Posted on: Friday, February 1,2002

Auditor wants DOE's storeroom to close

By Vicki Viotti
Advertiser Staff Writer

The state auditor wants public school officials to shut the doors to the Department of Education supplies storeroom, finding little improvement in management of the facility, which has been criticized for waste and sloppy inventory practice.

In a management audit released yesterday, state auditor Marion Higa also recommends lawmakers repeal the legislation that created the central storeroom and the revolving fund that supports it.

The storeroom was set up 30 years ago to enable bulk purchases of educational, office and custodial supplies, which are then sold to public schools at cost plus an 8 percent delivery charge.

Poor storeroom management by the DOE has been noted for years, according to the auditor's summary statement. A 1996 financial audit of the public school system found "unwarranted, excessive ordering," citing as an example the unjustified purchase of 48,000 pairs of scissors.

"This was a follow-up to our previous report," Higa said. "We wanted to see if there was any improvement."

Her finding: There was none.

"Overall, we found that the storeroom increases the schools' workload, wastes taxpayers' money and is no longer an efficient means to purchase and distribute school supplies," according to the report's executive summary.

The auditor found that the storeroom had, on average, enough stored inventory for the items to fill orders for two years, but in some isolated cases the hoarding created supplies to last as long as 12 years.

School officials apparently agree that closing the storeroom is a good idea.

Department spokesman Greg Knudsen said a bill repealing the storeroom law is pending this session.

The storeroom, located on Leo'ole Street in Waipahu, was established before the advent of big-box discounters, to give all schools access to supplies at a fair price, Knudsen said.

"We would be working on an alternate method for schools to procure supplies," Knudsen said. "Usually (schools) tell us they can go down to their local supply store and get a better deal, and so that will probably accommodate some of that."

Here are some specific criticisms in the management audit, which analyzed the handling of 35 supply items stored in the warehouse:

• Inventory records are inaccurate: In one example, the audit team found 212 water hoses missing, and an order for 2,700 hoses had been placed by mistake. Nineteen cases of computer paper were also unaccounted for.

• The excessive purchases lead to losses from damage, spoilage and theft; some items also become obsolete before they can be used. The auditors cited $10,000 worth of obsolete student progress report cards being shredded to make packing materials, and 166 U.S. flags purchased in 1993 were disposed of last year because they were eaten by termites.

• The supplies sold to schools are poor in quality. School officials have complained about defective and spoiled supplies.

• The department has more warehouse space than necessary. The 23,000 square feet of space, rented for $250,000 annually, is used for storage of old files as well as supplies.

• The state takes too long to deliver supplies: up to eight weeks for Neighbor Island orders. Schools also must consolidate orders to meet a required minimum order, adding to the delay.

The audit also questioned the skills of key personnel hired to manage the storeroom, and found that the revolving fund is not self-sustaining. Between July 1, 1997, and June 30 last year, the net loss totaled about $1.6 million, according to the report.