Ethics and Compliance: Lessons learned from El Paso ISD Region 20 Education Service Center

1. Ethics and Compliance:Lessons learned from El Paso ISDRegion 20 Education Service Center December 4th, 2013 Bill Brown, JD, CPA, Weaver Adam Jones, Weaver

2. The Case El Paso ISD was a large-scale forensics investigation of a data-manipulation and accountability avoidance scheme implemented over several school years, impacting the education of hundreds of students.

3. The Scope • A team of up to 12 staff: investigators, data analysts, accountants, HR and policy consultants, including a former FBI agent and former Dallas police detective • Examination of thousands of student records, HR files and e-mails across six school years • 155 individual witness interviews • Four months of on-site work, culminating in an 86-page report with hundreds of pages of additional exhibits

4. Caveats • The Criminal Element: The district was literally run for several years by a criminal, eventually convicted and incarcerated • The engagement was not originally proposed as an investigation, but as a process examination • We had the benefit of HINDSIGHT

5. What can an education leader take away from today’s presentation to improve a school district? • Setting the “Tone at the Top” is not a cliché • How do you monitor what happens at a campus? • Policies and procedures matter • Preventative data analysis • Ethics and compliance programs: a people solution

6. “Tone at the Top” (not a management cliché) • In this case, the superintendent/board relationship was not a “team of eight” but a team of one • Inadequate oversight: internal audit was ineffective and reported to the wrong place • One bad actor at the top will leave behind an infrastructure even after he is gone—and sometimes worse, a power void

7. From Central Office to Campus • Monitoring disparate campuses is a difficult task in the best of circumstances • It is more difficult if the underlying infrastructure (reporting and communications) lacks integrity and campus staff are not empowered • Data is one tool…but engagement is more important

8. Policies and Procedures Matter • In some instances, policies were developed to facilitate improper actions at the campus level • However, a vast majority of board policies adhered to statute, administrative code and TASB blue book practice…

9. Policies and Procedures Matter …assuming they were followed. They weren’t. In a large school district, there are always hidden corners where employees can make bad decisions, often escaping anyone’s notice or knowledge.

10. Preventive Data Analysis Remember, we had the benefit of hindsight… FACT: Bowie High School implemented a scheme to avoid students taking the 10th grade TAKS, eliminate the LEP subgroup and then advance students past 10th grade and to graduate them without accountability consequences.

11. Preventive Data Analysis Question: Did campuses other than Bowie exhibit any similar characteristics?

12. Avoiding LEP Accountability

13. Avoiding LEP Accountability 50

14. Skipping 10th Grade

15. Skipping 10th Grade

16. Central Office Code of Ethics Policy and Procedures State Law • Training • Monitoring • Reporting • Assistance COMMUNICATION* Reporting Non-compliance Campuses Education Integrity of Data

17. Central Office Code of Ethics Policy and Procedures State Law • Training • Monitoring • Reporting • Assistance COMMUNICATION* Reporting Non-compliance DISCONNECT Campuses Education Integrity of Data

18. Ethics and Compliance Program • Establish a written ethics policy and code of conduct, communicate to ALL employees • Be vigilant about updating policies and procedures • Be more vigilant about communicating those policies and procedures to employees and third party contractors

19. Ethics and Compliance Program But remember: • This is a PEOPLE solution, not just words on a page. • It requires empowerment!

20. The “People” Solution Remediation Tone at the Top 95% Educate Employees Investigate Reporting Mechanism Reduce Detection Time

21. The “People” Solution Remediation Tone at the Top • Establishes standards for ethical behavior • Affixes responsibility for maintaining ethical culture • Sets positive example for others to follow 95% Educate Employees Investigate Reporting Mechanism Reduce Detection Time

22. The “People” Solution Remediation Tone at the Top 95% Educate Employees Investigate Reporting Mechanism Reduce Detection Time

23. The “People” Solution Remediation Tone at the Top 95% • Informed employees will be more likely to act ethically • Raises awareness of potentially fraudulent conduct by other employees or vendors • Encourages reporting of fraudulent conduct (early detection) Educate Employees Investigate Reporting Mechanism Reduce Detection Time

24. The “People” Solution Remediation Tone at the Top 95% Educate Employees Investigate Reporting Mechanism Reduce Detection Time

25. The “People” Solution Remediation Tone at the Top 95% • Commitment to non-retaliation • Anonymous reporting extremely important • Appropriate response (part of the solution or part of the problem) • Reduces detection time • Cornerstone to enterprise-wide anti-fraud system Educate Employees Investigate Reporting Mechanism Reduce Detection Time

26. The “People” Solution Remediation Tone at the Top 95% • Objective/probing • Identify stakeholders/isolate interested individuals • Utilize appropriate investigative personnel (appropriate skills) • Timely conclusion/recommendations Educate Employees Investigate Reporting Mechanism Reduce Detection Time

27. The “People” Solution Remediation Tone at the Top 95% Educate Employees Investigate Reporting Mechanism Reduce Detection Time

28. Thank you for all you do for Texas kids! Questions? Comments? bill.brown@weaver.com adam.jones@weaver.com