then two other drivers did not um have the background screening at all. Then when we went to review the
attendants, which are the vendor employees that are actually sitting with the students in the back of the vehicles, uh nine of them could not be identified either by their name or their social security number.
uh the OIG went out um it was a collective effort and we went out to 12 schools on November 12th and then four months later we went out to 11 schools and we sampled the drivers of this uh
contracted services. So if you look at the chart, Foreverdriven is one of the uh companies, Med Aid is the other company and these are the numbers of um students they were transporting during
the two on-site observations. Okay, so the conclusions for the first observation showed that 17% of the vendor employees did not have a vendor identification badge. So that means that they were driving students and they
could not produce their badge. And we we also broke it down by each specific company but for a total of nine uh employees. Then we also found that 52% of Everdriven specifically employees were
unable to communicate fluently in English. Uh that is actually one of the requirements of the contract and based on our observation during that that particular visit they were not able to
communicate effectively. Another area we tested was uh whether they were dressed in a logoed uniform that as required by the uh contract and we found that 28 of the employees were
28% excuse me 28% of the uh 53 employees that we tested were not uh in a logoed uniform. Okay, this is basically a summary of our
on-site uh observations and um let me just go here. So, it basically covers all of the thing all the different areas of the observation. Sorry.
And if you need any further uh details on that, you can find that on page eight in the draft report. So, moving on to conclusion three, uh we noticed that we tested 34 sample
students to determine if they had an IEP plan on file. And did the IEP plan uh state that these students needed to have uh contracted services for transportation? And we did find one that
um it was not noted in the file and we followed up with the department and um we just noted it as a conclusion to uh remind them to make sure that that needs to be documented in the um students
record. Conclusion four, uh we noticed that there was an increase in bus drivers without the corresponding decrease in student transported by the vendors. So if you go down um this table shows
the number of school bus drivers. So we have a total of um let's say for FY22 a total of 681 positions and there was a vacancy of 225
bus driver positions. When we got over to FY25 that number decreased significantly to only 82 open positions. However, when we look at the dollar
values of the transportation services, it increased not decrease. So, if you follow me with FY22, there were 225 open positions. And we can see that 120 uh students were transported by
the vendors for a total of 4,52 um 4,52,74. That was the cost of the services. And when we get over to FY24, we see that there is 473 students being transported for a total
of 13,710,926. However, we see that the open um the vacant positions have decreased. Conclusion number five shows that there was 80,000 no show cancelled trip fees.
We did a sample of just three months of invoicing from January, September, and November of 2024 and that showed 400 46,00 trips.
4% of those trips which equal 2016 were for no shows or cancelled trips. Therefore, the no-shows accounted for in in in dollars 180 106 um which is for
almost 5% of the total. So I'm going to say that just one more time because it's a lot of numbers there. uh we reviewed three months of services uh for the trips. So both the vendors for a total of 46,58
student trips and with that 2016 of the trips were cancelled or no shows. What that looks like is that the drivers went out to the location and there wasn't a student to be picked up and
transported to their campus. Okay. Um I also want to add that Med Aid uh when there is a no show they bill the district for 50% of the cost of the trip. ever driven bills 100% which is
the full price of the trip for a no-show or a cancel. So the 50% and the 100% is how we are seeing that it can cost $180,000 just for three months of no shows.
Okay. We also discovered that there was um one particular invoice uh med the company Medaid bills um in a PDF format not like a electronic excel format. So, um
we calculated each particular invoice and that invoice displayed two uh payments for um $4,960 in overp payments. Okay. Conclusion number six uh is to do
with the capital maintenance funds are being used to fund transportation services. A and as you can see uh for the two vendors in this particular contract that uh we audited in FY2020 it was almost $2
million worth of capital maintenance funds being used to transport the students. And by FY 2024, it's almost $14 million of capital maintenance funds being used to transport
uh the students, which is a huge increase as well. Okay. Uh for conclusion six, we also want to note that uh Florida statute uh states that um
there are some stipulations to be able to use the capital maintenance funds for uh such transportation services. And um when we looked at the statute, the district didn't meet all four components
of this section to be able to use the capital maintenance funds. >> Okay. So, do we have any questions? >> Any questions, >> comments?
>> Sorry, I don't have um the The vendors are they using their own vehicles or are they using the district's vehicles? >> They are using their own vehicles. >> Okay. And then the large increase that
that happened starting what is it in the 23 this what what was the main cause of the large increase in cost? They were just transport. They were transporting more
students. >> Okay. So, we have the uh department here today. If maybe they can discuss the large increase in use. >> Yeah, man. I think everybody's aware that there's still a national shortage
of bus drivers. So, um that's that's the primary reason because there's a lack of bus drivers and we had to move some students to uh private transportation. >> Okay. So, so those years it was just more of the you didn't have the in-house to do the transportation so it was subbed out to the to the vendors.
>> Okay, that's all I have. >> Any other questions or comments? >> I have one or two. We've done the um how did this come to the light of the
IG's office? What what caused this get a look into this one? Okay. So, I believe a um complaint came through the investigations department about uh one of the vendors and the services that
were provided and uh that was one part of it. And when we started looking into the complaint, there were some other things to consider. Um also for safety measures, we wanted to ensure that we were um auditing uh some of the safety
concerns of the district. >> Okay. Thank you. Um just two more. The in the contract is the contract for personnel cost and operation cost um with each of the companies ever driven
in Medaida is it? So, because I'm I'm really trying to boil it down to what is the per student cost or is there cost savings from using um internal versus exter external for
transportation purposes? >> I mean, I can speak to it from a financial perspective. Mr. Sanchez can speak to it from an operational perspective. It is never going to be eliminated. I mean, so we we have to understand that we have students that are so medically
fragile that they're transported to school in a medical bed, you know, so it the that's never going to go away. Um I know because of our staffing challenges, uh that was also um compounded because of the pandemic. uh there were just
significant challenges during that time period that contracted transportation was the only option that we had in order to get the students to school, you know, which is a state mandate. Um so it does there there is a premium. It does cost
more. Um but we did have such a um a savings within the laps uh with our vacant positions. And when you look at the uh the numbers that were provided, it goes back to 2022, I believe. But you really have to go back prior pre-
pandemic to see what our staffing was prior to that. And I do have a pretty long I, you know, I like short responses. This is one of my longest responses I think I've had in an audit report because I felt like it really needed to have an explanation as to how we got where we are. Um, and that
transportation is working very hard in order to because it is very complex to now shift as many students as they can back to regular yellow bus transportation, but it's not an easy process and it's not something that can be done just over several months. Um and
so that we've had enough money within the lap salary um within which also includes overtime as well in order to cover that that overage that we've been paying uh for uh the contracted transportation and then Mr. Sanchez can speak to the the operational challenges.
>> I think you covered 99% of it. So but but yeah, you're right. It's it's um it's complicated, put it that way, to uh to try to what we try to do is maximize the number of students on on the um regular yellow buses, right? So most yellow buses can
hold, you know, 70 kids, 80 kids, right? Depending on how big the kids are. Um but so you want to so so the the optimal way of maximizing the utilization of those those buses is put as many um general education students on those
buses as possible and then allowing the private transportation and companies to handle the one or twos you know the individual ones um and it's not just ESC it's also uh we have a number of um McKinley Vento homeless students and and foster students as well so they're
they're also transporting those students and some of of them can live in Bokeh and go to school in Jupiter because they have the right to go to whatever schools that they were originally going to despite where they where they're currently living. So, um it's like I said, it's a complicated formula try to
to try to maximize and make it most efficient. Thank you. The um other component other question is your bus drivers increase and it's more contract management and I guess my
question is more to that. How is that handled internally from the school board side with the contract management watching those numbers? So, is someone watching that to so it won't get out of
hand because it appears that some things just kind of like got through the crack? >> Yes. I mean, we from a from the finance division um we monitor and and probably more than Mr. Searchwell appreciates because he's dealing with the
operational challenges and he has to make sure that these students um get to school. We need to ensure that we have enough funds. Um, so what my department was always making sure is that we had enough within our lap salary in order to cover the additional costs that we were
seeing within the the contracted transportation. >> Okay. All right. Thank you. >> Oh, okay. Allison, did you have a question? I was just wondering um my issue was the
amount of waste um when there was a no-show and I was just wondering if the district would look at um trying to speak to that other vendor and see if they too would allow just the 50%
cancellation fee type knowing that they went to pick the child up the child wasn't there. Obviously, sometimes kids are sick or, you know, they're not able to be picked up, which is understandable. They've already paid that person to work that day, but I'm just wondering if if there's any work
that could be done to try to get the Evergreen Company to agree to that, if not, you know, 50% at least 75 to do some kind of um cost savings in that area. I know that it's probably limited with vendors that do private
transportation as well. um that I just I don't like to see that kind of waste, which I'm sure all of you are on board with that. >> Yeah. So, I can answer that as well. These contracts are actually coming up for renewal. Um so, we're going through the RFP currently. Um and then with our existing vendors, you can see with a lot
of these findings, they're unfortunately somewhat out of the district's control because we're not the ones who are directing the drivers. So, that's why I I had to work with legal to say, what can we do to hold these vendors accountable? Uh so we are bringing them in and we're requiring the the vendors
to create uh a corrective action plan as to how they're going to ensure that they're going to comply with all the contract requirements because everything um all of the findings that were identified are requirements within their current contract so that we can determine what we can do from an
oversight perspective to ensure that they are in compliance on a daily basis with the contract. >> Okay. I was speaking not as much uh Miss Frederick to the compliance issues um more but I was saying that we're going to renegotiate the contract so we'll be
able to incorporate that when we renegotiate >> um Heather let me respond for a minute or ask you a question um >> all the findings in this report I think it was well done thanks for the presentation it was easy to follow you instead of reading everything in the
book it was very helpful thank you um all these all these issues that came up here in this report are in the contract and they were not abiding by the contract. Is that what we're finding out right now? >> Correct.
>> All right. Number one. Okay. I think I think for safety I'll talk about the safety of the students here which nobody's commenting on. You got a felon. You have people that can't speak English. You have people with no identification in our files. What does
the transportation department do with respect to monitoring our contract with all these violations? How could this have happened for four years? >> And that's >> I mean, how could that have happened?
>> So, we do have um supervisors who are going to be more v vigilant about making sure we're doing the same thing. And I think that I think AD's office did a good job of you know going to the schools and making sure that they checking them. So we're going to be doing more of that. Um that's part of our response as well as the is the and
quite frankly there's no there's no excuse for it. We need to make sure that doesn't happen again. So we're going to we're going to hold them accountable. Um, and now there's, you know, this this whole private transportation world has has kind of dramatically changed since co and there's a lot more competition
out there now. And, um, if firms don't do what they say they're going to do, we're going to be replacing them. So, um, >> yeah, I just find this very not very good feeling. I mean, these most vulnerable students in the district and and what they're being provided and I
mean, it's just dangerous. It's dangerous. Um, so the negotiation will find out all these remedies that we're talking about now and then we'll be >> well, we're not waiting for the renegotiation of the contract. We're bringing the vendor in now to create a
corrective action plan to say how they're going to ensure that they can comply with the current contract requirements, >> the identity, >> the correct to ensure that every driver is background checked prior to prior to transporting a student. But we need to work with the vendor because the vendor
is the one who is actually directing the drivers. >> So that's why I engage legal to say what can we do because we're not the ones directing the drivers if if that's why the ultimate uh correction to this is to or the ultimate fix is to move as many
students back to yellow bus as possible because we have control over those drivers. >> Thank you. >> Are we able to um Mr. chair. >> Um, are we able to so ask if they're not meet they can't
meet compliance, can you term the agreement and have someone in place to continue transporting those students? Because I I I heard Mr. Sanchez say that there's competition out there now. So is there
room within >> piggybacking >> piggybacking or bylaws that we could actually give some recommendation as audit committee that if a one of these they can't meet can't come into compliance the staff has opportunity to go back out
and make a selection. I I'm not certain how this uh what we did with this RFP, but normally what we would do is we would have a pool and so that way you could pull from multiple vendors. In the the past when we went through this previously, we didn't have that many
that were willing to respond. So we were limited with the vendors that we that responded. Um, so now that there is more competition, I'm hopeful we can have a larger pool of vendors to choose from so that if there is one where it's found to be a breach, uh, we can terminate and we
can move to another vendor. >> All right, just put the one that charged us extra, the 100% for the no-show on notice that we are looking. >> Right. One last question, Heather. Who's Mr. Churchwell? >> Search. >> Searchwell. >> He's the director of transportation. >> Thank you.
>> Yeah. Unfortunately, he's Yeah, he was at a um >> searchwell. He was he he's returning from a um a peer review out in out in New Mexico right now. So he's he's on a plane heading back here. So >> Thank you. >> Any other questions? Comments? >> Point of point of information. Oh, I'm
sorry. >> No, I I have a question, but you go first if it's a >> Okay. Well, this is just a just a point of information if I may, Mr. Chair. Um we've used the term safety throughout this audit. Um, and I knew this audit was was in the hopper at the board meeting a couple weeks ago, but I hope
that anyone who's paying attention right now um, understands that these sort of matters, as Mr. Dixon just pointed out so astutely, background screenings, having felons or people who we haven't screened in contact with vulnerable
students, those are all matters of security. And that was exactly why we put that into the policy. We want you all to be able to look at that security as was shared with leadership. I believe at a at a meeting about a week ago. It's everyone's responsibility. So that was why it was added. This is a perfect
example of something. It's not just limited to school police. It's not just limited to the physical plant. It is things like transporting students. It is it. So that was that was why that was there. I couldn't share that two weeks ago, but um I hope that um I hope you
understand now why security was added. >> Yeah. Oh, >> if it's related to this, go ahead because mine's off topic from this one. >> The >> the the uh the one question I have is this seems like a scenario where you had
the environment dramatically changed almost overnight. You almost had a the vendors picking up like 300% of the services within, you know, the next year. And so is there kind of a plan in place because
it kind of seems like you know the the internally you couldn't find enough people to to provide the services. So then you're you're subbing it out and they're probably going we can't find enough people for these services. So they're probably were violating the compliance just to just to provide the
service. So if it was probably in in in an environment to where if if they were in compliance, there wouldn't have been a driver to pick up these students. So is that kind of looking up like what's the default when the when to be in compliance, there's not enough drivers
to transport the students. >> That's why we've worked hard over the time period to increase the pay of of bus drivers. So during that time period, the uh bus drivers did receive a higher increase. um than others within that bargaining group. Um I believe it was a
a 15% increase I I want to say two years in a row. Um so we have been able to stabilize our drivers at this point. Um I know that they're they're still continuing to look for drivers, but the number of students that we transported, we never got back to the number of
students we transported pre-COVID. So we don't need the same number of drivers that we had pre-COVID. they're realigning, working to realign the the routes. And so now that that's somewhat stabilized, that gives them the ability to start to transfer those students back on to regular routes is my is my
understanding of what the process they're going to be working on in the upcoming year. >> Thank you. Okay, Alyssa and then Miss Branch. >> Um, well, thank you for bring Michael what you did about the safety and stuff. I was just curious maybe it's just a semantic.
slightly different topic but um of just understanding the accounting process because I see in the vendor over over billing which is minimal like it's you know 5,000 over the the amount is is great like kudos in that but the 100% review of all vendor invoices now prior to payment like that you now conduct
that and I guess I'm just curious what is the process because I would have thought vendor invoices were reviewed 100% prior to payment anyway so I just wanted to kind of clarify that on my understanding >> so the the review of the the in of the invoices of who's receiving the service would be done by the department who's
closest to that service. So it is the transportation department. What the transportation department was doing was they they were sampling the invoices and they were not looking at 100% of them. And so that's why the invoices that the auditors happened to select were not the
invoices that the department had sampled. And so you know so that I informed them you can't just do a sample. You need to be looking at every invoice. And so now they're changing their process to look at every invoice, review every invoice prior to payment.
They have to go in this the our um uh ERP system, receipt the invoice in. We won't pay the invoice until it's receeded. And so that receipt is them saying that service has been done and performed or the good has been received. >> Okay, Gloria.
>> I'm good. I I got my I figured it out. Thank you. >> Okay. Any other questions or comments? If not, I'll entertain a motion to approve. >> I'll make a motion to approve. >> Is there a second? >> The Andre second. >> Discussion. >> All in favor? All opposed? Passes 70 and
AA. Wonderful job. That was a real technical report. You did a great job. >> Excellent job, Aita. Really well, M. >> Okay, we'll move on to the internal audit uh funds. Randy >> uh the this year's uh internal fence audits is moving you know uh smoothly
even though we have a number of new auditors needs to be trained as of this morning the auditors are completed another 10 schools compared it to last week. So uh now it's a total of 54 schools fieldwork has been completed and
then the remaining school will continue to uh to be audited and then again hopefully we will be uh completing all the field works by the by mid-March or something like that and then the findings are very similar to last year's no material findings are founded so far
they're all uh common on compliance pro uh non-compliance with the uh district procedures. Okay. Any questions or comments? >> Thank you, Randy. Okay, we'll move on to compliance and quality assurance, Bob. >> Okay, thank you. Uh, we performed a
review of subcontractor default insurance that was purchased by construction managers. One of our prior reviews uh identified an over billing of more than $73,000 by a construction manager for which the district was fully reimbursed. and we
engaged this review to determine if this type of over billing was isolated to one project or involved other projects as well. Our primary objective was to determine whether mounts build by the construction managers were appropriate and accurate.
We selected a sample of six construction projects and those are listed in detail on page two of your report. We have four major conclusions. Conclusion one is that staff do not adequately verify the accuracy of amounts construction managers build the
district for insurance. We noted several instances of this. So we broke this into two parts. Conclusion 1 A and 1B. Conclusion 1 A is there were undetected over billings and overpayments totaling more than $177,000.
Shortly after we requested documentation to support amounts that construction managers build the district, two of the construction managers identified overp payments for two projects uh listed on this slide here and both of
the construction managers provide a refund check to the district. During our review, we found that current processes do not require um construction managers. I'll use the word CM as an abbreviation for construction managers uh to provide
backup documentation that is necessary for staff to verify the accuracy of the amounts being build. So staff is unable to verify if the amounts build the district reflect the CM's actual cost. Conclusion 1B is staff approved payments
of approximately $555,000 for one construction manager's deductible liability insurance without obtaining sufficient backup documentation to support the expense. >> Okay, let me go back. Okay.
For three projects managed under u one of the construction manager name was Mosson Associates. It took staff or district staff more than six months to provide us with evidence of the amounts the construction manager paid to their insurance company. We eventually
received copies of checks and invoices, but they did not provide us enough detail to allow for reconciliation to the amounts previously build the district. We noticed that the back of one of the checks that was provided contained two endorsements on it for deposit into two
separate bank accounts. One of those accounts was the construction manager's bank account. The same bank account from which the check was written. A copy of that check is on page 10 of your report. No, >> after our discussions with the CM about
this unusual endorsement, >> they provide they provided us with bank statement copies that showed the full amount of the check in question was debited in fact from their bank account and deposited by their insurance provider. However, they could not explain how the back of that check became manually
endorsed for deposit into their own bank account. >> That was Moss, >> correct? Uh what we learn is that that insurance provider is a related party captive insurance company and as the accountants in the room may
know related party transactions can pose higher risks. We noticed an endorsement on their um from their insurance company for quality control, quality assurance services as well as for claims management services
for a flat rated additional premium of $680,000. We also noted five annual invoices that Moss received from Hunt Brokerage and Consulting LLC in the amount of $100,000 each.
and Hunt Building Company has a 40% ownership interest in Moss and Associates. And this is explained in our report in a footnote. And it's not clear what portion of these amounts or transactions were build to the district.
Um it's not clear whether the services and fees are customary or whether the basis for the amounts charged are rational, fair, and reasonable. Staff are responsible for ensuring the pay applications are complete and accurate prior to approving them from
payment. And not requiring contractors to provide sufficient backup documentation increases the risk of billing errors, fraud, billing undetected. We have four recommendations to address these issues. To strengthen procedures to include the review of sufficient
backup documentation that supports the amounts contractors build for insurance. To ensure pay application review procedures utilized by the district's third party program manager are accurate and being followed. To add language to the standard contract to address related party transactions and their potential
for higher risks. And to remind construction managers of their contractual obligation to provide documentation to the inspector general in a timely manner and to hold them accountable when they do not. We also recommend that district leadership remind staff of the
requirement to provide information to our office in a timely manner. Uh we received a response from management. They assert that the overbuildings could not have been reasonably verified at the time of billing but they do plan for future contracts to
require the necessary detail to verify actual costs. and they also plan a contract with a construction auditing firm to review to perform reviews of construction invoices for larger projects. We have a rebuttal to their response is
that internal procedures require support documentation to include invoices and we also re reiterate that the school board expects management to make accurate payments to contractors. We also received a response from the district's third party program manager.
Uh um yeah, and in summary, it states that they performed all services in accordance with their contractual obligations and that payment applications were in fact supported with sufficient backup
documentation and their full response is attached to the report in appendix C. Our second conclusion is that staff has not demonstrated that reimbursing construction managers for their subcontractor fault insurance and
deductible liability insurance is in the best interest of the district. According to contract terms, if a CM requires subcontractors to provide bonds, the cost of those bonds are to be reimbursed by the district. However, staff have allowed CMS to purchase
subcontractor default insurance instead of requiring subcontractors to purchase bonds. This was done without the benefit this was done without the benefit of a costbenefit analysis or a feasibility study to determine whether this practice
is in the best interest of the district or worth the costs. We have two recommendations to help ensure informed decisions are made. We recommend staff determine whether it is in fact in the district's best interest to require CMS to purchase SDI and
deductible liability insurance. And if so, then language should be added to the contracts that establish the specific terms and conditions related to those insurance products. management responded that they believe using SDI is in the district's best interest and that they will work with
the construction auditing firm to assess all options and ensure alignment with industry best practices. We also received a response from one of the construction managers. It basically states that they had discussions with district staff over
many years regarding insurance strategies to help understand the benefits of SDI verse bonding and their full response is also in the report in appendix B. As part of our testing, we verified if
CMS maintained the insurance coverages required by their contracts. For the most part, they did, but staff did not always maintain evidence of that. Uh, specifically, pollution liability insurance, subcontractor default insurance, and deductible liability insurance.
We also learned there were no guidelines to determine when pollution liability insurance should be required on a project or when it may not be worth paying for it. Our recommendations are that procedures
should be strengthened to ensure that all certificates of insurance policies and endorsements are received, that contract language should state whether pollution liability insurance is required for a project, and guidelines
should be established to determine when it is worth paying for pollution liability insurance. Management responded that they have updated their procedures to ensure that all insurance documentation is provided and that procedures will be added to clarify when pollution insurance may be
necessary. Our last conclusion is that one CM utilized an insurance company that was not authorized to conduct business in Florida and also did not meet the minimum AM best company rating required by the contract. This was that related
party insurance company Providence Insurance who provided deductible liability protection to Moson Associates for three of our sample projects. Providence was not listed in the state database and was not rated by AM Best as was required.
So we simply recommend the process be enhanced to ensure all ins to to ensure all insurers meet the minimum requirements stated in construction contracts. Management responded that they will add this verification to the payment review process.
received a response from Mos Associates on this basically saying that Providence was lawfully ensuring the deductible risks of Mos Associates and it's lengthy so there but there that's basically what it says and their full response is attached as in appendix
B in the report you happy to take any questions or comments >> Mark this might have been out of the scope of the audit but the the these insurance providers that were related parties, were was it checked to see if they were
an actual insurance company in the business of doing insurance or was were these companies just formed to provide insurance just to this contractor. >> That's what they do. That's cap that's what the cap Well
>> I'm not sure what staff did. >> Yeah. in this case. >> No, >> because because they should probably look they should look at the the insurance company, see if it's actually in the business of doing insurance instead of just being formed just to provide this one policy to this one
contractor, which ends up being a related party that owns part of the contractor because then they're they're most likely violating the rules of forming the insurance company because you can't form an insurance company just to provide it to one related party. From our research on this and discussions
with staff, it's not an uncommon practice. This does happen in the business, >> but they are the only client for that. >> But that's pretty common for captive insurance. I was say captive insurance because you don't want to pay a third party. You do your own insurance company
and you keep the money >> or a couple companies go into a captive together or Yeah. It's >> right. Right. >> Maybe I'm famili unfamiliar with the insurance, but it's it's other insuranceances. You can't just form an insurance company to ensure one client.
>> Barbara, >> yeah, I did check the the law on this and there is an exception that you can have a company that's not in the and not in Florida can can do business even though they're considered unauthorized. In Florida, there's an exception if they
only insure one insured and they don't offer any insurance to any other policies. there is is an exception under Florida law that allows them to do this what they did here. >> Okay, Robert. Robert, let me ask you a couple questions just chronologically.
You were doing a review of one contract and that one contract came out this for $73,000 or something. >> We wanted to review a rep a sample of contracts that contained subcontract default insurance within them. So, we sampled six major. >> So, it was just an audit sample.
Something didn't happen with the first with some contract that was reviewed at the this at the department level that caused this to happen for six sample. I'm trying to chron I thought I I thought I heard in the beginning that
there was one company or one contract for $73,000. >> Yeah. Correct. That's what that's what drove this review. That's why Okay. So I following the crowd. So that happened >> that happened a couple years a couple years ago. We reported that. Yes. >> Couple years ago. Yeah,
>> couple years ago that happened and we've waited now to do a S. How when did you start the sample? Not you, but when did we start the sample of six? How long ago was that? >> It was it was a while ago. It might have been over two years ago. >> Okay. So, the six has been working and now we're coming forward with it.
>> Okay. Thanks for that part. Now, I have another question. Who is this program manager that we have in between a construction CM and and and our us? Who is that? That's a company called AECOM. >> And what do they do for us? >> It's the contract to staff augmentation.
They do what our staff used to do, >> I guess. And uh facilities is here. They can help elaborate on that. >> Thanks. >> Sure. when we uh when the uh referendum was passed um eight years ago, uh the staffing levels in the construction
department was were were severely depleted and uh at the time we uh engaged this company to help provide support as uh as Bob had mentioned and over the years they we've built up our staff to be able to take over some of
their duties, but they're still providing us support in administrative services um uh running a lot of these programs. >> You defined it you defined it as in between. They're not in between us and the and the contractors. They're they're a consultant for us. So
>> they're in a triangle. >> Not in between. >> Yeah, they're not in between. Correct. >> It's a triangle. Excuse me. I'm just trying to understand the construction side of it. Um, so we got that this Moss company was mentioned three different times in this
report for the three different issues. Have we dealt business with them for a long time? >> Uh, yes sir. >> Have Have you ever had a problem with this before? >> With them? >> Uh, well, you got insurance, you got
over billing, and what was the third part of it? There was three times it was mentioned in this. I well I think one of them was not Moss if I'm correct. >> I don't know. >> Um but >> Mos name is coming up a lot in this of this review. I just wonder the relationship there and
>> that's all. >> Yeah. >> Just asking. >> Uh yes. And the first one that you had mentioned earlier was Moss. That was under >> that was that $73,000 >> was under Yeah, >> that was Moss. That was the one then. >> And that was the first one which led to the evaluation of six um
>> and as soon as the review was Robert as soon as the review was started two years ago during this pro as soon as they knew we were looking at something they immediately came forward and said we overbuild you. >> This is correct. As soon as we asked for the backup documentation, they came forward and said, "Oh, we have over
billings of the that totaled $177,000 >> into somebody's head here." >> I mean, this is and these are big numbers. We're not talking about little stuff like sometimes we talk about 50,000 or 100,000. You're talking hundreds of hundreds of thousands of
dollars. And in a sample, that's just a sample. I don't know how many contracts you have. You probably have 40 of them, 50 of them. I don't know. there aren't that many um because we want to we want to do more recent contracts like in the last five years and we want to do large projects right >> so uh facilities would have a better
estimate but I'd say we maybe half would be a good guess of the ones that we qualified for um for our sample >> does all this report go into a procedural manual for that department >> and that's being done now >> and could if I could if I could also mention too uh because the facilities
department works very closely with the finance division and when uh Mr. Bliss brought forward, you know, the concerns or the observations, opportunities for improvement, uh we knew that we had to do a a better job at at the payment
review process. And so that was something that I brought to the audit committee. I think in one of our um responses, I I can't remember which audit audit it was, but that we were going to engage a construction auditing firm um to help
supplement uh the Treasury Department where they'll be doing a u a complete audit and review of each of the um once the project is complete. And so at that point you can go through and and and the purpose of that is is to to ensure that
they've complied with all the contract requirements and and we can have any funds returned. Uh we can also that's going to be mainly used for large projects. Uh but we're also considering you know what size projects and uh doing
those smaller projects as well. Um Mr. Brolene who's on who introduced himself in the beginning. Um he's from car rigs and he is the firm that we've engaged um as part of that payment review process. They have not started um because we've reach recently engaged them. We first
asked them to go through and review the construction policies and then an overview of the whole of construction facilities process from start to finish because we know as a district that we have not been paying our vendors timely
and that has been a comment by the vendors and yes we don't want to change our process just for the vendors but internally we take a very long time to pay our invoices because they do go even though it doesn't appear they're going through a detailed review process. There is a very detailed review payment
process that goes through the facilities department. Um there's a construction oversight review committee um that is also reviews change orders and whatnot before it goes to the board. So there's a very detailed and lengthy process. So before we made changes to those
policies, we asked car rigs if they would look at the proposed changes because we wanted to make sure those changes would align with industry standard. Um and then from there we'll expand uh their review to looking at our contracts, how we can strengthen the
language within our our contracts to ensure we have all the appropriate supporting documentation. Um and and so we we have taken steps um we've engaged the firm and so we'll we'll be able to ensure to be able to look back at at contracts that have already or projects
that have already closed and use this process going forward. managing managing cash flow during the process of the project which sometimes I would think could go two months, two years, I don't know. You're advancing
funds. You're just advancing funds. This audit will only be that much later. So, you're advancing funds now. You're auditing suggestion. I got it. That's great. that'll tune it up at the back end like we have for a financial report that our
auditors do for the school district. But for cash flow purposes, I would think you'd have to bring this back down the line in this department and and really install procedures that are going to be adhered to
>> before before the bill goes to somewhere through the process to get paid. >> And that is part of the whole comprehensive review process. That'll come back down to >> Yes. Yeah. It's a comprehensive what is going on from the time is paid all the
way through the process. >> Okay. We are we are making contract language changes as well and in work with M Mr. Bliss actually helped us see the light and see the opportunity to make those changes not only to policies
which I'm sure we'll talk about but in addition as you say as you're pointing out in contract language so they see it up front and it's administered in our operational procedures all the way through the construction contract so that when
um all willing that we get to the CRI uh review that hopefully there's far less to worry about. >> Right. Thank you. Thank you. >> Chair, there are some things in um from a staffing perspective I would like to just um try to get a little understanding on is throughout the
document throughout the reported state staff did staff did not staff is doing. Um are we looking are some of those staff internal things that staff was doing was not doing are they also being addressed through this process?
because just one just looking at the very first page staff do not adequately verify accuracy of amounts. So that has very little to do with the outside the other companies or the consultants. >> I would disagree with that because it's
our contract language does have to be detailed enough to ensure that we're getting the proper documentation. And so we're going to utilize CRI to ensure that our to review our contracts to ensure the contract language includes everything um necessary and that also
aligns with industry standard to make sure to make it easier to go through the whole process review of um ensuring that it's it's the accurate amount. You know for example SDI I've been finding out so much more than I ever wanted to know. I
am not an expert. Right? So that is why I consulted with RSM construction auditors and CRI construction auditors. Not specifically as to what our district is doing, but based on their experience in the industry, they are experts. What do you see when you go out to clients
and you do these audits? And they would say that when they go out and do these audits for the first times, a lot of times the documentation isn't detailed enough because their contracts aren't written in the right way. Or not that they're not written in the right way, they could be enhanced. And you know,
contractors are just like anybody else. If they can find a loophole, they're going to find a loophole. So when they find a loophole, then you need to make sure you you need to make sure that you tie it up the next time that you do a contract with them. And so by using a a firm that that's what they're doing on a
daily basis, we'll be able to leverage their expertise so that we stay on top of those loopholes and making those changes current within our contract to ensure we're getting all of the the supporting documentation that's needed. >> Understood. And oh, sorry.
>> And um before you call, I want to I want to support the staff and the way the report is written and it doesn't sound like it's all of the staff. is more of the consultants and some of the con construction managers that are supplying
um deficient information and not just staff internally unless this staff is not >> well I would say and there were some things that were missed in the payment review process 100% I would say there's when you look at the payment the reviews the the contractor payments that come in
they're what 200 pages I mean it's so much supporting documentation that's submitted. You know, staff does they truly do an outstanding job. Um, our if they were just paying based on when the invoice was submitted, we wouldn't have
any problems and delays in paying our vendors. But it honestly is I would say a a two-month process almost to go through and verify with the architect making sure the status of you know the percent complete is accurate based on what the uh the contractor is
submitting. So there is a very I don't want that to get lost here. There's a very detailed review process. There are just certain things where I would say maybe we didn't have the expertise on and we missed internally. Mr. >> Okay, two more questions. Frank.
>> Yeah, I'm um Moss was I've got a couple comments, but before I just want to say that uh um Moss is an excellent construction company. I'm not going to justify um some of the problems here other than to say that um they built three schools in district five and did a
tremendously good job of of building those structures and and did a great job of finishing those schools. Um I do have some concerns. Um um first of all and I understand Miss Fredericks that it's a ton of stuff that
comes in but um I don't one of my main major concerns when I was on the board as well is uh the interaction between departments and the uh inspector general's office. Um the report says that eight written requests over six months were needed before staff provided
partial documentation. That's a policy violation of schoolboard policy 1.092. 9092. Uh, you have 10 days to provide it. Um, I hope that in the future. I tried getting this done while I was a school board member. Obviously, it's not working because it took them
eight, six months to get the documentation over to the inspector general's office. I think the purpose of putting the inspector general in place is so that the inspector general's office has can promptly get documentation to make sure that issues that are that that can be seen when they
review the documents are fixed before the contract goes on for months and months and months. So hopefully you can fix that in the future and work for >> if I could speak to that because I take that comment to heart because I am an auditor at heart I would say and I do my
best to provide information as timely as possible and and I always work with the IG's office if if there is something where um you know just due to timing and workload we're not able to get with that we've always been able to work together to provide delays with that one that was
an extremely extended period of time. I do believe that that did relate to my department and it was it was truly just a misunderstanding. The information was provided to one of my staff members and it was happened to be in a hallway and
she just forgot that she had it. You know, it was a it was as simple as that. And when we found out that it was the delay, you know, it was we had to then go back to the contractor to say we need to we had to request the information again. And it was it was purely a misunderstanding and it was not it was
not intended to withhold information in any way. >> Okay. Your your office has always done a great job so I understand mistakes can be made. Um the other one is the violation of policy 7.229 contractors payments were made without
accurate and complete supporting data. Um I guess my concern is more with AECOM Mr. Sanchez. Why why aren't they required to make sure I mean I can hand somebody an invoice and say this is this should be paid and shouldn't ACOM be looking at making sure
that whatever the invoice is for that the work was completed rather than just say it's okay to go ahead and pay this invoice. I mean what what is the purpose of having them there if they're not going to at least check to make sure that if an invoice is submitted the work for that that that invoice covers was
actually provided to the district. it it's not just AECOM it that that that review starts with the architect with our project managers um a and actually a's involvement in our pay application process has has diminished over the last couple years as Mr. Dolan has said we've
we've hired on staff that now we're taking over that responsibility even more so ourselves but yeah I don't I don't think anybody has questioned whether percent complete well that that is accurate because it's reviewed three times or so before it comes to me and I get I get only I don't see all the pay
applications but I get a number of them that especially ones that reduce retain retention on it and I can tell you that I I see them marked up to the penny about you know you you build this for x amount of dollars and we we marked it up and we changed it to this amount. So I I know that it's it's a very detailed
review. So um and I can't speak to individual pay applications, but I can tell you that on an overall basis they're they're very detailed reviews by at least three different people looking at the >> I understand Mr. Sanchez. I'm not I'm not casting you know a you at your
department. I'm saying why are we paying ACOM if they're not doing what they're supposed to be doing? Are they required to verify that work was done before they say yeah go ahead and pay this invoice? I understand you guys are looking at all this stuff, but why are we paying them an override on contracts if they're not
at least verifying that um the work is done before an invoice is authorized to be paid? What what are we paying them for with respect to that issue? That is >> exactly. Well, they're no longer in doing that that process for us. Okay. >> Our internal people are doing the pay
application reviews. >> Okay. >> They do supplement our staff with some project managers and some other things and in reporting, but our project managers are doing that that part. Okay. And and I guess the my other concerns are that the contract, you know, the school board has put provisions in for how these contracts are supposed to be
structured and contract article 8, the insurer was not authorized as an AMS AMS that whether they're authorized to do business and set up this captive company is totally a separate issue from the fact that the contract that has been approved by the school board with
respect to what provisions are supposed to be in it. There was a violation of that and nobody caught that. I don't know if that was legal or I don't know where where the issue is, but I'm hoping somebody is checking to make sure that the contract that's been approved by the board that those provisions are being
followed with respect to insurance. Um, it also contract article 24 is was not followed another contract provision that was approved by the board. Invoices lack detail required for pre-post audit review. So, um I just I'm just um kind
of surprised that a contract of this magnitude can be issued by the district and certain provisions that are very important to protecting the district are are not being followed. So, I understand that you're reviewing all this and you're going to try and fix it. But I
guess my core question is over all of this is why are we paying for SDI or private bond a bond between the contract and the subcontractor? It's not a good use of public funds for us to do that. That's a risk that this the contractor
is taking whether they choose to get a bond and pay the bond and go through the procedures when there's a problem. And I know it takes months when you have a bond as opposed to private insurance, but why are we paying that? Let them build that into their bids for with all the other contractors rather than giving them an extra pot of money. So, we
approve them. The board approves a contract for for X million dollars and now we have to pay them extra so they can get insurance to protect themselves against their own subcontractors. I don't understand what the what the benefit is to the district to doing that. Just tell them to work this into
your bid. Give us a bid that includes all of what you want in there and let's compare you to all the other contractors that are out there. And if you want to get insurance to protect yourself against your subs or you want to get shy bonds, then do that. But it has nothing to do with us because it doesn't help us a bit. We have a bond between the
contractor and the district. If they default, that bond's going to kick in. Whether they have a problem going out and finding a subcontractor is none business of ours. They have the obligation to get a sub, whether they have insurance or a bond to get the sub. It's their obligation to get it. And if they don't, then they violate. Then we
have a bond that protects the district. So tell me why we would consider continuing to do this. I understand it's industry standard. I understand that our outside auditors say other people do it, but what is the benefit to the Palm Beach County School District and the taxpayers to providing money for the
contractor to ensure itself against its own subcontracts. I don't understand what the benefit is to the district. >> The main benefit because ultimately I did originally have the opinion that you have. Why are we paying for that? And I know the county for example, I believe Miss
Bolton is in the audience, the county chooses to not pay for SDI. I that is why I had to research reach research and consult with experts to say, you know, why would we want SDI? Why do we need SDI? What is industry standard? Because I do want to make sure
that our district is aligning with industry standard. And ultimately, it is to the benefit of the district that we stay on time because if there if a subcontractor does default, it takes time for the for the the contractor in
order to go through the bond exercise and do whatever they have to do to pull out funds. Going through the SDI process is a much quicker process and it provides more more certainty that the project is going to stay on time. And it's very important for us over any
other entity, I would say, to stay on time because when a school needs to open for the first day of school, the school needs to open the first day of school. We can't open a week later, you know. So that is the the main benefit that I see for for a district and why it's important and why I'm continuing to
still recommend that we require that they have SDI. And we're working on this still internally. Um we're still having internal conversations. uh and and that's why I want to make sure to bring in of CRI into those u discussions as
well and maybe SDI isn't best for all projects you know maybe it's only certain projects not the smaller projects so we're working through all those discussions internally but based on my um initial um uh you know thoughts
as as to based on consulting with those who have experience in the industry it is ultimately best for the district because it is going to keep those that is our best guarantee that is going to keep the projects on time. >> So let me give you a followup. We when we when we lease out an auditorium we
require that the less leie has insurance. We don't pay for that. That's one of their requirements. You need to protect the district. You need to buy insurance. We make sure they bought the insurance before they get the lease. So I don't understand why we don't say to the contractor, we want you to have
private this SDI. We want you to have this because it's in the best interest of the district that if there's a one of your subs walks out that we have somebody immediately going to pay to get somebody in there. I get that. Why are we paying for that? Why don't we say to the contractor it we want you to have this insurance just like we tell every other contractor that we contract with
that you have to have this insurance or that insurance or whatever. I'm sure the company that transports our kids that they must have insurance that protects the district in case they have an accident. Do we pay for that insurance? No. It's built into their rates. So why are we taking on the responsibility rather than just saying this is a
required insurance that we require contractors to have. You guys need to give us proof that you bought it. Why aren't we doing it that way? Why are we paying it in addition? This is an add if this was part of the part of the contract. It would be one thing, but I understand that the bid is given. We
give a dollar amount. We we accept the bid and then we have to pay them extra when they when they buy this insurance. We give them more money. Why why don't we just say it's your requirement to provide us, you know, certificate of insurance showing that you're going to insure the district. >> We're going to pay for it regardless one way or the other. Even if Yeah. So, even
if we do it that way, I would rather know exactly what it's going to be and I would rather have some sort of defined metric and cost and way to determine what that is that we're paying for and what it is. And so that's why the the response that we have because you know I
the the uh response came from me but it was really collaborative. Um and then we're still working internally. I mean that is that is my honest response back is that we are still working internally. We've engaged car rigs in order to help
um because there is a disagreement between uh right now between the the finance department and facilities as to how to best approach SDI, you know. So that's why I don't have a response in here saying this is exactly what we're going to do because we haven't yet determined it.
>> Okay. So I'll I'll give you I'll give you that. >> I can take your opinion back though. >> That's all I'm asking is just take it back and just like we do with every other insurance company. I get it that you want to see exactly what it is. So, here's what we want to see in the insurance policy that you proved to us that you bought to protect the district. Here's all the things that the finance
department and the and the building department want to see in the insurance. I don't understand why we just don't do that and say just work it into your bid, whatever it comes to. We don't even care. We just want to see the output of what exactly we're getting coverage for so that we have authority to to make we we know that we're covered on this
situation. I I just don't understand why. and we've carved out that particular type of insurance and saying we're going to pay for that even though every other contractor that deals with the district pays for their own insurance and gives us proof of insurance. So just take my comment back if you would in
>> I'm going to entertain one more question and then we need to move on. Uh there's gentleman online by the name of Rob. Thank you for your patience. >> Yes. Hello. I just uh what I wanted to kind of it goes back to a comment about
um our services coming at the end and you and wanted to ensure what things are being done during the payment application process and particular the topic at the time was dealing with SDI and general liability insurance. So just to address that Heather did say we do the contract
review which is upfront. It helps get the language right, gets all that's needed in order to do the pay review real time. Another aspect that wasn't mentioned that was part of what we do is we do a pre-verification. So, you're not waiting at the end to figure out did they do the insurance
correctly or not. As just one example, we do other pre-verification of what we consider to be higher risk items, items that you don't want to wait or maybe they're more difficult or complicated to try to verify during the pay process. One of those things, as has been pointed
out, is the insurance. And so we we typically uh do that as part of that process. So it's pre-verified. So you're not so you know and determine at the beginning with the contractor. This is what we're agreeing to uh that's going
to be what's valid in terms of the cost for SDI or general liability. So that's a pre-arication. That's just one example. And then we do our close out at the end. And just one one other comment is we also do a lot of staff reviews. We know you have your own internal process
and department that does that but we're available to on a consultant basis if there's support needed in that regard. We can also as part of that uh part of that uh rel engagement with you guys help with that as well uh as needed um
to to provide that support. >> Okay. Thank you. We need to uh move on. Do I enter I I entertain a motion to approve this review? >> A motion to approve. >> Second. >> Second. >> Discussion. All in favor? >> I.
>> All opposed. >> Passes 70. Okay. Bob, go on to the recommendations and implementation status report, please. >> Okay. This uh you see a recorder. There's the good news on this report is
there's only two items of outstanding audit recommendations that are have not been completed yet, which is the fewest amount that I think we've ever had. So, congratulations to staff. The bad news is these have been ongoing for quite a while, but staff is working
on them. One is expected to be completed in by the end of this year and the second one has been pushed back to June 2026. >> Well, they both relate to the implementation of service now. So we're phasing in several different modules. So we've already started I would say six
months ago with the implementation of service now. It's just these were not considered a priority and they were pushed back further in the implementation process. So >> general question are service now. Um I'm a little familiar with that software
system. I guess it's software system. >> Is that being implemented throughout the district or just in here? >> It's being implemented. It's going to be implemented for our call centers. Uh we're also using it for inventory tracking. Um for our our tracking of our
what we call our our bugs within the system. You know when we say okay there's we want to see this change within the software you know tracking the the status of those >> okay >> that type of asset so it will be it's somewhat because it is including the the
call center piece of it >> any further questions comments if not I'll entertain a motion to approve >> motion to approve >> second discussion all in favor all
oppose passes 70 >> okay we'll move to item eight overview of construction management policy changes. >> Okay, so I'm going to keep this as quick as possible since we're already towards the end of the meeting and I think we already discussed actually a lot of information related to the construction
project uh uh uh con construction policies. But as I've already stated, the facilities department has been working very closely with uh the finance division as well as legal. Um so within the finance division, the treasury department um as well as procurement and
we've been working they facilities started over a year ago to try to improve their current process. And as part of that uh process it's also updating and aligning their their policies. And so there are let me see one two three four five policies that
are going up uh for review. Normally we wouldn't present these policies to the audit committee. They've already been presented to Cork, which is the con construction oversight review committee. Uh board member Branch is also a representative on the cork committee. Um and these uh policies were presented to
the court committee last week. Um and I just wanted to bring it more forformational purposes just because the audit department, Mr. Bliss sits on the court committee or I don't know if you officially sit on the court committee, but you you attend all of the meetings. So I thought it was important for the
audit committee to understand that there are going to be some revisions to the policies. The rei the reason for the revisions is to streamline our current process and then also align it with uh changes within the Florida statute. And the only ones I really wanted to mention
was the changes within the change order uh uh process because from a the Florida statute facilities had already gone through the review of all their policies and then last year in the legislative session there was a change to the change order process saying that the change orders
had to be completed, reviewed, paid within 35 days after that change order being submitted to the district. Our process right now um it goes through a change order would go through the court committee then get presented to the board. It could take up to 70 days for a
change order to be processed. And so there was no way for us to comply with that change in statute without changing our current delegated authority. Um so that is the reason. So our current delegated authority was $100,000. We have now increased it to $200,000 per
incident. uh we asked our rigs if they could um assist us with uh reviewing that policy and and what is industry standard now across the state since this is a change in Florida statute. We are one of the first districts to tackle um the change. So we are being much more
conservative than probably the facilities department would like to be um and and there is a possibility that we will not be able to comply with that 35day requirement from statute. And if that is the case, we may have to go back and change and update this policy again.
But our recommendation is increasing the limit from 100,000 to 200,000 per uh per individual item. And then for the um cumulative, it would be b 500,000 or a million depending on the size of the contract. That is the one place where we
defer uh slightly from uh what car rigs recommended. They recommended 200,000 per individual item and then 200,000 or 10% as a cumulative amount. Facilities was concerned that 10% was too high of a number because if you have a large
contract that could be >> sure >> 10 15 million a lot of money and so that's why they felt more comfortable with a flat amount. Um so I just wanted to make sure to to mention we did run that by car rigs. They were okay with the the district's position. they
understood the district's position. They're still keeping their recommendation. Um, but they do feel that, you know, that it's I would say and and Rob, you can correct me if I'm wrong. Um, that they think it's acceptable at least. And then we'll continue to monitor um and see make sure
if we're not able to comply with that 35 days, we may have to come back potentially with um some changes later on. But we wanted to keep it conservative, not go with a $2 million limit or million dollar limit. We wanted to keep it low um and know that we may
have to come back to you. The only other item that I wanted to mention was uh where the use of the contractor contingency. So when there's a a project that goes to the board with a contract agreement, there's a contingency that's
built in specifically for the contractor for items that would just be missed. you know that and right now it's required that those change orders would go back through and the use of contingency would go back through court committee. Um in speaking with uh CRI since it's already
been approved by the board there's no reason to go back to the board because the contingency has already the contractor contingency has already been approved as part of the contract. Um Cork recommended that they would prefer to continue to see those. We recommend
that we're still going to provide it, but we'll provide it at the end of the project, I believe. So, those were the two items that I I really wanted to highlight and and Mr. Dolan can can correct me if there's anything. >> That is accurate. Yes.
>> Okay. Before we go any further, it's my understanding that since we've exceeded our time, I need a motion to extend the meeting until we complete what should be within five minutes. Is there a motion? >> Since I did it, I guess I I'll make the motion. Is there a second?
>> We have a second. >> Okay. Discussion. All in favor? All oppose? Passes 70. >> Okay. Heather, any questions of Heather? >> Yes. Any questions? >> Okay. If not, Mr. Chair, I do have one. Something that you just stated at the
very end. You said that uh the contingency will come back to the cork at the end of the project. They didn't want to see it ongoing if there was just they wanted it at the end only. >> Uh yeah. Well uh this is this is not
precluding staff from reviewing each contingency item as they come through. So staff will see everyone as it happens. The construction the contractor will submit them to staff. staff will have to evaluate them for the thoroughess, for the accuracy, for compliance with the policy, for
contingency policy, and then allow them to continue on through because they're already in the contract. We were ultimately going to compile it all at the end for the uh for the uh construction oversight committee to be able to review that one the compilation
at the end of the project only. >> All the contingency. >> Okay. Of all the >> just for contingency. Yes. change orders will be change orders the different policy the change orders will be presented um on a review basis every month to the oversight committee.
>> All right. Thank you. >> So I'm picking up on his question. Why can't you one of your monthly court meetings show them the contingency been that they've already been done so that they're not waiting two years till contracts finished to see all the contingency payments that were made.
Can't you just give them since you're reviewing them anyway, can't you just include them as a monthly report to Cork? >> It's uh the the it's a it's a matter of the order of magnitude. Okay. >> Um the the number of contingencies that occur um every month is immense compared
to the number of change orders. In all honesty, we've we've suggested we're taking maybe 10 change orders a month, that kind of thing, or even less. Contingencies, uh we're taking at least 40 50 a month. and um keeping up with those on a reporting basis was more
challenging. And we're still sticking with the the we're kind of we want to give that level of comfort that staff is reviewing them. It's not like they're just contractor gets to take the money and use it how how he chooses. He still has to submit each month every ch every contingency use to us. >> Thank you.
>> Okay. Uh next is investigations. These were all sent to you previously by Joyce. Uh our next meeting scheduled for November 21st. Is there any further business or comments to come before the uh committee? If not, I'll accept the
motion to adjurnn. So move second. Pass unanimously. 70. Thank you all for your patience and your participation. All righty.