An outside auditor of Tennessee’s famed-but-failed Achievement School District found that the group’s finances were a mess.

The Achievement School District was created to prove that ASD could take control of the state’s lowest scoring schools (in the bottom 5% of the state) and move them to the top 25% in only five years. The clock began ticking in 2012, when ASD took over half a dozen schools. An independent study by researchers at Vanderbilt University found no evidence that ASD was on track to meet that goal. Gary Rubinstein analyzed the numbers and concluded that the original schools turned over to charters were still in the bottom 5% (although one rose to the bottom 7%). Of course, they still have a year to go, so let’s not rush to judgment! (Georgia, North Carolina, and Nevada are all planning to create special districts modeled on Tennessee’s ASD, which supposedly knows how to turnaround low-performing schools even though it hasn’t. But when has failure ever deterred corporate-style reformers?)

But it turns out that the ASD’s finances were a mess, according to auditors.

It’s in charge of turning around Tennessee’s failing schools, but the state’s Achievement School District now has its own flunking grade from state Comptroller watchdogs.

The just-released audit by the Division of State Audit provides a blistering critique into what auditors say the agency’s lack of internal financial controls over basic functions.

So just how bad are things at the agency that directly manages five public schools and contracts with private charter groups to operate 24 other schools falling into the bottom five percent of schools statewide in terms of student performance?

Even as Division of State Audit accountants’ examination was still underway this spring, the state Department of Education, which had allowed the ASD to operate independently, informed the Comptroller’s office in April that it had staged an intervention and seized control over the ASD’s “fiscal and federal processes.”

As a result, the functions were transferred from Memphis to Nashville with a turnover of the ASD’s financial staff. Education Commissioner Candice McQueen’s staff told auditors they were hiring a fiscal director, fiscal manager, accountant, account tech, federal programs director and federal programs manager.

Problem areas cited by the Division of State Audit ranged from loose controls over spending, travel and credit cards to insufficient monitoring of the actual schools that ASD runs or contracts out.

Specific findings include:

1) The Achievement School District’s management did not establish adequate controls over several key human resources and payroll processes

State law directs that it “shall develop written procedures, subject to the approval of the commissioner, for employment and management of personnel as well as the development of compensation and benefit plans.”

“During our audit,” watchdogs wrote, “we found seven key areas where ASD did not establish processes over key human resources and payroll functions, including segregating duties; maintaining personnel files; verifying education credentials; documenting time and attendance; completing performance reviews; documenting approvals of bonuses and pay raises; and exiting employees.

2) The Achievement School District’s management “failed to implement adequate internal controls over its expenditures, travel claims, and purchasing card purchases

“Based on our testwork,” auditors wrote, “we found several deficiencies that indicate that ASD management did not establish adequate internal controls over expenditures and purchasing card purchases. Specifically, we noted that management did not properly approve expenditures, travel claims, and purchasing card purchases, nor did they provide adequate support for some transactions.

3) The Achievement School District’s fiscal management “did not perform sufficient fiscal monitoring of its direct-run schools and charter management organizations

“Considering the problems identified in previous Tennessee Single Audits,” auditors noted, “we inquired with management to determine if ASD management conducted fiscal monitoring of ASD’s Achievement Schools and charter management organizations; we found that ASD’s main office staff do not conduct such monitoring.

In one instance, auditors discovered there were payments of $5,895 to employees who no longer even worked for ASD.

Among other things, auditors also couldn’t find six expenditure transactions for a dental insurance premium, donation, coffee supplies, and accrual calculations, totaling $131,637, and for three travel claims for a flight and expenses involving charter school operators. That totalled $4,734 and, the audit says, “management could not provide supporting documentation.”

I read this story shortly after finishing a revealing memoir called Sex, Lies, and A Charter School: The Misappropriation of Your Tax Dollars. The author, Dikombi Gite, lives in Houston, where he was born. He became an engineer, but decided that he wanted to try his hand as a teacher and “give back.” He was sure he could connect with kids because he shared their life experiences. He didn’t have any teaching credentials, so he couldn’t be hired by the Houston public schools. He was hired immediately by a charter chain, where he struggled as a teacher. The chain is not identified, but it started in Houston and has (he says) 80 charters. Within months, he was moved into the office to manage the school’s books. What he learned in his brief life at the charter school was that the place appeared swell on the surface, but it was in fact riven by strife, affairs among staff members, fights among students, cronyism, nepotism, missing money, and more chaos than he could manage. Could the same story have been written about a public school? Perhaps. But not as likely because few of the teachers were professionals, and few of the administrators were professionals. People were hired and fired on a moment’s notice, no background checks. The thing that mattered most was attendance, because the flow of money depended on the head count. It is a well-written book (self-published by the author) and very revealing about what happens when there is no supervision, no oversight, no transparency, and no accountability. Funny, another book I was reading last night repeated the reformers’ claim that the key to success was school autonomy: no restraints, no constraints, no unions, no oversight. A grand theory. This book tells a different story. The author’s address is: POB 331753, Houston, TX. 77233. His email: