Memphis schools audit shows more than $119M in questionable costs

(The Center Square) – An audit of Memphis-Shelby County Schools released Wednesday shows more than $119 million in questionable costs, including more than $54 million in suspected waste, fraud and abuse, some of which could lead to indictments, according to Comptroller Jason Mumpower. One of the largest questions concerns a $48.4 million contract for custodial services awarded to a single vendor, despite a recommendation to award it to multiple vendors, according to an executive summary of the 667-page audit, which covers the period between fiscal years 2022 through 2024. "The report states that documentation indicated the former chief of Business Operations influenced the award outside the established procurement process," the audit said. "The contract was later terminated because of poor performance. Following the termination, the district referred separate whistleblower allegations concerning the procurement process to the Federal Bureau of Investigation." Auditors said they were unable to independently verify specific allegations or determine what happened to the referral. The report identified a $3.1 million payment to a renovation company that shows a possible conflict of interest between the company and the district's former director of Facilities and Maintenance. The school district paid the company $250,000 for work that was never completed, and another $400,000 was performed negligently, the audit said. Some of the money paid to the company involved federal grants. "I assure you we will be taking this to the local district attorney, and perhaps more importantly, to the United States attorney, for further review," Mumpower said in a news conference. "I believe there is information in this report that could absolutely lead to an indictment, but that's not for me to say." Mumpower said the contents of the audit are "ludicrous and not defensible in any way." "It's going to be more interesting than whatever beach read you're using by the pool this year," Mumpower said. "This report reads like a novel and you will be flabbergasted and disappointed in what's been going on in the Memphis-Shelby County School System." Memphis-Shelby County Schools said the audit predates the current administration. "We remain committed to carefully reviewing the final report and implementing any additional improvements where appropriate," the school district said in a statement. "As we complete our review, our commitment to transparency, accountability and continuous improvement remains steadfast." The General Assembly passed a law that gives a nine-member board appointed by state officials oversight of Memphis-Shelby County Schools. Members of the Memphis-Shelby County School Board, Shelby County Government and others sued the state in federal court, saying the legislation violates the 14th Amendment, the Tennessee Constitution's Equal Protection Clauses and home rule. "They need to withdraw their lawsuit because otherwise all they're doing is delaying the change that is needed in the school system," said House Speaker Cameron Sexton. "And if they're unwilling to withdraw it, I am asking the parents and residents of Shelby County and Memphis to go and ask them to withdraw it."