A REPORT
TO THE

ARIZONA LEGISLATURE

Division of School Audits
Performance Audit

St. David Unified
School District

December • 2014
Report No. 14-208

Debra K. Davenport
Auditor General

The Auditor General is appointed by the Joint Legislative Audit Committee, a bipartisan committee composed of five senators and five
representatives. Her mission is to provide independent and impartial information and specific recommendations to improve the operations of state and local government entities. To this end, she provides financial audits and accounting services to the State and political
subdivisions, investigates possible misuse of public monies, and conducts performance audits of school districts, state agencies, and
the programs they administer.

The Joint Legislative Audit Committee
Representative John Allen, Chair

Senator Judy Burges, Vice Chair

Representative Paul Boyer
Representative Demion Clinco
Representative Martin Quezada
Representative Kelly Townsend
Representative Andy Tobin (ex officio)

Senator Nancy Barto
Senator David Farnsworth
Senator Steve Gallardo
Senator Katie Hobbs
Senator Andy Biggs (ex officio)

Audit Staff
Ross Ehrick, Director
Ann Orrico, Manager and Contact Person
Dennis Tinney, Team Leader
Judy Fitzgerald
Joshua Lykins
Richie Rinaldi

The Auditor General’s reports are available at:

www.azauditor.gov
Printed copies of our reports may be requested by contacting us at:

Office of the Auditor General

2910 N. 44th Street, Suite 410 • Phoenix, AZ 85018 • (602) 553-0333

STATE OF ARIZONA
OFFICE OF THE

DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL

MELANIE M. CHESNEY

AUDITOR GENERAL

DEPUTY AUDITOR GENERAL

December 15, 2014
Members of the Arizona Legislature
The Honorable Janice K. Brewer, Governor
Governing Board
St. David Unified School District
Mr. Mark Goodman, Superintendent
St. David Unified School District
Transmitted herewith is a report of the Auditor General, A Performance Audit of the St. David
Unified School District, conducted pursuant to A.R.S. §41-1279.03. I am also transmitting within
this report a copy of the Report Highlights for this audit to provide a quick summary for your
convenience.
As outlined in its response, the District agrees with all of the findings and recommendations.
My staff and I will be pleased to discuss or clarify items in the report.
Sincerely,

Debbie Davenport
Auditor General

2910 NORTH 44 th STREET • SUITE 410 • PHOENIX, ARIZONA

85018 • (602) 553-0333 • FAX (602) 553-0051

St. David USD

St. David Unified
Table 1:
School
District
REPORT HIGHLIGHTS
PERFORMANCE AUDIT

Our Conclusion
In fiscal year 2012, St. David
Unified School District’s
student achievement was
much higher than peer
districts’, on average, and
the District was reasonably
efficient in most operational
areas. The District’s
administrative costs were
much lower than peer
districts’, but the District
lacked sufficient accounting
and computer controls. The
District’s plant operations
and transportation program
were reasonably efficient
overall. However, the District
needs to accurately determine
and report to the Arizona
Department of Education
its bus ridership information
to help ensure the District
is properly funded and to
allow it the ability to calculate
and monitor rider-based
transportation performance
measures. The District’s
food service program was
inefficient, with a cost per
meal that was much higher
than the peer districts’
average primarily because
of overstaffing and inefficient
purchasing practices. As
a result, the District spent
$44,110 of its Maintenance
and Operation Fund monies
to subsidize the program.

2014
December • Report No. 14-208

Much higher student achievement and reasonably efficient
operations
Student achievement much higher
than peer districts’—In fiscal
year 2012, St. David USD’s student
AIMS scores were higher than peer
district averages in the four tested
areas. Additionally, under the Arizona
Department of Education’s A-F Letter
Grade Accountability System, the
District received an overall letter grade
of B, while most of its peer districts
received Cs. Further, the District’s 100
percent graduation rate was much
higher than the peer districts’ 81 percent
average and the State’s 77 percent
average.

Percentage of students who met or
exceeded state standards (AIMS)
Fiscal year 2012
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

Math

Reading

St. David USD

Writing

Peer group

Science
State-wide

District’s operations were reasonably
efficient in most areas—In fiscal year Comparison of per pupil expenditures
2012, St. David USD’s operations were by operational area
reasonably efficient in most areas. The Fiscal year 2012

St.
Peer
District’s administrative and plant operaDavid
group

tions costs per pupil were much lower
USD
average

than peer districts’, on average, because
Administration
$1,171
$1,487

it employed fewer administrative positions
Plant operations
967
1,438

and maintained substantially less building
Food service
365
454

Transportation
346
510
space per student. Additionally, although

the District’s transportation cost per mile
was much higher than the peer districts’ average, the program was reasonably efficient
for its size. However, the District’s food service program operated inefficiently, with a
much higher cost per meal because of higher staffing levels and inefficient purchasing
practices.

District lacked sufficient accounting and computer controls
Poor controls over payroll processing and cash collections—The District had an
increased risk of errors and fraud because it lacked adequate controls over payroll
processing and cash collections. For example, the District did not always properly
review and approve employee timesheets, did not always have documentation
supporting extra duty pay for employees, and did not always have documentation such
as cash receipt forms or cash collection reports to help ensure all monies received were
properly accounted for.
Inadequate computer controls—The District lacked adequate controls over user
access to its computer network and systems. More specifically, three of the District’s

four accounting system users had more access to the accounting system than they needed to perform their
job duties. Additionally, the District allowed network, accounting system, and student information system
passwords to be short and did not require passwords to contain numbers or symbols. The District also did
not require network and student information system users to periodically change their passwords. Lastly, the
District’s main server room was located in an area that was accessible to custodial and other noninformation
technology staff, which increased the risk of network interruption due to intentional or accidental equipment
damage.
Recommendations
The District should:
Implement proper controls over payroll processing and cash collections.
Modify employee access to its accounting system to ensure that an employee cannot initiate and complete
a transaction without independent review and approval.
Implement and enforce stronger password controls.
Limit physical access to its computer server room.

•
•
•
•

Improvements needed to lower District’s food service costs
In fiscal year 2012, St. David USD’s $4.22 cost per meal was 32 percent higher than peer districts’, on
average, primarily because the District had higher staffing levels and inefficient purchasing practices. As a
result, the District had to subsidize the program’s costs with $44,110 that otherwise potentially could have
been spent in the classroom. In fiscal year 2014, the District began taking steps to help reduce its food service
costs through better purchasing practices and better monitoring, which helped lower the District’s cost per
meal to $3.71. However, this amount was still much higher than the peer districts’ $3.19 average cost per
meal in fiscal year 2012.
Recommendations
The District should:
Review food service staffing levels to determine if changes can be made to produce cost savings.
Continue to identify and implement additional cost savings measures.

•
•

District misreported number of riders for transportation funding
St. David USD incorrectly reported its fiscal year 2012 ridership to the Arizona Department of Education
by reporting the number of students eligible for transportation rather than the number of students actually
transported as required by Arizona Revised Statutes §15-922. Although the District’s inaccurate rider counts
did not affect its transportation funding, the District should ensure it is meeting state reporting requirements
by reporting the actual number of students transported. This would also give the District the ability to calculate
and use rider-based performance measures, such as cost per rider and bus capacity utilization, to evaluate
its routes and program efficiency.
Recommendation
The District should determine and report the actual number of students transported as required by statute for
funding purposes.

St. David Unified
School District

A copy of the full report is available at:
www.azauditor.gov
Contact person:
Ann Orrico (602) 553-0333

REPORT HIGHLIGHTS

PERFORMANCE AUDIT

December 2014 • Report No. 14-208

TABLE OF CONTENTS
District Overview

1

Student achievement much higher than peer districts’

1

District’s operations were reasonably efficient in most areas

1

Finding 1: District lacked adequate accounting and computer controls
to protect it from errors and fraud

3

Inadequate accounting controls increased risk of errors and fraud

3

Inadequate computer controls increased the risk of errors, fraud, and loss of data

4

District did not accurately report its costs

5

Recommendations

5

Finding 2: Improvements needed and some taken to lower District’s high
food service costs

7

Food service costs much higher than peer districts’ average, resulting in need for
program subsidy

7

District is taking steps to lower food service costs

8

Recommendations

8

Finding 3: Improvements needed for transportation program
recordkeeping and oversight

9

District did not report actual riders as required for transportation funding

9

Poor controls over fuel inventory increased risk of theft

9
10

Recommendations

Arizona Office of the Auditor General

St. David Unified School District • Report No. 14-208
Page i

TABLE OF CONTENTS
Appendix

a-1
a-1

Objectives, Scope, and Methodology

District Response
Table
1 Comparison of per pupil expenditures by operational area
Fiscal year 2012
(Unaudited)

2

Figure
1 Percentage of students who met or exceeded state standards (AIMS)
Fiscal year 2012
(Unaudited)

1

Arizona Office of the Auditor General

St. David Unified School District • Report No. 14-208
Page ii

DISTRICT OVERVIEW
St. David Unified School District is a small, rural district located about 55 miles southeast of Tucson
in Cochise County. In fiscal year 2012, the District served 425 students in kindergarten through 12th
grade at its two schools located on the same campus.
St. David USD’s fiscal year 2012 student achievement was much higher than the peer districts’ and
state averages, and its operations were reasonably efficient in most areas.1 However, the District’s
food service program was inefficient, with a cost per meal that was much higher than the peer
districts’ average. In addition to taking steps to lower its food service costs, the District should
strengthen its accounting and computer controls and improve its transportation program oversight.

Student achievement much higher than peer districts’
In fiscal year 2012, 70 percent of the District’s
students met or exceeded state standards in
Figure 1: Percentage of students who met or
math, 82 percent in reading, 62 percent in
exceeded state standards (AIMS)
writing, and 77 percent in science. As shown in
Fiscal year 2012
Figure 1, the District’s reading and writing
(Unaudited)
scores were higher than the peer districts’
100%
90%
averages, and its math and science scores
80%
were much higher. Additionally, under the
70%
60%
Arizona Department of Education’s A-F Letter
St. David USD
50%
Grade Accountability System, St. David USD
40%
Peer group
30%
received an overall letter grade of B for fiscal
20%
State-wide
year 2012. Of the 15 districts in the student
10%
0%
achievement peer group, 4 other districts also
Math
Reading Writing Science
received a B letter grade, 9 districts received a
C letter grade, and 2 districts receive a D letter
Source: Auditor General staff analysis of fiscal year 2012 test results on
Arizona’s Instrument to Measure Standards (AIMS).
grade. Further, the District’s 100 percent
graduation rate in fiscal year 2012 was much
higher than the peer districts’ 81 percent average and the State’s 77 percent average.

District’s operations were reasonably efficient in most areas
As shown in Table 1 on page 2, and based on auditors’ review of various performance measures, in
fiscal year 2012, St. David USD operated in a reasonably efficient manner in most operational areas.
The District spent $1,583 less per pupil overall than its peer districts, primarily because it received
less federal grant monies because of its slightly lower poverty rate and less Maintenance and
Operation Fund monies because it transported students fewer miles.
1 Auditors developed two peer groups for comparative purposes. See page a-1 of this report’s Appendix for further explanation of the peer groups.

Arizona Office of the Auditor General

St. David Unified School District • Report No. 14-208
Page 1

St. David USD
Table 1:

Comparison of per pupil
Table expenditures
1:
by operational area
Fiscal year 2012
(Unaudited)

Spending
Total per pupil
Classroom dollars
Nonclassroom
dollars
Administration
Plant operations
Food service
Transportation
Student support
Instruction
support
Source:

St.
David
USD
$8,289

Peer
group
average
$9,872

State
average
$7,475

4,589

4,866

4,053

Much lower administrative costs, but controls
need strengthening—St. David USD’s administrative
costs were much lower per pupil than the peer districts
averaged—$1,171 compared to $1,487, primarily because
it employed fewer administrative staff. Despite its lower
administrative costs, the District should strengthen controls
over its payroll, cash handling, and computer systems and
network (see Finding 1, page 3).

Mixed plant operations costs—Compared to peer

district averages, St. David USD’s fiscal year 2012 plant
operations costs were 30 percent higher per square foot but
33 percent lower per student. The District was able to spend
less per student despite a higher cost per square foot
because it maintained 48 percent less building space per
student. It is not uncommon for districts that operate
152
481
436
substantially lower amounts of square footage per student to
Auditor General staff analysis of fiscal year 2012 Arizona
have higher costs per square foot, likely due to higher usage
Department of Education student membership data and
district-reported accounting data.
levels. For example, having more students per square foot
likely increases the maintenance and janitorial needs of that
space and would potentially require more energy to heat and cool the space. Auditors observed
the District’s facilities and plant operations activities and did not identify any overstaffing,
unusually high salaries, or excessive or unneeded heating or cooling of buildings.
1,171
967
365
346
699

1,487
1,438
454
510
636

736
928
382
362
578

Inefficient food service program—St.

David USD’s food service program operated
inefficiently with a much higher cost per meal than peer districts, on average. The District’s
$4.22 cost per meal was 32 percent higher than the peer districts’ $3.19 average. Despite its
higher cost per meal, St. David USD spent 20 percent less per pupil on its food service
program than peer districts, on average, but only because it served 40 percent fewer meals
per pupil than peer districts, on average. The District’s higher cost per meal was caused, in
part, by its higher staffing levels and inefficient purchasing practices. Largely because of these
higher costs, the District had to subsidize the program with $44,110 that otherwise potentially
could have been spent in the classroom (see Finding 2, page 7).

Higher transportation costs per mile but program reasonably efficient—St.
David USD’s $3.34 cost per mile was 35 percent higher than the peer districts’ average of
$2.47. Costs were higher in part because the District drove fewer total miles than the peer
districts’ average, and therefore certain costs, such as the program director’s salary, were
spread over fewer miles when calculating a cost per mile. In addition, auditors reviewed and
observed the District’s three bus routes and determined that routes operated in different areas
of the District and could not be combined to reduce costs. Also, the transportation director,
who oversaw program operations and was the District’s mechanic, was the only full-time
transportation employee. Other performance measures, such as cost per rider and bus
capacity utilization, could not be calculated because the District’s rider counts were inaccurate.
Although the District’s inaccurate rider counts did not affect its transporation funding, the
District should ensure it meets state reporting requirements by accurately reporting the actual
number of students transported. In addition, the District lacked sufficient controls over its fuel
inventory (see Finding 3, page 9).
Arizona Office of the Auditor General

St. David Unified School District • Report No. 14-208
Page 2

FINDING 1
District lacked adequate accounting and computer
controls to protect it from errors and fraud
In fiscal year 2012, St. David USD lacked adequate controls over payroll, cash handling, and its
computer systems and network. Although no improper transactions were detected in the items
auditors reviewed, these poor controls exposed the District to an increased risk of errors, fraud, and
misuse of sensitive information. Additionally, the District did not accurately report its costs on its
Annual Financial Report.

Inadequate accounting controls increased risk of errors and fraud
St. David USD lacked adequate controls over payroll processing, which exposed the District to
increased risk of errors and fraud, and resulted in some incorrect and unsupported payments in
fiscal year 2012. Further, the District did not maintain sufficient documentation to support cash
collections.

Some employees paid without extra duty approvals—Auditors reviewed detailed payroll
and personnel records for 30 employees who received payments in fiscal year 2012 and found
that 8 of the 24 employees who received extra duty pay received at least one payment that did not
have any supporting documentation showing that the additional duties and pay were approved
prior to services being rendered. For example, 4 employees earned a total of $6,645 for providing
services related to an intergovernmental agreement without documentation of prior approval for
the additional duties or pay. To help ensure that all pay is properly authorized and employees are
paid correctly, the District should document additional duties and related pay in the employees’
contracts or personnel/payroll action forms and ensure that these documents are properly
approved prior to payment as required by the Uniform System of Financial Records for Arizona
School Districts. This documentation should be maintained in employees’ personnel files.

Employee time sheets not reviewed—The District’s hourly employees prepared biweekly
time sheets that supervisors were then supposed to review and approve before submitting them
to payroll for processing. However, auditors reviewed one pay period’s time sheets for ten
employees who worked in fiscal year 2012 and found that all ten employees’ time sheets lacked
any evidence that supervisors reviewed and approved them.

Employee payments not always accurate—Auditors

reviewed detailed payroll and
personnel records for 30 employees and found that the District underpaid 1 employee. Specifically,
the District miscalculated the total pay for an employee who had taken a leave of absence during
the year, resulting in the employee’s being underpaid by $543.

Arizona Office of the Auditor General

St. David Unified School District • Report No. 14-208
Page 3

Controls over cash collections were insufficient—In

fiscal year 2012, the District
collected cash for various purposes, including student activities, extracurricular activities, and
student course fees. The majority of these monies were received at the high school principal’s
office. Auditors reviewed 22 fiscal year 2012 cash deposits totaling almost $10,300 and found
that the District did not have proper controls in place to ensure that it properly accounted for
all monies received. Specifically, auditors found that 15 of the 22 deposits reviewed did not
have documentation supporting the accuracy of the deposited amounts, such as cash receipt
forms or cash collection reports to document cash collected and items sold. In addition,
although cash should be deposited at least weekly, auditors found that 13 of the 22 deposits
included monies that the District received more than 7 days prior to when they were actually
deposited. Without proper controls, the District cannot ensure that all cash received was
deposited or that cash was deposited in a timely manner. Because of the high risk for loss,
theft, and misuse associated with cash transactions, the District should establish and maintain
effective internal controls to safeguard cash.

Inadequate computer controls increased the risk of errors, fraud,
and loss of data
St. David USD lacked adequate controls over its computer systems and network. Although no
improper transactions were detected, these poor controls exposed the District to an increased
risk of errors, fraud, and loss of data.

Broad access to accounting system—Auditors

reviewed the District’s user access
report for all four users with access to the accounting system and found that three district
users had more access to the accounting system than they needed to perform their job
duties. Two of these employees had full system access giving them the ability to perform all
accounting system functions without an independent review and approval. Although auditors
detected no improper transactions in the 30 employee payroll and personnel records and the
30 accounts payable transactions reviewed, granting employees system access beyond what
is required to fulfill job responsibilities, especially full system access, exposes the District to
increased risks of errors, fraud, and misuse, such as processing false invoices or adding
nonexistent vendors or employees. The District should review and further restrict its employees’
access to the computerized accounting system to ensure that no single employee has the
ability to initiate and complete a transaction without independent review and approval.

Weak password requirements—The District’s password requirements for access to its
network and systems need strengthening. Passwords for the District’s network, accounting
system, and student information system lacked complexity requirements—that is, passwords
can be short and need not contain numbers and symbols. Additionally, the District’s network
and student information system users were not prompted to periodically change passwords.
Common practice requires passwords to be at least eight characters, contain a combination
of alphabetic and numeric characters, and be changed every 90 days. These practices would
decrease the risk of unauthorized persons’ gaining access to the network and systems.

Arizona Office of the Auditor General

St. David Unified School District • Report No. 14-208
Page 4

Physical access to IT server room was not limited—The District did not sufficiently protect
its main server room. The District maintained its server in a small room that was used as the IT
director’s office. The room was also accessible to custodial workers and other non-IT staff, which
increased the risk of network interruption due to intentional or accidental equipment damage.

Lack of disaster recovery plan could result in interrupted operations or data
loss—St. David USD did not have a written, up-to-date, and tested disaster recovery plan even
though it maintained critical student and accounting information on its network and systems. A
written and properly designed disaster recovery plan would help ensure continued operations in
the case of a system or equipment failure or interruption. The plan should include detailed
information on how systems could be restored in such an event. As part of a disaster recovery
plan, the District should also perform documented tests of its ability to restore electronic data files
from data backups, which are important to ensure continuous accessibility to sensitive and critical
data.

District did not accurately report its costs
St. David USD did not consistently classify its fiscal year 2012 expenditures in accordance with the
Uniform Chart of Accounts for school districts. As a result, its Annual Financial Report did not
accurately reflect its costs, including both classroom and nonclassroom expenditures. Auditors
identified classification errors totaling $801,000 of the District’s total $3.5 million of operational
spending.1 The dollar amounts shown in the tables in this report reflect the necessary adjustments.

Recommendations
1.

The District should ensure that additional duties and related payments are addressed in
employment contracts or personnel/payroll action forms, approved in advance of the work
being performed, and maintained in employee personnel files.

2.

The District should require supervisors to thoroughly review time sheets to help ensure that all
employee pay amounts are accurate.

3.

The District should establish and maintain effective internal controls to safeguard cash,
including issuing receipts for all cash received and making deposits timely.

4.

The District should review employee access to the accounting system and modify access to
ensure that an employee cannot initiate and complete a transaction without independent
review and that each employee has only the access necessary to meet their job responsibilities.

5.

The District should implement and enforce password requirements related to password length,
complexity, and expiration.

1 Operational spending includes costs incurred for the District’s day-to-day operation. For further explanation, see Appendix page a-1.

Arizona Office of the Auditor General

St. David Unified School District • Report No. 14-208
Page 5

6.

The District should limit physical access to its IT server room so that only appropriate
personnel have access.

7.

The District should create a formal disaster recovery plan and test it periodically to identify
and remedy deficiencies.

8.

The District should classify all transactions in accordance with the Uniform Chart of
Accounts for school districts.

Arizona Office of the Auditor General

St. David Unified School District • Report No. 14-208
Page 6

FINDING 2
Improvements needed and some taken to lower District’s
high food service costs
In fiscal year 2012, St. David USD’s food service costs were much higher than peer districts’, on
average. Costs were high primarily because the District had higher staffing levels and inefficient
purchasing practices. As a result, the District had to subsidize the program’s costs with $44,110 of
Maintenance and Operation Fund monies that otherwise potentially could have been spent in the
classroom. The District has begun taking steps to help lower its food service costs but costs remain
high.

Food service costs much higher than peer districts’ average,
resulting in need for program subsidy
In fiscal year 2012, St. David USD’s cost per meal of $4.22 was 32 percent higher than the peer
districts’ average of $3.19 and 52 percent higher than the federal National School Lunch Program’s
(NSLP) $2.77 reimbursement rate for students qualifying for free meals. NSLP reimbursements
accounted for 55 percent of the District’s food service program revenues in fiscal year 2012. The
District’s costs were high, in part, because it had higher staffing levels than the peer districts’, on
average. Further, the District’s costs for food and other supplies were higher when compared to the
peer districts’ average because the District had some poor purchasing practices. These high costs
led to the District’s need to subsidize its food service program with $44,110 in Maintenance and
Operation Fund monies that otherwise potentially could have been spent in the classroom.

Higher staffing levels—The District’s higher cost per meal was due, in part, to higher staffing
levels. Specifically, St. David USD employed one food service full-time equivalent (FTE) position
for every 13,377 meals produced, while, on average, the peer districts employed one FTE for every
17,956 meals produced.

Poor purchasing practices resulted in higher food and supply costs—The District’s
higher food costs were due, in part, to inefficient purchasing practices. In fiscal year 2012, in
addition to purchasing food and supplies through a cooperative, the District also purchased these
items from two vendors without going through a formal process to ensure that it was receiving the
best price for the items purchased. Had it done so, the District may potentially have been able to
obtain food and other supplies at prices that were more beneficial to the District. For example,
auditors reviewed invoices from the two vendors and the purchasing cooperative, and determined
that on average the District saved 7 percent when purchasing from the cooperative.

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St. David Unified School District • Report No. 14-208
Page 7

District is taking steps to lower food service costs
During the audit, district officials stated they were aware of the high food service program costs
and were beginning to make adjustments to the program to lower costs. Specifically, the District
began purchasing food and supplies exclusively through the purchasing cooperative in fiscal
year 2014, which they believe will result in lower costs. Further, district officials stated they were
beginning to review their food choices and analyzing whether certain foods were less expensive
to make from scratch or purchase ready-made. In addition, district officials stated that they were
also beginning to calculate and monitor food costs per meal to help better ensure that costs
were covered by revenues. Finally, the District’s fiscal year 2014 meal prices were increased
slightly to help cover costs. The District’s efforts to lower its food service costs appear to be
somewhat successful. In fiscal year 2014, the District spent a total of $113,800 on its food service
program, which is over $41,000 less than it spent in fiscal year 2012. In addition, the District’s
fiscal year 2014 $3.71 cost per meal was 51 cents lower than its fiscal year 2012 cost per meal
but likely remains high considering peer districts’ fiscal year 2012 $3.19 average cost per meal.

Recommendations
1.

The District should review its food service staffing levels to determine if changes can be
made to produce cost savings.

2.

The District should continue to closely monitor its food service program to identify and
implement any additional cost savings measures.

Arizona Office of the Auditor General

St. David Unified School District • Report No. 14-208
Page 8

FINDING 3
Improvements needed for transportation program
recordkeeping and oversight
In fiscal year 2012, St. David USD did not accurately report all required information for state
transportation funding purposes because it did not report the actual number of students transported.
Further, the District lacked sufficient controls over its fuel inventory.

District did not report actual riders as required for transportation
funding
In fiscal year 2012, St. David USD incorrectly reported its ridership to the Arizona Department of
Education (ADE) by reporting the number of students eligible for transportation rather than the
number of students actually transported as Arizona Revised Statutes §15-922 requires. Transportation
funding is primarily based on miles driven, but the number of riders is also a factor in determining
the per mile rate that districts receive. Although the District’s inaccurate reporting in fiscal year 2012
did not affect its transportation funding, the District should ensure it is meeting state reporting
requirements by reporting the actual number of students transported. Further, not monitoring rider
counts hinders the District’s ability to calculate and use rider-based performance measures, such as
cost per rider and bus capacity utilization, to evaluate its routes and program efficiency and make
informed program decisions.

Poor controls over fuel inventory increased risk of theft
St. David USD did not implement proper controls over its fuel inventory. The District has a 1,000-gallon
diesel fuel tank that is located at the District’s bus yard. The bus yard is surrounded by a chain link
fence secured with a padlock. Additionally, the District’s pump is secured with a padlock, and only
two district employees have keys to the pump lock. However, the integrity of these security measures
is diminished because the District issued keys for the yard and pump padlocks to its fuel vendor. The
vendor retained the keys at all times and filled the District’s fuel tank based on its own schedule
instead of waiting until a district employee was available to unlock the bus yard and fuel tank and
determine fuel inventory levels before and after the vendor filled the tank. Although the vendor writes
the before-and-after fuel inventory levels on its invoices when it fuels the District’s tank, the District
does not monitor the tank to ensure these levels are accurate. Further, when fueling vehicles, district
employees did not complete logs to show the number of gallons each user pumped and for which
vehicles. By not performing fuel level readings before and after the tanks were filled and not

Arizona Office of the Auditor General

St. David Unified School District • Report No. 14-208
Page 9

maintaining and monitoring fuel logs, the District could not verify whether fuel billings were
accurate. This lack of control over the District’s fuel inventory placed the District at risk for theft
and fraud.

Recommendations
1.

As statute requires for state funding purposes and also to help it evaluate its transportation
program’s efficiency, the District should determine and report to the Arizona Department
of Education the actual number of students transported.

2.

The District should evaluate and implement additional controls over its fuel inventory to
help ensure proper accounting of all fuel deliveries and usage.

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St. David Unified School District • Report No. 14-208
Page 10

APPENDIX
Objectives, Scope, and Methodology
The Office of the Auditor General has conducted a performance audit of the St. David Unified School
District pursuant to Arizona Revised Statutes §41-1279.03(A)(9). Based in part on their effect on
classroom dollars, as previously reported in the Auditor General’s annual report, Arizona School
District Spending (Classroom Dollars report), this audit focused on the District’s efficiency and
effectiveness in four operational areas: administration, plant operations and maintenance, food
service, and student transportation. To evaluate costs in each of these areas, only operational
spending, primarily for fiscal year 2012, was considered.1 Further, because of the underlying law
initiating these performance audits, auditors also reviewed the District’s use of Proposition 301 sales
tax monies and how it accounted for dollars spent in the classroom.
In conducting this audit, auditors used a variety of methods, including examining various records,
such as available fiscal year 2012 summary accounting data for all districts and St. David USD’s
fiscal year 2012 detailed accounting data, contracts, and other district documents; reviewing district
policies, procedures, and related internal controls; reviewing applicable statutes; and interviewing
district administrators and staff.
To compare districts’ academic indicators, auditors developed a student achievement peer group
using poverty as the primary factor because poverty has been shown to be associated with student
achievement. Auditors also used secondary factors such as district type and location to further refine
these groups. St. David USD’s student achievement peer group includes St. David USD and 15 other
unified school districts that also served student populations with poverty rates from 27 percent to 36
percent in towns and rural areas. Auditors compared St. David USD’s student AIMS scores to those
of its peer group averages. Generally, auditors considered St. David USD’s student AIMS scores to
be similar if they were within 5 percentage points of peer averages, slightly higher/lower if they were
within 6 to 10 percentage points of peer averages, higher/lower if they were within 11 to 15 percentage
points of peer averages, and much higher/lower if they were more than 15 percentage points higher/
lower than peer averages. In determining the District’s overall student achievement level, auditors
considered the differences in AIMS scores between St. David USD and its peers, as well as the
District’s graduation rate and Arizona Department of Education-assigned letter grade.2
To analyze St. David USD’s operational efficiency in administration, plant operations, and food
service, auditors selected a group of peer districts based on their similarities in district size, type, and
location. This operational peer group includes St. David USD and 18 other unified and high school
districts that also served between 200 and 599 students and were located in town and rural areas.
To analyze St. David USD’s operational efficiency in transportation, auditors selected a group of peer
districts based on their similarities in miles per rider and location. This transportation peer group
1 Operational spending includes costs incurred for the District’s day-to-day operations. It excludes costs associated with repaying debt,

capital outlay (such as purchasing land, buildings, and equipment), and programs such as adult education and community service that are
outside the scope of preschool through grade-12 education.

2 The Arizona Department of Education’s A-F Letter Grade Accountability System assigns letter grades based primarily on academic growth

and the number of students passing AIMS.

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includes St. David and six other districts that also traveled between 281 and 336 miles per rider
and were located in towns and rural areas. Because St. David USD misreported its number of
riders by reporting the number of riders eligible for transportation rather than the actual number
of riders transported, auditors used the actual number of riders transported, as observed during
on-site visits, to determine the District’s proper transportation peer group. Auditors compared St.
David USD’s costs to its peer group averages. Generally, auditors considered St. David USD’s
costs to be similar if they were within 5 percent of peer averages, slightly higher/lower if they were
within 6 to 10 percent of peer averages, higher/lower if they were within 11 to 15 percent of peer
averages, and much higher/lower if they were more than 15 percent higher/lower than peer
averages. However, in determining the overall efficiency of St. David USD’s nonclassroom
operational areas, auditors also considered other factors that affect costs and operational
efficiency such as square footage per student, meal participation rates, as well as auditor
observations and any unique or unusual challenges the District had. Additionally:

•

To assess the District’s financial accounting data, auditors evaluated the District’s internal
controls related to expenditure processing and scanned all fiscal year 2012 payroll and
accounts payable transactions for proper account classification and reasonableness.
Additionally, auditors reviewed detailed payroll and personnel records for 30 of the 107
individuals who received payments in fiscal year 2012 through the District’s payroll system
and reviewed supporting documentation for 30 of the 3,360 fiscal year 2012 accounts
payable transactions. No improper transactions were identified. Auditors also evaluated
other internal controls that were considered significant to the audit objectives and reviewed
fiscal year 2012 spending and prior years’ spending trends across operational areas.

•

To assess the District’s computer information systems and network, auditors evaluated
certain controls over its logical and physical security, including user access to sensitive data
and critical systems, and the security of servers that house the data and systems. Auditors
also evaluated certain district policies over the system such as data sensitivity, backup, and
recovery.

•

To assess whether the District managed its food service program appropriately and whether
it functioned efficiently, auditors reviewed fiscal year 2012 food service revenues and
expenditures, including labor and food costs; compared costs to peer districts’; reviewed
the Arizona Department of Education’s food service monitoring reports; reviewed point-ofsale system reports; evaluated staffing levels using district reported data; and observed
food service operations.

•

To assess whether the District managed its transportation program appropriately and
whether it functioned efficiently, auditors reviewed and evaluated required transportation
reports, bus driver files, bus maintenance and safety records, bus routing, and the District’s
procedures for fueling vehicles. Auditors also reviewed fiscal year 2012 transportation costs
and compared them to peer districts’ and observed and counted students riding district
buses.

•

To assess whether the District’s administration effectively and efficiently managed district
operations, auditors evaluated administrative procedures and controls at the district and
school level, including reviewing personnel files and other pertinent documents and
interviewing district and school administrators about their duties. Auditors also reviewed

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and evaluated fiscal year 2012 administration costs and compared these to peer districts’
average costs and further evaluated staffing levels using district reported data.

•

To assess whether the District managed its plant operations and maintenance function
appropriately and whether it functioned efficiently, auditors reviewed and evaluated fiscal year
2012 plant operations and maintenance costs and district building space, and compared these
costs and capacities to peer districts’.

•

To assess whether the District was in compliance with Proposition 301’s Classroom Site Fund
requirements, auditors reviewed fiscal year 2012 expenditures to determine whether they were
appropriate and if the District properly accounted for them. No issues of noncompliance were
identified.

We conducted this performance audit in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings and conclusions based on our
audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objectives.
The Auditor General and her staff express their appreciation to the St. David Unified School District’s
board members, superintendent, and staff for their cooperation and assistance throughout the audit.

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DISTRICT RESPONSE

DISTRICT RESPONSE