Delaware School Boards Association Run Amok! Gives Indian River Free Membership! Doesn’t File Tax Returns! Division Of Corporations Okay With That!

Awesome.  Simply awesome.  A non-profit company incorporated in Delaware can get all their funding from tax-payer local school districts, have their 501c3 status as a non-profit revoked, not file tax returns, and the State of Delaware doesn’t care.  Earlier this afternoon, I wrote about how this exact scenario happened with the Delaware School Boards Association (DSBA).  Two hours later, I contacted the Delaware Division of Corporations.  Delaware doesn’t seem to care if a corporation files tax returns or not.  There is no oversight mechanism in the State of Delaware to enforce anything related to federal tax filings.  The Division of Corporations advised me that someone would have to get an attorney and go through the courts.  Excuse me?

So DSBA can gouge school districts out of tons of money, but they will go to bat for them on legislation and counsel school boards on how to make sure board members have the most up-to-date board training.  But they fail to show any transparency for how much money they receive, how they spend it, and what their losses are.  That is just wonderful.  What exactly does this organization do for school districts?  They are glorified lobbyists taking funds out of schools.

I attended my local school board meeting a couple of months ago.  One of the items on their agenda was “legislative priorities”.  One of those priorities concerned special education and due process hearings.  DSBA wanted my district to advocate for something that had never applied to their district.  Why does everything in Delaware have to have some type of “association” attached to it?  Once we centralize every group in the state, who watches that centralizing group?  I’m sure for the members of DSBA, and those who sit on DSBA’s board, it looks great on the resume.  “Look at me, I’m not only on a school board but also on the board of DSBA.”

Please… spare me the righteous indignation.  How ironic that in this National School Boards Association guidance to state associations they offer the following advice:

State school boards associations have been established to provide a state-level network for members of local school boards to achieve common goals, support shared improvement efforts, and explore such widespread issues as board member training, policies, statewide needs, state and federal initiatives, and state and federal funding. Improving student achievement also must be a goal since it is the top priority of the state association’s members.

I am pretty ticked off about this as you can tell.  Is it any wonder our state is corrupt as hell?  What does our state offer oversight on when it comes to financial matters and transparency?  It’s not like DSBA’s Facebook page tells us a lot.

dsbacorporatestatusindelaware

Apparently, it is a-ok for DSBA to instill certain codes of ethics on local school boards, but when it comes to that ethical thing like FILING TAX RETURNS FOR YOUR NON-PROFIT ORGANIZATION WITH THE IRS, those ethics aren’t important.

…the Code of Ethics is recommended by the Delaware School Boards Association as a guide to its members as they strive to render effective and efficient service to their respective communities.

But according to DSBA’s website, this is their role in Delaware:

DSBA offers their members:

  • Developing statewide legislative and funding priorities for public education in conjunction with the Legislative Committee and member boards;
  • Monitoring the impact and progress of legislation introduced in the General Assembly which may affect the programs, operation, funding or administration of school districts;
  • Planning and presenting orientation and training programs designed to enhance the effectiveness of school board members;
  • Providing local school boards with information concerning those issues and activities which affect school districts;
  • Coordinating legal services or local board efforts in those instances where boards share common concerns and goals; and
  • Serving as liaison between school boards and other educational organizations or State agencies.

Can I add one?

  • Show no transparency for how we spend taxpayer funneled money but thanks for your contributions chumps!

From their “membership” list of Delaware school boards, not every district board is a member of DSBA.  Only 13 out of 19 are currently members: Brandywine, Cape Henlopen, Capital, Colonial, Lake Forest, Laurel, New Castle Co. Vo-Tech, Poly-tech, Red Clay, Seaford, Smyrna, Sussex Tech and Woodbridge.  As well, the Delaware State Board of Education is also a member.  So it looks like Appoquinimink, Caesar Rodney, Christina, Delmar, Indian River, and Milford have very wise boards who decided not to join this non-transparent organization.

DSBA is led by Executive Director John Marinucci and an Administrative Assistant named Linda Murphy.  That’s it.  That is their entire staff.  They have an office in Dover.  But of course many Delaware school board members govern the whole thing and decide what legislative priorities are best for school boards, even if those legislative priorities don’t even affect a member school district.  So who are these elected officials and Governor-appointed Delaware board members, running 13 out of 19 Delaware school districts, who serve in another capacity for an organization that doesn’t file IRS 990 Non-Profit tax returns?  Thanks for asking!

Officers- President: Joseph Brumskill (Brandywine), 1st Vice-President: Jennifer Burton (Cape Henlopen), 2nd Vice-President: Matthew Lindell (Capital), Treasurer: Cynthia Brown (Poly-tech), Director of Special Affairs: John Skrobot (Brandywine)

Other members of the Board of Directors: Ralph Ackerman (Brandywine), Bobby Benjamin (Colonial), Nina Lou Bunting (Delaware State Board of Education), John Schulties (Lake Forest), Brent Nichols (Laurel), John Lynch (New Castle Co. Vo-Tech), Martin Wilson (Red Clay), David Tull (Seaford), Chris Malec (Smyrna), George Torbert (Sussex Tech), and Walter Gilefski (Woodbridge)

Legislative Committee: Ralph Ackerman (Brandywine), Dr. Roni Posner (Cape Henlopen), John Martin, Jr. (Capital), Leo Magee (Colonial), Barbara Rutt (Delaware State Board of Education), Ronda Swenson (Lake Forest), Brent Nichols (Laurel), Mark Stellini (New Castle Co. Vo-Tech), Nancy Cook (Poly-tech), Kenneth Woods (Red Clay), Jeffrey Benson, Jr. (Seaford), Ron Eby (Smyrna), John Oliver (Sussex Tech), and Walter Rudy (Woodbridge)

They also have corporate members!  Those are Stecher Financial Group, Johnson Controls, and Adelphia Furniture Inc.  Two of those companies aren’t even out of Delaware!

On their calendar they have ZERO events on it, so we don’t even know when this organization and their various officers and legislative committees even meet.  This is like the evil twin of the Delaware Charter Schools Network.  For all the bitching I do about them, at least DCSN files their IRS 990 501c3 tax returns.  Oh yeah, that’s because they didn’t get their status revoked for failing to file NINE YEARS.  28 school board members throughout the state.  Do they get paid for their service to DSBA?  We don’t know cause the non-profit doesn’t file a tax return!

My bad, the Delaware Online Checkbook changed over to the new Delaware Open Data Portal thing Governor Markell officially launched yesterday.  So I can see that Delaware School Boards Association received $210,177 in FY2016.  Here is the breakdown by district:

Brandywine: $13,907.50

Cape Henlopen: $32,600.00

Capital: $18,938.00

Colonial: $21,488.66

Delaware Department of Education: $13,930.50

Lake Forest: $10,300.00

Laurel: $6,244.00

New Castle Co. Vo-Tech: $8,784.50

Poly-Tech: $8.676.00

Red Clay: $26,322.00

Seaford: $16,021.50

Smyrna: $8,676.00

Sussex Tech: $4,862.00

Woodbridge: $15,275.50

And the following two school districts, who aren’t even members, didn’t seem to mind paying DSBA in FY2016:

Appoquinimink: $5,400 (cost per student: $1.92)

Indian River (dropped DSBA in fall of 2016): $3,000.00

But the fun doesn’t stop there.  Because not only does DSBA bill school boards for dues, but also food, instructional supplies, and computer supplies.  And it doesn’t matter if it is paid out of the Delaware Special Fund or the Delaware General Fund.  Keep in mind all the below amounts are out of the overall totals listed above, but some of these categories are outlandish given the scope of what DSBA does.  Ones I colored in red are potential audit red flags (I know, stop laughing)!

Appoquinimink: Computer Supplies– $2,700.00

Cape Henlopen: Computer Supplies– $9,100.00

Colonial: Instructional Supplies– $8,100.00

Colonial: Meals w/in State (Breakfast/Dinner)- $349.66

Lake Forest: Computer Supplies– $34.00

Lake Forest: Equipment Rental-$2,700.00

Lake Forest: Food- $173.00

Red Clay: Other Professional Service- $8,100.00

Seaford: Instructional Supplies– $8,100.00

Woodbridge: Other Professional Service- $421.50

Delaware Department of Education: Training- $208.50

I’m sorry, but in what kind of world does DSBA, which amounts to a lobbyist organization, provide computer and instructional supplies?  Did Lake Forest rent a crane or something from DSBA?  I didn’t see a school supply or rental tab on their website.  And why do districts code these expenses all over the map?  The food amounts would have been higher if other districts didn’t code it as association dues.  So we elect school board members who go to meetings at DSBA, which gets over $200,000 of taxpayer money with a staff of two, and those school board members charge their districts for food?  Are you frigging kidding me?  And why is Cape Henlopen, who has half the amount of students in their district as Appoquinimink or Cape Henlopen, paying DSBA the most out of all the districts?  And Woodbridge only has 2,466 students but DSBA gets over $18,000 from them?  There is something seriously funky going on with this.  Some of these districts are paying obscene amounts to this non-profit (who doesn’t file tax returns as a non-profit).

And don’t think for one minute it didn’t dawn on me that the Delaware Dept. of Education, who pretty much decides who sits on task forces and committees, and always seems to find room for someone from DSBA on them, pays a lobbyist organization who helps LOCAL SCHOOL BOARDS over $13,000.00.  I see Mr. Marinucci at most of the meetings I attend these days when the DOE is involved, especially ones around the Every Student Succeeds Act.  I know, that is what lobbyists do!  But when I see school boards wasting time with legislative priorities that don’t even concern their school district, an obscene amount of taxpayer money going to a non-profit that doesn’t bother to file tax returns, school districts coding expenses for this non-profit under whatever category they want (probably to get funds from the state and not out of their local funds), and the same organization not filing tax returns as a non-profit for almost a decade, I have some pretty major beefs with this organization.

The Cape Gazette did an article on DSBA on July 31st, 2015, a month after Indian River voted not to rejoin.  They spoke with the First Vice-President, Jennifer Burton:

Cape Henlopen school board member Jen Burton serves as first vice chairman for the DSBA. She said membership is worth the $9,000 a year Cape pays, even though the association is going through some changes.

But when that membership becomes 3 1/2 times more than that $9,000 a year, what is the worth then Ms. Burton?  Apparently Indian River didn’t feel the same way:

Indian River School District Board of Education withdrew July 13 from the Delaware School Board Association, saying $13,000 the district would have paid in dues could be better spent elsewhere.

“The Board came to the conclusion that its DSBA membership was no longer productive and that continuing to pay thousands of dollars in dues to the organization was not a responsible use of taxpayers’ money,” Hudson said.

But I guess it is okay for Indian River to use this organization for FREE at the expense of other district’s taxpayer money, right?  Which means part of my school taxes, along with every other Capital School District resident, are going to pay for Indian River to rejoin something they felt wasn’t a responsible use of money?  I guess when it is free, that’s okay.  I don’t think so!  I don’t pay local school taxes for Indian River.  I pay them for Capital.  And if I were citizens in the other DSBA districts, I would be upset too.  I don’t elect school board members so they can help bail out other districts who don’t know how to spend their own money.  If they want a bail-out on their DSBA dues, go to the state.  That’s why I pay state taxes, not local taxes.  DSBA has a lot of nerve asking other districts to do this.  And yes, if you are not an employee of DSBA but serve as an elected official for your school district but serve on one of their boards or committees, you are acting as DSBA.  Don’t believe me?  Listen to Colonial’s Board of Education discuss this during their October 11th board meeting.  Go towards the bottom of the page on this link to hear it.

In a presentation on DSBA, it was announced that the board of DSBA voted to allow Indian River to rejoin DSBA with full voting rights for free because of their “financial distress”.  Yeah, distress caused by themselves.  Just wait until that audit comes out!  But let’s give them DSBA services for free!  Colonial board member Melodie Spotts, upon hearing that DSBA hasn’t filed their tax return for nine years, put forth a motion to remove their membership in DSBA.  The motion was defeated 4-3.  Spotts was concerned how it would look after their board just voted to go out for a referendum.  There was a lot of talk about promoting transparency around their refernedum and the appearance of paying membership fees to an organization that doesn’t appear to have financial transparency.

So DSBA, care to cough up nine years worth of tax returns and show the citizens of the state who elect school board members if they truly are getting their money’s worth?

 

 

 

 

 

 

 

 

 

 

 

IRS Revoked Delaware School Boards Association’s Non-Profit Status Six Years Ago, No Returns Filed In Nine Years

Wow!  The Delaware School Boards Association had their 501c3 status revoked by the Internal Revenue Service over five years ago.  The IRS doesn’t do that unless a non-profit corporation hasn’t filed a tax return for three consecutive years.  So how is it this non-profit which represents school boards across Delaware is allowed to even operate?  I know they charge a hefty amount for school boards to join their association, but at this time the Delaware Online Checkbook is down until the 19th.  I’ve seen five figure amounts going from school districts to this non-non-profit for yearly membership.

dsbairsrevocation

While John Marinucci is new to the role of Executive Director, I have to assume he would know about this. But if they don’t file tax returns, what are they doing with their money?  I heard other news regarding DSBA recently as well.  They are asking member school boards to pitch in extra to pay for Indian River’s membership in DSBA due to their financial hardships.  How nice…

Apparently, I’m not the first to discover this information but it doesn’t appear this non-profit cared about the exposure since they haven’t rectified the situation.  The IRS website has no information about the organization receiving a reinstatement of their 501c3 status…

Academy Of Dover: IRS Issues, Mold, Legal Fees, & Settlement Issues

Back in March, I found something incredible in regards to how the Internal Revenue Service revoked the 501c3 corporation status of Academy in Dover back in 2012 for failing to file their 990 tax forms for three consecutive years.  It appears they did get this status reinstated with the IRS, but it could also shed some light on their current financial issues.

AoD501c3IRS

I won’t pretend to know who a corporation, even a charter school, goes about getting their 501c3 status reinstated by the IRS.  But they did, on 2/15/2016.  The article I posted in March did not show that date at the bottom the above picture.  But I was contacted by the school who told me they were able to work things out with the IRS.  I was not given the nature of the resolution, but something else I found last night could show possible expenses at the school.

For each year Academy of Dover did not file their tax returns, there could have been continuing IRS penalties.

IRS Tax Penalties For 501c3 Not Filing Returns

The IRS defines gross receipts as:

Gross receipts are the total amounts the organization received from all sources during its annual accounting period, without subtracting any costs or expenses.

So if Academy of Dover received over $1 million during any of the years they didn’t file (which they did), they could still be on the hook for a lot of fines.  If the IRS revoked their status in 2012, based on not filing for three consecutive years, and they just filed their 2014 tax return this year (which would be the tax year they got an extension on last year to file by this February), that means they are looking at a minimum of five tax returns that were not filed on time, if at all.  The only one they have posted on their website is the 2014 one.  Guidestar.org, a popular website that shows tax returns for non-profits, only shows the 2014 return as well.  So say they didn’t file a return for five years.  That could be a maximum of $50,000 for each year, totaling $250,000.00.  That could certainly throw a monkey wrench into their budget, especially since they already paid $500,000 over the past fifteen months as part of their settlement to Mosaica.  Adding to this is another settlement in the amount of $30,000 that was due by the end of the year as per their May board minutes.  The minutes did show that half of that would be covered by their insurance.  But with potential IRS penalties up to $250,000 depending on the number of actual years they didn’t file, a $50,000 payment to Mosaica, and another $15,000 settlement, this school sure does rack up the expenses that may not have been necessary if someone didn’t drop the ball somewhere.  Keep in mind, aside from what insurance paid ($15,000), all of this comes from your pocket Delaware taxpayers.

I am merely speculating on this.  They could have reached a deal with the IRS.  As well, they may not face penalties for the years between the revocation of their corporate status with the IRS and when they were reinstated.  Either way though, it is frightening this was never brought up during their various formal reviews, charter renewals, and other DOE “oversight”.  But it is something the board should openly discuss at their next board meeting.  If the Delaware DOE doesn’t address this during their charter renewal process this fall I would be shocked.  Charter schools are required by Delaware law to post their 990 IRS tax returns on their website, something many of them are guilty of not doing.  Better to get it out in the open now.  I don’t see anything in their board minutes aside from the board approving their latest tax return, which is also part of Delaware law for charter schools.

There is one matter which was sent to me anonymously by someone who did not want to be identified.  Apparently, when it rains up to half of the school can flood.  Their sewer gets backed up.  When this happens, students are sent to one side of the building.  Further complicating these issues is a matter of potential mold at the school.  I haven’t seen this addressed in any of the board meetings.  But if there is mold present, that could be very serious for anyone in the building especially if there are spores released into the air.

I have no doubt much of this could be traced back to Noel Rodriguez for some of the years he led the school.  The man was not competent to lead the school, much less do the right thing when it came to the school’s finances.  But he has been gone from the school for almost two years now.  The school could have very well spent a lot of that time trying to reach an agreement with the IRS, on top of the Mosaica issue.  But now is the time for the board and the school to open up about these matters.  It could very well save them from getting their charter revoked!

 

Academy of Dover Is Not A 501c3 Corporation As Stated In Their Charter, DOE Needs To Revoke Their Charter Now

The Academy of Dover is not listed as a 501c3 corporation with the Internal Revenue Service.  The Academy of Dover’s charter, which firmly states they are a 501c3 non-profit corporation, is not real.  The Delaware Department of Education put the charter school under formal review last year.  This was their fourth formal review in 12 years.  This did not come up at all during that process.  As well, their auditor, Barbacane, Thornton, & Company LLP, wrote about this in the last three years of audits they did for the school.

AcademyofDoverIRSRevocation

For the past three years, their auditor made note of this in their yearly audit of the school.  Each year provides a link to the full audit:

2013

AoD13AuditPt1

AoD13AuditPt2

2014

AoD14Audit

2015

AoD15Audit

And yet, for all three years, it states the exact same thing.  Ironically, the link for their 2012 audit, which may have shed some light on this situation, comes up as a blank pdf file.

How has this never been publicly disclosed until now?  Actually, it was disclosed a few years ago but it was buried in a comment section on Kilroy’s Delaware.  It was during July of 2013, which as any blogger can tell you isn’t exactly a big audience at that time of the year.  Especially an education blog!  But a commenter wrote exactly what I am telling you now but no one picked up the baton and ran with it.

But this tells me this information has been out there for a while now.  I would have a very hard time believing nobody at the Delaware DOE knew this.  I’m sure they read the annual audits.  But the fact these audits say the exact same thing three years in a row is astonishing.  With the school involved in a $2 million dollar lawsuit as well as former Head of School Noel Rodriguez’ personal theft of school funds, how does this not come up at all?  Who is reading these audits at the DOE?

The oversight for Delaware DOE authorized charters falls on the DOE.  It was right in front of them the whole time and I have never seen it publicly questioned.  It never came up in their formal review meetings last spring.  I know this because I attended all the meetings.  Transparency and this school have never been the best of friends.  But this… the DOE needs to act.  Their 501c3 status was revoked over four years ago.  They have been operating in the dark for over four years.  Granted, they could be trying to work things out with the IRS.  But if they aren’t a 501c3, even though they are still listed as such with the Delaware Department of Corporations…

AoDcertofinc.

And if anyone is wondering why charters need more oversight, this is exactly why.  Avi at Newsworks wrote an excellent article today about more charters under investigation in Delaware, including ones that were already under past investigations.  I’m just going to come right out and say Senate Bill 171 would give us more of what we have: fraud, lies, and auditors copying and pasting the same information year after year.  House Bill 186 would allow information, like what I am writing now, the ability to be seen.  Who knows what other skeletons are buried out there in Delaware charters?

Title14Charter990

One last thought…charter schools are required by the State of Delaware, in Title 14, paragraph 509, that they must have their IRS Tax Form 990 on their website.  Academy of Dover has not had this on their website since at least 2008 since the IRS said they hadn’t posted a return the last three years in 2011.  So we have a law and nobody is making sure this even happens?  Hello Jack Markell… this is transparency calling… your DOE has a lot of explaining to do.  But let’s get Academy of Dover taken care of first.  They have been out of compliance with their approved charter for over four years.  It’s time the DOE and the non-elected State Board of Education make a real decision instead of “probation” four times…