CUMBERLAND — The state of Maryland’s Office of Legislative Audits has released a report on the Allegany County Public School System finding several deficiencies, including $4 million in losses on food service and an $888,000 loss involving bus driver contracts.

The audit, which cited the school system for 19 “findings,” said that billing for Medicaid reimbursable services had a backlog of unprocessed claims dating back to February 2011. Claims not billed within 12 months of the service date may not be reimbursed, according to state regulations.

“The findings are like recommendations. They have no penalty or enforcement aspect to the report,” said Randall Bittinger, the chief business officer for the school board.

Upon receiving the audit report in December, David Cox, the superintendent of schools for Allegany County, was allowed to reply to Thomas J. Barnickel III, a legislative auditor for the Maryland General Assembly.

Cox replied to the 40-page audit with a letter listing the points he agrees to, points he doesn’t concur with and reasons why he defends the school system’s decisions.

The following is a highlighted list of additional findings from the Jan. 29 audit report:

• The school system, which offers employees a self-insured health care plan administered through Carefirst, paid the provider $16.4 million plus a $1 million  administrative fee without verifying the billing.

• Payments of $1.3 million were made to a physical and occupational therapy provider without proper documentation, such as time sheets and student names.

• The school system did not adequately solicit competitive bids, specifically to two architectural and engineering contracts, totalling $130,000.

• The school system failed to get independent confirmation during procurement and vendor payment functions.

Bittinger spoke at length with the Times-News in an effort to put the report in context.

“I don’t want to diminish or discredit the work of the auditors; I want to explain the full picture,” said Bittinger.

Bittinger said the audits, which began in 2006, are conducted for all 24 of Maryland’s school systems and are being done about every five years. Allegany County Public Schools was one of the first schools audited and this is the second.

Bittinger said that findings, which used to be called “recommendations,” are similar for many of the school systems.

The Office of Legislative Audits website shows Garrett County schools received 22 recommendations in a 2010 audit; Dorchester County had 18 findings in 2011 and Queen Anne’s schools had 18 in 2011.

Bittinger was asked about the $4 million in losses in the food service from 2008 to 2011.

“That is common in most school districts. We have reduced losses which is pointed out in the report. We are taking actions and we will continue to do so,” said Bittinger.

The audit’s claim of $888,000 in losses on bus driver contracts, centered around findings that contracts were paid on negotiated rates instead of rates based on actual maintenence and fuel costs.

“They looked at one specific component. You have to look at the total package. We did a study for them the last time, and it showed that it is cheaper to use bus contractors, rather than the school system taking over transportation,” said Bittinger.

The report also said that nine employees had used credit cards to make $460,000 in purchases.

Initially, the audit had questions regarding the documentation, but finally determined that purchases “appeared to be appropriate for school business.”

“We also disagreed with the amount. We feel it is $439,000,” said Bittinger.

When asked about indiscriminate paying of health claims, Bittinger said, “Carefirst pays claims for many school systems. We rely on their system. I don’t think we are blindly paying claims.”

The board said in a press release on Tuesday, “We are evaluating these recommendations and plan to implement many of them as learning tools for improved procedures in the future.”

Bittinger said board members agreed with the findings on the bidding of the $130,000 in architectural and engineering services.

“This was an oversight and we should have bid it. The two projects had changed significantly in scope and we didn’t want to jeopardize the projects,” said Bittinger.

Bittinger said they may be called to testify before the joint audit committee of the Maryland General Assembly. He said they did this on their first audit in 2007 as most schools have done.

The school system has 8,913 students in its 23 schools.

Bittinger said that board members are continually taking steps to control costs.

“We rank 14th in expenditures per pupil out of the 24 school systems,” said Bittinger.

The audit is an extensive and detailed report.

Those interested are urged to view the report for Allegany County, or any of Maryland’s school systems at: www.ola.md.us.

Greg Larry can be contacted at glarry@times-news.com.