MBE2012
Seattle Schools Scandal May
Be Worse Than Thought
SEATTLE (AP) — Last year’s Seattle
Public Schools financial scandal may have
cost $1.3 million more than previously
thought.
According to the state auditor’s office,
Silas Potter Jr. approved gross overpay-
ments during the four years he headed a dis-
trict program to award small public works
contracts, and total misspending could
approach $3 million.
In some cases, payments Potter approved
appeared to be 10 times what they should
have been, such as when the school district
paid $14,500 for video surveillance cabling
and conduit worth just over $1,000, The
Seattle Times reported.
Potter faces first-degree theft charges, as
do two others accused of conspiring with
him.
The scandal, which came to light last year,
prompted the firing of Superintendent
Maria Goodloe-Johnson and the district’s
top financial officer. It also likely factored
in the defeat of two school board members
last fall.
In an earlier investigation, the auditor’s
office identified $280,000 in losses and
questioned another $1.5 million in expendi-
tures for a period when Potter headed a
now-closed district office that was supposed
to help small businesses win government
contracts.
The latest audit covers the district’s small-
works program, which awards public works
contracts that cost $300,000 or less. Potter
oversaw that program from 2005 through
2009. The audit found problems with 14 of
the 26 vendors the office dealt with, includ-
ing wages paid at much higher than the pre-
vailing rate, lack of detail about what the
district was paying for, charges for hours
that vendors could not document, and
excessive markups.
Duggan Harman, assistant superintendent
of business and finance, said the district
might ban some or all of the 14 vendors
from bidding for future district work, and
none of the 14 has had a contract since
2009. District officials also have been look-
ing into whether they can recoup any of the
money.
Harman acknowledged that the district
failed in a number of ways, such as failing
to oversee employees, follow normal
accountability channels and maintain an
``adequate means for employees to raise
their concerns.’’
``It kills me to see this,’’ Harman said.
``I’m trying to keep in perspective that this
was something that was seven years ago.’’
The district has fixed many of the prob-
lems and now requires more than one per-
son to sign off on any purchase orders or
invoices, no matter the amount, Harman
said. Invoices must be detailed, he said, and
can no longer say ``payment per agree-
ment.’’
The district also has established a new
ethics program, beefed up board oversight
of district finances, and hired two addition-
al internal auditors.
Construction Employment Leads
All Industries in Job Gains — but
Other Industries’ Losses Dominate
OLYMPIA - Washington’s construction
industry led all sectors in employment gains
in August, with a seasonally adjusted esti-
mate of 1,900 jobs, contributing to a net
gain of 3,900 construction jobs since
August 2011.
These and other job estimates are detailed
in the latest report from the state’s Employ-
ment Security Department. The prelimi-
nary, seasonally adjusted unemployment
rate for August was 8.6 percent.
For the second year in a row, the employ-
ment estimates for the leisure-and-hospital-
ity industry and the wholesale-trade
industry showed unusually large losses for
August. They contributed to an estimated
net loss of 1,100 nonfarm jobs across the
state.
“Based on the raw data, jobs in these sec-
tors didn’t change significantly,” said Joe
Elling, chief labor economist for the state’s
Employment Security Department. “The
reported losses show up when the seasonal
adjustments are applied.”
Economists seasonally adjust monthly job
numbers and the unemployment rate to
remove or discount normal seasonal varia-
tions, such as holiday hiring. If an industry
adds more jobs or doesn’t eliminate as
many jobs as expected based on past histo-
ry, it shows up as a seasonally adjusted gain.
Similarly, when jobs are cut deeper than
expected in a given month, or if normal hir-
Page 6 • Minority Business Enterprise • The Seattle Skanner September 26, 2012
ing doesn’t occur, that shows up as a job
loss.
“It can take up to two or three years to
determine when deviations from the season-
al norms are temporary or longer term,”
said Elling.
In addition to construction, the industries
with the most seasonally adjusted job gains
in August were manufacturing, up 1,500
jobs; financial activities, up 1,200; educa-
tion and health services, up 500; and gov-
ernment, with an estimated net gain of 300.
On the loss side, wholesale trade dropped
an estimated 2,600 jobs; leisure and hospi-
tality lost 2,300; retail trade shed 1,600
jobs; and professional and business services
lost 200.
Within the government sector, federal
employment in Washington grew by 1,800
jobs, state agencies lost an estimated 900
jobs, public higher education declined by
100 jobs, K-12 schools added 500, and local
government lost 1,400.
In August, an estimated 301,700 people
(seasonally adjusted) in Washington were
unemployed and looking for work. That
includes 129,676 who claimed unemploy-
ment benefits last month.
Also in August, 3,429 unemployed work-
ers ran out of unemployment benefits,
bringing the total to 108,669 since extended
benefits were activated in July 2008.