The Kathleen Davies Mystery Deepens As Charter School Petty Cash Letters Come Out & Many Charters Get Sue-Happy

Delaware is missing one of the key players in transparency thanks to a deliberate campaign orchestrated by one or many.  Because of this, it may have cleared the way for many charter schools to launch a lawsuit in Delaware.

Delaware State Rep. Kim Williams exclusively released the letters sent to five Delaware charter schools about their petty cash practices last night.  They showed some very extreme violations of state code.  As well, letters were sent to four other state agencies.  These letters were sent by Tom Wagner, the publicly elected Delaware State Auditor, on June 21st to the following charter schools:  Odyssey Charter School, Delaware Military Academy, Charter School of Wilmington, Sussex Academy, and Delaware Academy of Public Safety & Security.  The state agencies Wagner sent letters to addressing the petty cash violations of state code were the following: Department of Education (Secretary Godowsky), Department of Finance (Secretary Tom Cook), Division of Accounting (Director Kristopher Knight), and the State Treasurer (Ken Simpler).  These letters were never publicly released from Tom Wagner or the Delaware Auditor of Accounts office.  Originally, this was an audit inspection and that report would have been released.  But before that happened, the Delaware Auditor of Accounts top official, Kathleen Davies, was put on leave last spring.  Now we can clearly see why.

Before I get into the results of the letters to the five charter schools, we need to look at motive.  The key to any mystery is “Who benefits”?  That benefit could be the ability to keep something hidden or being able to reap some type of positive outcome from the situation.

We have so many who could have done it: Ann Visalli, Secretary of Education Dr. Steven Godowsky, Kendall Massett, Senator David Sokola, Charlie Copeland, Nick Manolakos, and others as well.  We can’t forget the potential role Greg Meece may have contributed either.  State Board of Education Executive Director Donna Johnson and Kendall Massett are very tight and the DOE is in the same building as the Auditor of Accounts Office.  It could be a combination of any of these people.  It could have even come down from the very top, Governor Markell himself.

Out of all these entities, one of them leads the pack in Delaware when it comes to offering charter schools advice and protection.  That would be the Delaware Charter Schools Network, led by Executive Director Kendall Massett.  When it comes to charter schools, I have no doubt Kendall is in a key position to communicate issues to charter school leaders.  Some charter schools are run by ex-legislators in some sort of capacity.  Former State Rep. Nick Manolakos is the Head of School for Odyssey Charter School.  Delaware GOP Chair Charlie Copeland is the President of the Board of Directors for Delaware Academy of Public Safety and Security.  Both are prominent Republicans in Delaware.  Many on the Sussex Academy Board of Directors are also Republican.  Odyssey Charter School and Delaware Military Academy clearly had the most egregious of petty cash violations out of the five charters.  I can imagine the pressure on Tom Wagner from all sides could easily have prompted his decision to make Kathleen Davies go away.

 

Odyssey Charter School:

  1. petty cash fund not approved by State Treasurer and checking account used for petty cash not approved by State Treasurer
  2. 53 petty cash checks over state limit of $500.00, totaled $303,451.65
  3. 57 debit transactions from petty cash account over state limit of $500.00, totaled $326,574.05
  4. maintained petty cash account over $5,000 limit, average monthly balance was $88,979.83

Delaware Military Academy:

  1. had no written policies and procedures for petty cash
  2. never had account reconciliations done by Account Custodian
  3. checks signed with two signatures but each check signed by Account Custodian who can’t sign checks
  4. 30 petty cash checks over state limit of $500, totaled $114,111.08
  5. maintained petty cash account over $5,000 limit, average monthly balance was $20,589.31
  6. failed to provide receipts or invoices for check of $1000.00 for “lunch start-up costs”

Charter School of Wilmington:

  1. had no written polices and procedures for petty cash
  2. never had account reconciliations done by Account Custodian, was performed by Chief Financial Officer who was not the Account Custodian
  3. no checks signed with two signatures, only signed by CFO who was not the Account Custodian
  4. 13 petty cash checks over state limit of $500, totaled $11,228.90
  5. had debit transaction from petty cash account for $4,000, well over the $500 limit, which was transferred to another CSW account
  6. maintained petty cash account over $5,000 limit, average monthly balance was $6,174.10

Delaware Academy of Public Safety & Security:

  1. had no written policies and procedures for petty cash
  2. never had account reconciliation done by anyone, including the Account Custodian
  3. no checks signed with two signatures, only signed by CFO who was not the Account Custodian
  4. 8 petty cash checks over state limit of $500, totaled $6,440.11

Sussex Academy:

  1. 5 petty cash checks over state limit of $500, totaled $16,377.05
  2. maintained petty cash account over $5,000 limit, average monthly balance was $26,689.95

 

So let me get this straight.  Kathleen Davies was working on finalizing this report, showing five Delaware charter schools breaking the law, but she got put out to pasture?  And all the charters got was these “don’t do it again” letters?  That were NEVER released to the public, until now?  And look at the cc: on the letter to Godowsky.  All charter school leaders and board presidents.  My theory that Kathleen Davies was put on leave for bogus purposes is actually proven in the letters to the charter schools.  As the News Journal wrote, Ann Visalli with the Office of Management and Budget followed up on a complaint by unnamed individuals at the Auditor of Accounts Office.  As a result, Davies was placed on leave (six months after the tip was submitted to OMB) because she failed to use a procurement card for travel purposes and went through the also-existing state reimbursement program.  But in the letters to the charters, that standard doesn’t seem to exist because Wagner writes:

We also recommend using a State-issued procurement card (PCard) or direct claim through First State Financials when possible.  Regardless of the method of payment, supporting documentation must be maintained for all transactions.

So by Wagner’s own advice to the charters, what Kathleen Davies did is perfectly acceptable.  She followed the procedure.  Maybe not a preferred procedure, but a procedure nonetheless.  Which makes Ann Visali’s actions a complete and utter crock.  A complete and utter lie meant to disgrace the one person at the Auditor of Accounts office who was doing their job, and doing it well.  But no, instead we get these non-transparent letters from Tom Wagner.  And he has the gall to ask Godowsky to collaborate with him on “an event” to make sure all the charter schools know this, even though their leaders and board presidents were included in the letter to Godowsky?  How much more special treatment and hand-holding do the charters need to understand the law?  Do they need circle time to get this right State Auditor Wagner?  This obvious fraud going on in our State Auditor’s office is completely out of control, matched only by that of the Department of Education.

This whole debacle comes down to this: someone or maybe even a group of individuals is protecting charter schools in Delaware.  They have enough power and clout to make things disappear or just focus on other aspects surrounding it to cloud the issues.  We are seeing this with the charter school lawsuit and I have to wonder if the petty cash information was not made public because of that looming timebomb.  One can only assume the charters were given some type of direction in their process for having the DOE review exclusions districts submit for their local funding formulas.  They clearly knew the results before the districts did as evidenced by the emails between the finance office of the DOE and charter school leaders.  They also had to have known there would be some major blowback from the districts and advocates for the districts based on that.  If not, they are complete and utter idiots who truly underestimate the will and resolve of people in Delaware traditional school districts.

This is my new working theory: the charters knew they would wind up filing suit on the local funding formula.  I think they knew Godowsky was intentionally kept out of the loop on this and when the public found out about the new charter bills going out to the districts with very elevated amounts, Secretary Godowsky would be forced by public pressure to reverse course.  As a result, they would be free to sue the Christina School District and the Delaware Dept. of Education for something they wanted to happen in the first place- a big, fat, and juicy lawsuit.  They knew the only thing that could happen for them to get more money would be to create the conditions for a lawsuit to happen.  Which they did.  Delaware is a very corrupt state.  If people don’t see that in this day and age with everything I’ve written, along with many others, they need to get their eyes checked.  There are good people, fighting the good fight, but they are overpowered and outnumbered by those who are either corrupt or lend their ears to those who are corrupt.  If some cities get a moniker of “Sin City”, then Delaware clearly qualifies for the “Sin State”.

But the charters and their friends had to clear a very real obstacle in their road to the lawsuit.  One Kathleen Davies.  The same person who was doing the petty cash audit along with other charter school audit inspections.  One of those inspections was a tip I sent to the auditor’s office on Newark Charter School and their failure to submit non-profit 990 tax forms to the IRS.  While they met the criteria once upon a time for being exempt from filing their 990 tax returns, they knew the conditions which allowed for those exemptions no longer existed.  Something the IRS issued very strongly worded guidance to all American charter schools that participate in these exemptions.  NCS knew they could not look like a victim in a lawsuit against their feeder pattern district if that audit inspection came out.  It had to disappear.  We all know true compliance with properly making sure all our schools in Delaware are truly funding student needs is an exercise in futility, despite what the law already requires.  But an audit inspection into NCS’ finances would be a much deeper probe.  It could have offered a great deal of transparency with their money and what they are doing with it, far past the scope of their annual audit or what appears in their financial statements.  But given the pull they seem to have, with the Delaware Charter Schools Network, the Chair of the Senate Education Committee (Delaware Senator David Sokola), to some extent the Chair of the House Education Committee (State Rep. Earl Jaques), other members of the Delaware General Asssembly, select members of the Delaware Dept. of Education, lobbyists, and companies within the Newark area, I could easily picture Greg Meece being able to rally enough force to make things happen in regards to Kathleen Davies.  Once again, I stress, with utmost importance, this is only a working theory of mine and is not grounded in documented fact.  I imagine a paper trail that could conceivably supporting this working theory would not materialize no matter how many FOIA requests I might ask for.

Lest we forget, as clearly documented in the above-linked News Journal article, Senator Sokola was the prime sponsor on a bill meant to give charter schools more authority over the choosing of their annual auditors as opposed to the State Auditor of Accounts office.  This was in complete contrast with Rep. William’s original bill which would have had the auditor’s office doing the job.

She publicly supported Williams’s bill over an alternative proposal from Sen. Dave Sokola, D-Newark, which would strengthen the rules charters have to follow in picking auditors but leave them with the authority to do so.

Eventually, Rep. Williams and Senator Sokola compromised on a charter school audit bill but the charters still get to pick their own auditor.  What the new bill also accomplished was any charter school under investigation by the State Auditor of Accounts office would also be audited for that fiscal year by the Auditor of Accounts.  By making the petty cash audit turn into letters instead of a full-blown inspection report, those five charter schools will not get a full financial audit by the Auditor of Accounts office this year.  There are also other stipulations in which that office can do a full financial audit on a charter, including the following, based on the text from the signed House Bill 435.

Has failed to maintain a current status with the Internal Revenue Service Form 990 filings, if said filings are required of that charter school.

All of this legislative language serves to expose charters who do not comply with the law.  But discovery of something like an exemption of an IRS 990 filing not being practical based on the current conditions of the only Delaware charter school in the state to not file said return, would come from something like an audit inspection of the school.  Something that is not happening from the Auditor’s office because they got rid of Kathleen Davies and my request to them seems to have vanished into the ether.  Even though I provided clear documentation to John Fluharty about this.  Granted, the Office of Management and Budget received a “tip” from other officials in the Auditor of Accounts office with the allegations of Davies “not following procedure” with travel expenses in November of 2015, the OMB did not act on this until the petty cash audit neared completion and the NCS 990 audit would have been under way.  As well, there was the pulling of Davies’ September 30th Enrollment inspection which was reworked by Wagner and released in September.  That report was released two weeks before Davies was put on leave.

At a bare minimum, the Auditor of Accounts office and the Office of Management and Budget must be made accountable for their actions regarding Davies.  If she was put on leave for something as trivial as not following suggested procedure while charter schools run amok with their petty cash accounts and the results of which were not made public, even if it was switched from an inspection to non-transparent letters, we have a major conflict of interest going on here.  This conflict of interest reaches to the Delaware Dept. of Education and the Red Clay Consolidated School District.  As the charter authorizers of these five charter schools, they failed to even publicly broach the subject going on four months since the letters went to them, much less put the charter schools on formal review to address the financial violations of their charters, as they have the ability to do so under Title 14:

  • 515 Oversight and revocation process.

(a) The approving authority shall be responsible for oversight of the charter schools it approves.

(b) In addition to the review required by § 514A(a) of this title, the approving authority may notify a charter school of potential violations of its charter and submit the charter to formal review to determine whether the charter school is violating the terms of its charter and whether to order remedial measures pursuant to subsection (f) of this section.

Both the Delaware Department of Education and the Red Clay Board President, Kenneth Rivera, were well aware of the situation because they were included in the letters sent from Tom Wagner.  Bloggers like myself exist because of what amounts to severe issues with education in Delaware.  Our state has, is, and will continue to fail the most important stakeholders in education, the students themselves, because they fail to adequately provide oversight to make sure our schools do the right thing.  Instead, Delaware does its level best to cover up issues with no transparency and institutes polices and measures that have no basis in reality.  They are what outside interests want.  These “poverty pimps”, corporate education reformers, ed tech charlatans, and those hiding behind the cover of “non-profits” and “community organizations” should not be involved in education at all.

This is what I want to see: Kathleen Davies immediately reinstated, the original charter school petty cash audit inspection completed, and any other pending charter or district audits done with fidelity.  As well, anyone else who played a role in this absolute cover-up and smear campaign against Davies needs to be named and held accountable for their parts in this.  As State Rep. Kim Williams asked, who audits the auditors?  I believe it is time to find out.  It is past time the feds got involved in Delaware’s finances.  Corruption, fraud, waste, and abuse are rampant in Delaware.  If left unchecked, as it has been for some time now, the situation will only wind up costing the taxpayers of the state even more money than they have already doled out without even realizing it.

In the above picture, the people in the “Brady Bunch” format are as follows:

Top- Kendall Massett, David Sokola, Governor Markell

Middle- Tom Wagner, Kathleen Davies, Nick Manolakos

Bottom- Charlie Copeland, Secretary Godowsky, Ann Visalli

Delaware Auditor Tom Wagner Releases Heavily Edited New Version Of September 30th Unit Count Inspection Report

Tom Wagner, the elected Delaware State Auditor, issued a new September 30th inspect report from his office today.  The original report, issued on May 4th of this year, was conducted by Kathleen Davies who was put on leave in Mid-May.  Oddly enough, this report does not even appear on the state website but this was emailed to many state employees and legislators this morning.

I am presenting both the new report and the original so readers can compare the two.

To view the original point, go below:

In comparing the two documents, there are significant changes.  Missing in the new report is a letter from Thomas Wagner to Secretary of Education Dr. Steven Godowsky.  In the new report there is a new Appendix where the auditor’s office gave each charter school or district that received a finding to respond to the initial report issued on May 4th.  There are key edits of certain sections.  Especially when it revolves around the Delaware Department of Education.  The changes appear to fluff up the DOE in certain instances.  Almost as if the DOE had editing power over an audit approved by the State Auditor.

I resent this whole new report and the attempt to demean Kathleen Davies.  No logical explanations have been provided by anyone on her situation.  This smear campaign by the State Auditor’s office and the Office of Management and Budget needs something more than some bogus explanation provided by Ann Visalli.  Wagner needs to step up for his employee who did her job faithfully for many years.  Instead, just this new report alone looks like he is majorly kissing up to the Delaware DOE, led by Secretary Godowsky, who serves at the pleasure of Governor Markell.

Letter From Newark Charter School Board Chairman May Turn District/Charter/Delaware DOE Funding War On Its Ear

No sooner do I receive the official word that no changes to the local cost per pupil formula will be changed than I get multiple emails with a letter from Newark Charter School Board Chairman Stephen Dressel sent to Newark Charter School parents.  This letter shows a very different take on the whole issue and alleges that Christina has been hiding funds in a certain bucket in their local funding.  The letter further states that the Delaware Department of Education approved this every single year.  That it wasn’t until this year that this funding bucket was found and corrected.  At this point in time, I truly don’t know what to believe.  While I have serious concerns with Newark Charter School’s enrollment practices and other financial issues at the school, if (and this is a very large if) what they are saying is true, I have serious questions about that as well.

I will be very clear with a few things before you read this letter.  The information presented to me from sources last week was a change in this formula, not a correction.  At no point in time until now did anyone from Newark Charter School or anyone from the charter school community present this information to me.  This is crispy fresh information that I just received.

So if there is no change, as the letter alleges, does that mean Christina will still have to pay these funds?  And who are the other districts alluded to in the letter?  Who was responsible for signing off on this at the Delaware DOE?  How does the Office of Management and Budget fit in with this?  Why did the local cost per pupil go up three times the original amount from 2013-2016 when the amount of students Christina sent to Newark Charter School only went from 1,200 to 2,000?  Those are still big mysteries in my book.  So while NCS may claim they are owed these funds, the fact remains the DOE put their stamp on it every year.  Were there earlier funding inequities going on with this formula which accounts for the huge change in funding between 2013-2016?  If this “hidden” budget was so hidden, how did Newark Charter School come to find out about this if the DOE was oblivious to what was going on as the letter alleges?  How much did Governor Markell or Ann Visalli, the former chief of the Office of Management and Budget know about what was going on with this if OMB were the ones determining the actual formula?  And is there any connection whatsoever to Kathleen Davies at the State Auditor’s Office being put on leave in May?  I do not have these answers, but my door is open for anyone to contact me on these questions.

In terms of this letter, it is written by a sole member of the Board of Directors of Newark Charter School and signed by one individual.  This letter is not from the entire board, or even on behalf of the board.

I have no doubt the NCS supporters will see this as justification for the actions Greg Meece, Joanne Schlossberg, and Dressel took last Spring.  The Deputy Secretary of Education, who the Associate Deputy Secretary of Education answers to, would be responsible for financial oversight of the Delaware DOE.  They did not meet with the Deputy Secretary of Education in the Spring.  They met with the former Deputy Secretary of Education, David Blowman, who now serves as the Associate Secretary of Education.  Blowman would have been the head finance guy at the Delaware DOE for the past few years when anyone would have signed off on what Dressel alleges to in this letter.  This is going to blow up this entire conversation all over again.  If what NCS is saying is true, then I would owe them an apology for allegations surrounding this particular issue.  I went based on information presented to me and I publicly wrote about this.  NCS or the charter school supporters could have responded in an official capacity at any time but chose not to.  But this is one letter written from one board member of the NCS board without full board approval. This letter was sent to the parents of a local education agency as defined by federal law so this document is in the public domain.

Oh, and just one more little itty bitty thing.  The creator of the PDF file was not Stephen Dressel.

GregMeeceSignature

 

 

 

The Charter School Petty Cash Audit You Will Never See

Delaware State Auditor Tom Wagner has a lot of explaining to do.  And possibly Governor Markell as well!

Things are getting a bit clearer now.  On the Kavips blog, Delaware State Representative Kim Williams wrote a comment on Kavips take on the Kathleen Davies situation playing out at the Delaware Auditor of Accounts office.  She wrote about how she contacted the auditor’s office last September regarding some concerns she had with a Delaware charter school’s petty cash activity on Delaware Online Checkbook.  The report was near completion prior to Kathleen Davie’s abrupt “leave of absence”.  Williams even had a comment she approved that would have appeared in the petty cash audit inspection.

Williams emailed Delaware State Auditor Tom Wagner to find out the status of it following Davies’ leave.  Wagner told her he stopped the audit and issued letters to all the charter schools instead.  Really Wagner?  I know which school Williams found on the petty cash situation.  When the Charter School of Wilmington wrote in their board minutes that the auditors were there to review their petty cash accounts, I knew something was up.  So I checked all the charter schools petty cash activity.  Some of them were quite egregious compared to what they are allowed to have in those accounts.  But I figured I would wait to see the report before I wrote about it.  In other board minutes, CSW board members asked where the audit was and they were going to contact the auditor to find out.  I find it very interesting they chose to write about this one particular audit, not once, but twice.

So now we have an elected official voluntarily choosing to cover up information.  This makes the very bizarre action against Davies’ look even more suspicious.  Who knows what other activity is being “stopped” by Tom Wagner.  Lord only knows how much else she found.  We also have the woman who was in charge of the Office of Management and Budget involved in this scandal as well.  Ann Visalli reported to one man, and one man only… Delaware Governor Jack A. Markell.  We have an obvious set-up against Davies with a lot of BIG Delaware power figures involved.  I hope her attorney eats them up!

Hey… Tom Wagner… where is the audit on Delaware Met?  Where is the audit from the tip I submitted about Academy of Dover and Newark Charter School?  What other audits are you cancelling?  Why do you keep ignoring emails from constituents like Jack Wells and myself?  What do you do all day?  Who got you to stop audits showing abuse of taxpayer money?  Is there an Indian River audit taking place given the firing of their CFO?  Mr. Wagner, do you know what else I’m finding?

Hey, Delaware Attorney General Matt Denn… when are you going to announce charges for the charter school employees that were caught?  And that Indian River guy?  Are you waiting for Markell to leave his post?  Or for the statute of limitations to run out on these thieves?  I know the FBI are aware of this because I let them know just in case Delaware didn’t.  That was in April.

If I were writing a mystery novel about this, hypothetically of course, I would have to name suspects in a crime.  Keep in mind this would be a fictional story because no one has been charged with anything (including former charter school employees who were nabbed by the auditor’s office, but I digress).  I would have to look at who opposed Kim Williams’ original charter school audit bills.  That would be Kendall Massett (Director of the Delaware Charter Schools Network), a lot of House Republicans, Senator David Sokola, Donna Johnson (Executive Director of the State Board of Education), Nitin Rao (the business manager of Newark Charter School), and Democrat State Representative (and Chair of the House Education Committee) Earl Jaques.  Oh yeah, Speaker  of the House Pete Schwartzkopf voted no on that one too!  Chuck Taylor with Providence Creek Academy (also the President of the board over at the Delaware Charter Schools Network and a member of the Charter School Accountability Committee at the Delaware DOE) had parents from his school send emails to the House prior to the vote opposing the legislation.  And we can’t forget Ann Visalli!  And some guy named Henry Clampitt who was doing work with Kendall’s group also opposed it at the Senate Education Committee meeting on it last January.  I would have to imagine many other charter school leaders were not happy about the bill either.  This is a big list of whodunit suspects!  Did they act in concert in this imaginary thriller?  Or did someone fly solo?  I can’t wait to write the ending to this mystery!  I imagine all these suspects could feel the noose tightening around them right about now.  In this fictional story of course!

I sure hope someone was able to get their hands on all those letters sent from Tom Wagner concerning the petty cash audits that went out to various charter schools…