The DeKalb County Board of Education wanted an auditing director sooner. Two years ago to be more specific. But tight budgeting and salary freezes kept the district from hiring one.
Now, there’s Gary Babst.
The school board recently hired the former General Motors auditor as the new director of audit. It’s a key job hire approved in the aftermath of numerous school system scandals, including the May indictments of former Superintendent Crawford Lewis, Chief Operating Officer Pat Reid and two others. Lewis and Reid have been charged with illegally profiting from school district construction contracts and face several racketeering charges.
Babst said he took the job after considering his 30-year career with General Motors, the only job he’s had since he graduated college in 1978.
“Sometimes you work in that environment, and you think, ‘Can I be doing more?’” he said sitting inside a school district conference room recently.
Babst got the job and appeared before the school board earlier this month, telling members the district must commit itself to rigorous review of big-money spending, such as construction projects, and review businesses practices to make sure fraud and misspending is as unlikely as possible. He also announced the creation of a new fraud hotline, which he said has been proven to be one of the best ways to prevent fraud.
“We need a sense of urgency,” he told the board. “We need a strong tone at the top, and we need the board (and administrators) to lead by their actions. … We need to build an internal control structure, and that’s going to take some time.”
Intentionally or not, the address went to the heart of the school system’s problems, particularly county residents’ perception of the district and their assumption of corruption at the system’s highest levels. In addition to the indictments of Lewis and Reid, several administrators were recently demoted or fired after an internal investigation revealed they had sold nearly $100,000 worth of books they authored to system schools.
School board Vice Chair Zepora Roberts also found herself answering questions about the employment of two daughters in the school system, and the board publicly chastised her after she threatened to assault a local TV news reporter who asked her questions about it. Board member Jay Cunningham was also criticized after local media discovered his restaurants had sold more than $20,000 worth of food to the district since he was elected.
Babst said the school system and board – to which he reports directly – is focused on repairing that image.
“It puts everybody in a negative light, but every day I’m more impressed with the quality of people here,” he said about the recent indictments. “What’s really important is that we audit the high-risk activities.”
That’s something the school system hasn’t truly had before, Babst and board Chair Thomas Bowen said. Babst said before his arrival there was an “audit function” buried inside the school system’s accounting process, but it was mostly focused on school-level expenditures. That left the district’s larger spending, including pricey construction contracts exploited by Lewis and Reid, to little oversight.
Board members told system administrators two years ago they wanted to hire a director of audit, but the position was never filled due to hiring freezes and budgetary cutbacks, Bowen said. Having someone like Babst sooner may have prevented some of the issues the school system must recover from now.
“I do think that having this position there sooner could have helped with some of the issues,” he said. “We can’t say having him here would have done it, but in terms of sending the right message, that’s something that would make me kind of regret that we didn’t hire him sooner.”
Babst agreed that a director of audit could have discovered those problems. But he said he doesn’t want to focus on the district’s immediate past and is instead interested in building a credible system of checks and balances inside the school system’s financial system. He said he intends to study the practices of nearby school districts and possibly recommend hiring additional personnel to oversee that system. He said he’ll be under the day-to-day direction of interim Superintendent Ramona Tyson and her successor, but he’ll answer entirely to the school board – another way to ensure independent audits of district spending are protected from influence.
“I’m going to let them know what’s going on,” he said. “I’m certainly going to look at them for a lot of input, but I think they’re giving me a lot of latitude. … Everything I’m doing is very transparent.”
Babst said he finished his master’s of business administration at Xavier University in Cincinnati in 1978 and was immediately snapped up by GM. He has worked there since as an auditor or manager. When he was a part of GM’s corporate audit staff, he directed fraud investigations and managed company-wide audits of practices ranging from manufacturing, engineering and finance to purchasing and construction.
Over the years, the American automotive industry has become increasingly pressured as foreign imports squeezed American companies’ market share and automotive fuel prices increased. GM declared bankruptcy in 2009 and is partially owned by the U.S. Treasury. That contributed in part to Babst’s decision to leave Detroit, he said.
“You start to look around,” he said. “You start to be concerned.”
So, Babst took the job. His family still lives in Michigan, but for the next six to eight months, he said, he’ll be alone in DeKalb County, focused on the school system.
“I will live and breathe this place,” he said.
Bowen said he hopes so.
“If he does his job as I know he will, he’s going to identify a number of areas that need to be fixed, a number of processes that are not being followed correctly,” he said. “We haven’t had someone in his role questioning all of these things. So I expect him to find and correct a number of items and put in practices and procedures to make sure (fraud and mistakes) don’t happen again.”