External Members:
Mr. Timothy Lynch
Ms. Fredrika Taubitz, Executive Vice President and Chief Financial Officer,
Zenith National Insurance Company

Staff Present:
Ms. Anne Valenzuela-Smith, Executive Administrator, Business Issues
Mr. Richard Sheehan, Special Counsel
Mr. Harold Kwalwasser, General Counsel
Mr. Don Mullinax, Office of Inspector General
Ms. Megan Klee, Chief Information Officer
Mr. Alan Tomiyama, Business Manager
Dr. Jim Alther, E-Rate Director
Ms. Ann Fisher, Chief Procurement Officer
Mr. Peter Bowen, Ethics Officer
Dr. Roger Rasmussen, Director, Independent Analysis Unit
Dr. Charles Schepart, Analyst, Independent Analysis Unit

APPROVAL OF THE MINUTES FOR THE SEPTEMBER 20, 2001 MEETING

The Committee approved the September 20, 2001 minutes as submitted.

INTEGRATED STUDENT INFORMATION SYSTEM (SIS)

Ms. Valenzuela-Smith presented staff's recommendation to move forward with negotiations on a contract for a new Integrated Student Information System (ISIS). One of the central issues in the original Chanda Smith lawsuit was the District's lack of an integrated student information system. Because the District used multiple stand alone student information systems, the Chanda Smith Consent Decree calls for the procurement (through a Request for Proposals (RFP)) and implementation of an ISIS. The Board of Education approved a plan on August 22, 2000 to implement ISIS, and it went through the selection processes. District staff expressed concern on the need to establish a standard architectural approach for all technology systems, and undertook a review of the two RFP finalists whose proposals included specific product recommendations. An outside firm led the technical reviews with expertise in databases and data warehousing proposals. District staff considered the technical reviews in deciding whether to accept the recommendations of the RFP Committee or reject the recommendations and start fresh with a new RFP. The Superintendent recommends that staff initiate negotiations with the preferred vendor. Should staff be unable to conclude negotiations successfully with the preferred vendor, staff then has the option to pursue negotiations with the alternate vendor. Negotiations should be concluded within the next 30 to 60 days. If the negotiations are successful, staff will bring to the BFAT Committee the proposed contract for Phase 1.

The Committee Members expressed their concerns and questions on who will oversee the completion of the project, the timeline for completion, and project deadlines. Ms. Canter and Mr. Huizar also expressed concern for the pace of completing the project. Ms. Valenzuela-Smith responded that the negotiations are difficult because the two finalists are not a perfect fit for LAUSD's needs. Additions and modifications of the proposals would need to be made and negotiated, and there are business issues that need to be resolved.
Mr. Lynch suggested that staff might have more leverage if they negotiated with both vendors simultaneously, and agreed with Ms. Young that staff should not be held to a specific time limit.

Ms. Young asked staff to respond to the following issues:

• Who are the vendors?
  
• What systems are proposed?
  
• Which applications are proposed?
  
• What are the databases behind the applications?
  
• Where did the vendors have systems implemented?
  
• What percentage of the core code was customized in the implementations?
  
• What does District staff anticipate as the percentage of ideal scope that would be able to be achieved

• Will security be based on web-enablement?
  
• What is the rollout timeline?
  
• What is the data conversion process? What are the District's current formats and how will they be

• How does the proposed system integrate with the architecture proposed by the CIO?

RESPONSE TO KPMG REVIEW OF THE OFFICE OF THE INSPECTOR GENERAL (OIG)

Mr. Mullinax, Inspector General, commented about the role of the Inspector General and the role of his office. The Association of Inspector Generals has standards in the areas of independence, planning, organizing, staff qualifications, direction and control, coordination, reporting, confidentiality, and quality assurance. In LAUSD, the OIG reports directly to the Board of Education, and receives oversight from the BFAT Committee. The basic concept behind the offices of inspector generals is that an institution must build into itself a mechanism of self-criticism and self-correction. They were designed to be neutral, impartial and independent. Besides looking at illegal and improper activity, most OIG's have more auditors than investigators. Auditors evaluate the economy, efficiency and effectiveness of programs and operations. Investigators focus on waste, fraud and abuse. The OIG provides information and recommendations. Management can either accept or reject their recommendations. They do not administer programs or make operational decisions. Last year the Los Angeles County Superior Court denied a contractor's attempt to get a temporary restraining order to prevent the issuance of a report. The Court upheld the OIG right to issue reports. The OIG is capable of carrying out a full range of audits and investigations. The OIG charter gives authorization to conduct audits and investigations of any and all
functions within LAUSD, as well as entities that do business with the District, and the OIG must maintain the public's trust in LAUSD. In order to accomplish this challenge, the OIG must have the freedom to make independent and objective judgements.

Mr. Mullinax made the following comments about the KPMG External Evaluation of the OIG:

• KPMG made 44 recommendations.
  
• The OIG has implemented 33 of the 44 recommendations.
  
• Of the remaining 11 recommendations, the OIG will implement five by December 1, 2001.
  
• The OIG cannot implement the remaining six recommendations without actions first being taken by

Mr. Mullinax commented on some of the recommendations that required actions first by the BFAT Committee or the Board. One recommendation proposed that the OIG Charter be amended to lengthen the term of the IG one year longer than the term of the Board. In regard to this recommendation, there might be some legal or legislative issues that need to be researched.

The Committee Members expressed their concerns and questions, and stated support for the three-year term.

EVALUATION OF THE INSPECTOR GENERAL - CLOSED SESSION

The Committee recessed into Closed Session at 5:26 p.m., and reconvened at 6:10 p.m. Mr. Huizar announced that the Committee recommended forwarding the contract of the Inspector General to the Board of Education on October 30, 2001.

DECISION MATRIX OF NON-INSTRUCTIONAL SERVICES

Ms. Valenzuela-Smith presented the LAUSD Responsibility Matrix (tables) for various non-instructional services (business, finance, facilities, technology, and personnel). She made the following comments:

• Dr. Ott has already presented to the Committee a responsibility matrix for instructional services.
  
• The tables included in the presentation cover:

• There are personnel in the local district offices that have responsibilities related to staff relations,

• Presently, there are no specific personnel in the local district offices that are responsible for teacher

• There are three areas not included in the presentation that are important.

• Shared Responsibility" activities will be clarified.
  
• The sections of the Responsibility Matrix dealing with personnel will go to the Human Resources

• BFAT Committee staff will schedule a review of the decentralization.
  
• The remaining areas of the non-instructional decision matrix will be scheduled at a future BFAT Committee meeting as soon as staff is ready.
  
• District staff will provide an update on the instructional decision matrix at a future BFAT Committee

WAREHOUSING AND PROCUREMENT PROGRAM

Mr. Tomiyama, Business Manager presented the Purchasing, Warehousing and Distribution Study, Status Report and the LAUSD Purchasing, Warehousing and Distribution Study: Briefing of Findings and Recommendations that was done by Deloitte Consulting and Tompkins Associates.

Deloitte Consulting did a study of the LAUSD procurement process for the Office of the Inspector
General. Deloitte recommended that the District combine contracting with purchasing, and recommended that LAUSD hire a Chief Procurement Officer (CPO). They also recommended that LAUSD have less reliance on District warehousing and place greater emphasis on just-in-time purchasing, where manufacturer and distributors store the products and delivers them directly to schools.

Subsequent to Deloitte's 1999 study, District staff wanted more details on the implementation-focused study on supply chain performance and engaged Deloitte in 2000. The study was presented to the BFAT Committee in September 2000.

Ms. Anne Fischer, Chief Procurement Officer (CPO) was hired as a result of one of Deloitte's recommendations. She commented on the following recommendations made by Deloitte and Tompkins and the status:

• Establishing a vendor services unit to assist schools and Accounts Payable with on-time payment issues.
  
• Implementation of a procurement card program.
  
• Study the e-procurement market and develop an RFP for an integrated software product.
  
• Integrate Public Works Contract Unit with Procurement Services, Contract Section.
  
• Relocate warehouse to new facility. Implement enabling order fulfillment technology (e.g.,

• Implement tactical changes in warehouse and trucking operations.
  
• Remove high-dollar, low volume items from warehouse. Revise distribution strategy for printed forms.
  
• Redesign Procurement website to migrate from information-only to transaction-oriented. Publish all

• Commit to placing more items on master contracts (including professional services). Provide schools the ability to issue purchase orders directly from master contracts.

It was suggested that Mr. Mullinax, Mr. Tomiyama, Ms. Fischer and Mr. McConnell should develop a recommendation regarding public works contracting that will be discussed at a future BFAT Committee meeting.
INFORMATION TECHNOLOGY ISSUES

Ms. Klee, Chief Information Officer (CIO), gave an overview on Information Technology achievements. She commented on the following areas:

• Local Area Networks (LANs)
  
• Available Technology Support in Schools
  
• Help Desk
  
• Telephones, Telephone Line Savings and Telephone Equipment Savings
  
• Security
  
• Software
  
• Technology Support of Instruction
  
• Student to Computer Averages
  
• New Computer Purchases
  
• Digital High Schools - AB64
  
• New Discounts for Year 4 E-Rate

E-RATE PROGRAM PROGRESS REPORT

Dr. Jim Alther, E-Rate Director, presented the E-Rate program progress report. He made the following comments:

• There are 556 K-12 schools that have LAN contracts in place or under construction.
  
• Year 3 E-Rate started with 450 school sites. 101 sites (formally Wareforce projects) received an extension and will be completed by SBC (PacBell) by February 28, 2002. District staff are pushing SBC to complete the work before the end of the current semester.
  
• So far, 303 sites have connectivity. This includes Year 2, Year 3, and 37 Year 4 E-Rate projects.
  
• Year 3 E-Rate status:

Some schools have been given approval to use their networks. However, some have deficiencies that need to be corrected.

• When networks are completed, schools are notified. Schools are provided documentation.
  
• Year 4 E-Rate Status:
  

  Vector is performing site-walks of its 37 sites. Work is expected to be completed by September 2002.
  

  LAUSD received about $33 million for 37 schools to provide Internet connectivity to all classrooms.
  

  ITD is working with Facilities Services to address the networks for the remaining 87 sites that will probably need Proposition BB funds. Theses sites do not qualify for E-Rate funds. Theses schools are in Districts A, C, D, and K.
  

The 2000-01 General Fund Cash Flow Statement Report, and the Report of Investment Activity, from the General Accounting Branch, October 3, 2001, was accepted as "Receive and File."

DECISION SUPPORT SYSTEM (DSS) PROGRESS REPORT

The DSS Status Report, DSS Steering Committee, October 16, 2001, was accepted as "Receive and File."

INTEGRATED FINANCIAL SYSTEM (IFS) PROGRESS REPORT

The Integrated Financial System Project Updates (Memo), Joseph Zeronian, CFO, October 12, 2001, was accepted as "Receive and File."

STATUS REPORT ON THE IMPLEMENTATION OF VARIOUS INFORMATION TECHNOLOGY (IT) PROJECTS

The Technology Projects Status Report, Information Technology Division, James Konantz, October 16, 2001, was accepted as "Receive and File."

ITEMS REFERRED TO THE COMMITTEE BY THE BOARD OF EDUCATION OR THE COMMITTEE OF THE WHOLE

There were no items referred to the Committee by the Board of Education or the Committee of the Whole.

PUBLIC COMMENT

Mr. Darryl Dufay, expressed his concerns regarding KPMG review of the OIG. He supports the independent efforts of the Office of the Inspector General, and the continuance of the OIG and its incumbent.

Mr. Gene Krischer and Ms. Michelle Varela, Friends of the Children, expressed support for the OIG and Mr. Mullinax. They read various documents supporting the independent work of the OIG.

Mr. George Buzzetti, spoke to the KPMG review of the OIG, and the evaluation of the Inspector General. He expressed support for the OIG and Mr. Mullinax. He indicated that LAUSD needs to operate with integrity, and that the Ethics Officer needs to work closely with the OIG. He believes that Mr. Mullinax has acted professionally, with integrity and done excellent work.

Mr. Howard Watts, spoke to the evaluation of the Inspector General, and believes that the Inspector General is the most important person in LAUSD because he has the responsibility for keeping the District honest and clean.

Mr. Mike Saulenas, encouraged the District to take care of its missed asbestos problems.

ADJOURNMENT

The meeting adjourned in honor of Mr. Olonzo Woodfin on his retirement from District service
at 7:40 p.m.

1. Approval of the minutes for the September 20, 2001 meeting

The Committee will take action on approving the draft minutes of the September 20, 2001 meeting.

2. Integrated Student Information System (ISIS)

The Committee will receive a status report on the ISIS project and recommend that the Superintendent act promptly to select a qualified vendor to implement an ISIS for LAUSD.

3. Response to KPMG review of the Office of the Inspector General

Mr. Mullinax (Inspector General) will respond to KPMG's "External Evaluation and Best Practices Review" (May 2001) of the Office of the Inspector General.

Under Government Code 54957, the Committee will meet in closed session to evaluate the performance of the Inspector General.

6. Warehousing and procurement program

Mr. Tomiyama (Business Manager) and Ms. Fischer (Chief Procurement Officer) will discuss the District's warehousing and procurement program.

Ms. Klee (Chief Information Officer) will discuss recent achievements in various IT projects.
8. E-Rate program progress report

Dr. Alther will present a progress report on the District's Year 3 and Year 4 E-Rate programs.

9. Committee organizational issues

The Committee will discuss various organizational issues such as identifying and prioritizing future agenda items, calendaring future meetings, and other related Committee business.

10. Cash flow and cash investments

Ms. Fong (Controller) will provide a report on District cash flows and cash investments.

11. Decision Support System (DSS) progress report

Mr. Wohlers (Chief of Staff) and Ms. Valenzuela-Smith will provide a progress report on the District's Decision Support System project.

Mr. Woodfin (Controller) will provide a brief summary of five projects that are intended to make the District's Integrated Financial System easier to use and more accessible to schools.

On behalf of various executive sponsors, Mr. Konantz (Assistant Superintendent, ITD) will provide a status report on the implementation of various IT projects, including the IFS, DSS, E-Rate, ISIS and others.

The Committee may consider and act upon motions, Board Reports, or other business referred to it by the Board of Education or Committee of the Whole, with respect to any properly posted matter at a meeting immediately preceding this committee meeting, where the time between that meeting and this committee meeting is less than 72 hours. Members of the public are encouraged to review the order of business or agenda for the meetings of the Board of Education or Committee of the Whole.

Persons who wish to address the Committee may sign up at the meeting.