Richmond schools audit finds issues totaling $25,000

Embezzler stopped: Read the Richmond city audit report on a school employee who stole $15,000.

The theft of almost $15,000 from a grant-funded literacy program and the possible misappropriation of an additional $10,000 spent on bus passes were the key findings of an audit of the school system's grants-management program, according to a preliminary report released yesterday by Richmond's auditor.

A former employee of the Richmond school system pleaded guilty Tuesday to stealing the $15,000. She faces up to 10 years in prison when sentenced Oct. 13.

Kelli Payne, 40, of Ashland pleaded guilty under the terms of an agreement approved by U.S. District Judge Henry E. Hudson. In addition to prison time, she faces a fine of as much as $250,000 and three years of supervised probation. She also will be required to repay the stolen money.

"I think it's an isolated example, but it has allowed us to look at the way we operate and tighten some controls," schools spokeswoman Felicia Cosby said this week.

The city auditor, Umesh V. Dalal, said his staff determined that after Payne was issued a check for $15,000 to purchase gift cards as rewards for program participants, she deposited the check in a personal checking account.

Dalal also reported that program funds were used to purchase $10,000 worth of bus passes but that no records exist to support the distribution of those passes. The passes were purchased on June 26, 2007, for the fiscal year ending August 2007. During those two-plus months, the program had 46 participants. Dalal said Payne admitted giving some of the passes to nonparticipants, also a misappropriation of grant money.

The findings come about a month after a separate Dalal report discovered that a school system employee had improperly placed someone on the payroll in her department and then paid him for hours not worked. School officials say appropriate action was taken in that case, but they wouldn't say whether that action included terminating the employee.

"We have problems that are systematic," said School Board Vice Chairwoman Kimberly B. Gray. "There's still hope we can turn this around, but we need profound, radical changes."

School Board member Dawn C. Page, like Gray new to the board this year, said she was dismayed that continued problems take away from the district's ability to educate children.

"We cannot continue to operate this way," she said. "We're responsible for taxpayer dollars. We have to create better controls. We need to see a step-by-step, aggressive action plan."

She said she would ask Superintendent Yvonne W. Brandon to begin work on such a plan when the board meets Aug. 4.

The school system received a federal grant for about $1 million in 2005 for the Even Start education program, designed to improve the academic performance of low-income families. The district hired Payne to serve as a coordinator for the program.

Cosby said she wasn't aware of any concerns about Payne's performance.

Payne stopped working for Richmond schools on Aug. 31, 2008, when the Even Start grant expired.

Contact Zachary Reid at (804) 775-8179 or .

Staff writer Frank Green contributed to this report.