Updated at 4:10 PM on 1/4/11

The Chicago Board of Education was spending lavishly on such items as liquor and flowers, even as the school district was bracing for a budget crisis.

Chicago Public Schools’ Inspector General James Sullivan lists hundreds of thousands of dollars in inappropriate expenditures by the Board in a newly released report. Those included Soldier Field skybox suites, catered lunches for 50 people on days when the board held its monthly meetings, and holiday parties at a board official’s home that cost the district thousands.

The report says the board also spent $3,000 to have its offices and the CEO offices “swept for electronic eavesdropping devices.” And the district gave away $750,000 to charities, some of which board members had direct ties to.

The investigation spans the tenure of two board presidents, Rufus Williams and Michael Scott. Scott committed suicide in November 2009.

The inspector general’s report finds the Board intentionally avoided competitive bidding and contract rules and freely overspent its allotted budget. The report says the Board’s spending sets an “inappropriate tone at the top.”

“The message that budget cuts need to be made and furlough days need to be taken rings hollow when the Board itself uses CPS funds irresponsibly,” it states.

The district clamped down on board spending and instituted more controls last year, aware of the investigation.

Inspector General Sullivan also examined the role clout played in admissions to the city’s top high schools during the last two school years. He found that a process meant to be fair and impartial had been “tainted by politics and favoritism.” His report implicates high-level employees in CPS and Chicago Mayor Ricahrd Daley’s office.

Sullivan also recommends the district discipline some of the selective enrollment principals for giving preferential treatment to politicians, friends, and CPS staff.

The Chicago Teachers Union said the report shows the city needs an elected school board. “What this is really about is a system that’s out of control,” said Xian Barrett, the union’s political director. “It’s nontransparent, it’s not held accountable. And that’s exactly why we’re fighting for an elected school board, for more community input.”

The district centralized much of its admissions process and is now auditing principal selections.

The Inspector General’s office received a record number of complaints last  year—1,479 complaints alleging misconduct, waste, fraud and financial mismanagement within the school system.