L.A. Unified Falls Behind on Bills

Do you have trouble paying your bills on time? The Los Angeles Unified School District has the same problem--on a mega scale.

For months the district has owed thousands of dollars to a Hollywood company that supplies photography equipment to schools. One bill from Freestyle Camera is 2 1/2 years old.

“Their system is broken,” said Kristina Loughery, a sales representative with the family-owned company. “It needs to be fixed.”

L.A. Unified’s Inspector General Don Mullinax agrees. “This is not an isolated event,” he said of the Freestyle Camera snag. “We are finding several vendors that haven’t been paid in a while.”

Calling the problem “a districtwide concern,” Mullinax is auditing the system’s accounts payable section. His report is due in a little more than a month.

Mullinax has experienced the bureaucratic billing muddle firsthand. Because the school district neglected for months to pay more than $600,000 in bills from Office Depot, Mullinax was unable to get desks for investigators in his office.

“It hurts the morale and the productivity of your staff if they don’t have anywhere to sit,” said Mullinax, whose workers have been using temporary desks with no computer connections or telephone hookups.

The tab has since been paid, and Mullinax will get his desks.

Still, the potential for trouble persists. A review by the accounting firm Deloitte & Touche last year found the district’s accounts payable operation has a higher risk of “waste and abuse” than any other district department, Mullinax said.

It’s hard to get a handle on the problem because L.A. Unified’s purchasing and accounting systems are gargantuan.

The school district issued 216,000 purchase orders last fiscal year. It cut 189,000 checks totaling $2.1 billion to pay for everything from new books and chairs to school repair jobs.

The payment process is a complex exercise in paper shuffling. Before the district pays a bill, it matches a trio of documents: an electronic purchase order, an invoice and a receiving report.

As a result, hundreds of thousands of documents pass through the hands of teachers, administrators, accountants and clerks. The documents can--and evidently do--get lost, misplaced or forgotten. In some cases, schools do not forward paperwork to accountants downtown, or are slow to send it.

A missing document anywhere along the line means a delay in a vendor’s getting paid.

District officials defend the procedure, saying it provides a check and balance on spending and ensures that the district receives the goods it pays for.

“The great bulk of the payments are timely,” said Olonzo Woodfin, the school district’s controller. Most are paid within 10 days, he said.

But Woodfin acknowledged that some payments fall through the cracks.

“We are criticized for the length of time we take,” he said. “Many times we don’t have all of the documents.”

That’s what happened in the case of Mullinax. The school district had ordered desks for his office, but Office Depot had placed a credit hold for an outstanding balance.

The district owed the money for furniture it had purchased during the last several months.

Workers in the district’s central offices bought the furniture but did not forward the receiving reports to accountants.

L.A. Unified officials have since paid Office Depot nearly $500,000 of the $600,000-plus bill, Woodfin said.

The trouble for Freestyle Camera appears to have started not downtown, but at a couple of schools.

Freestyle had been shipping goods to several campuses in recent months, although the district owed it money.

The company’s controller said bills were repeatedly sent to the school district. Finally, company officials decided at the beginning of February to stop shipping supplies until the district paid up.

Last week, fed up with the district’s lack of response, company officials fired off e-mails to The Times, Supt. Roy Romer and Mayor Richard Riordan.

“We’re in business to make money, not to service someone else’s debts,” said chief executive Lenore King, whose father co-founded the firm 54 years ago.

The district has five outstanding purchase orders--totaling nearly $11,000--with Freestyle.

Woodfin said that the accounting section had no invoice on record for one of the orders and that a payment for a second order is being processed.

The accounts payable staff downtown did not have the receiving reports for the other three orders. The largest of them--for $3,157.20--was for equipment delivered to Grant High School in the San Fernando Valley.

Victor Moreno, the Grant High photography teacher, said he signed all of the relevant paperwork for the photo supplies and turned it in to the front office.

“It’s frustration because [the paperwork] takes my time away from my area of expertise,” Moreno said. “It could be simple, but in this case it isn’t.”

Now, the school cannot order more equipment because the district has been cut off by the store.

Moreno said he has just 12 rolls of film left for 75 students. He is anxiously awaiting supplies from Freestyle.

“I’m counting my lucky stars that we don’t run out,” he said. “If [the problem] is not fixed, I have to stop and alter the program.”

Following inquiries from a reporter about Freestyle Camera, district officials pledged to get the proper paperwork in order and to pay up soon. Officials say the outstanding bills are the exception, not the rule, in their dealings with the company. The district has made good on other orders, making payments to Freestyle of more than $58,000 since the beginning of 2000, Woodfin said.

Even as district officials resolve the Freestyle bills, they are pushing ahead with a pilot project at 17 schools that are automating the receiving reports.

“That would speed up the process,” Woodfin said. “It would make it easier to get the pieces together.”