Why Does Our State Auditor Only Find Things Like The Sussex Tech Fraud From Tips? Are There More Sussex Tech Situations We Don’t Know About?

Boom! Jack Wells sent one hell of an email to Delaware State Auditor Tom Wagner today.  This is one for the record books and opens up a whole new ballpark on the question of financial oversight of our school districts and charter schools!

TO: Mr. Thomas Wagner, Auditor of Accounts

This report reveals numerous problems that were “only” revealed because the Office of Auditor of Accounts {AOA} received an anonymous complaint on 1 July 2014. 

While I am concerned about the findings, I am even more troubled why these findings were not identified in the State of Delaware Statewide School Districts’ Construction Projects Attestation Engagements conducted in fiscal years 2012, 2013, 2014, 2015, and 2016.  

Question: Since these reports did not reveal the problems identified in the report conducted by your auditors as a result of an anonymous complaint, can you inform me the purpose of these engagements/examinations?

Comment: Some findings were revealed, however the report ending June 30,2015 states: “Our examination disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Hopefully your answer to my question will disclose what must be reported under Government Auditing Standards.

While I am troubled by these findings, I have to wonder if these findings and others problems are not being revealed by the engagements/examinations that are being conducted each year. Provided below are the number of districts that are audited each fiscal year.

Fiscal Year     # of  School Districts  Audited

2012                   18

2013                   17

2014                   18

2015                   18

2016                   16

I have to wonder if the findings on Sussex Technical are only the tip of an iceberg.

Finally and even more troubling is the fact that audits required by law to verify expenditures of $2.3 billion annually for the education of our children were legal and used for the purpose provided are not conducted.

Amen Jack!  I am dying for these questions to be heard.  But I fear we will only hear the empty vacuum of space on this.

Audit Investigation Of Sussex Tech Slams District Over $4 Million In Shady Construction Deals

Delaware State Auditor Tom Wagner’s office just released an audit investigation of Sussex Technical School District.  Construction deals that did not meet Delaware State Code began with a bus parking lot for almost $206,000 and continued with over $4 million dollars with the same company.  Wagner’s report, which can be seen below, found this to be very egregious.  Common Sense Solutions, a construction company owned by Michael Horsey, made a whirlwind of profit from contracts that were not procured by the State of Delaware as required by the law.

The report, in its conclusion, stated the following:

CSS turned their original HS Bus Entrance CM contract of $205,699 into nearly $4,000,000 in payments  by piggybacking the HS HVAC Systems, HS Instructional Shops, and District Office Renovations  projects onto the original CM contract with Sussex Tech as well as providing other services to the District that were not subject to any contract or required State approvals.

Any attempts at resolving the ongoing situation by district employees was met with firm resistance according to the report:

Through various interviews with employees at Sussex Tech, it has been stated that each time someone  began questioning the payments made to CSS, they were pushed out of the decision-making and payment approval processes.

Once again we have a Delaware school district or charter school where serious financial abuse and conflicts of interest are a higher priority than the education of children.  Once again, why are we NOT getting annual audits of ALL school districts as required by Delaware State Code?

Education Funding Mismanagement In Delaware

The below picture portrays exactly what is wrong with education funding in Delaware.  There is no consistency or oversight with where existing funds are going.  As a result, we have a boiling cauldron of fraud, waste, and abuse.  It seems like anyone can get paid in education and it can be catalogued however a school wants.

In this picture, we see the former Head of School from Family Foundations Academy and East Side Academy doing what appears to be consulting work for three Delaware charter schools.  Given that the amounts are very similar, I can assume it was the same type of work.  All three schools put the payments under different categories: Educational Benefits-Chld, Consultants, and Other Professional Service.  All three schools used different funds for what I assume to be similar work: Special, General, and Federal.  All three schools belong to the same Wilmington Charter School Collaborative, which is an alternate teacher evaluation system.  This initiative came about through Lamont Browne.

Lamont Browne left Delaware last summer and moved to Colorado to work his “magic” in another corporate education reform state.  So how is it he is able to do all this work in Colorado and still get paid by the State of Delaware through various charter schools?  Does he have a finders fee for this teacher evaluation system?

Governor Carney wants to talk about all these education funding decisions but has completely ignored the elephant in the room: we don’t know where existing funding is going to, especially in our charter schools.  School districts pull the same kind of shenanigans (wait until you see the next major audit investigation report coming out of Tom Wagner’s office!) but they can be harder to find.

I did go ahead and submit this as a tip to Delaware State Auditor Tom Wagner’s office as I wrote this article.  In the vein of full transparency, I am including screen shots of my tip:

When I write about this kind of stuff, all too often charter school supporters start defending the schools and say I am picking on charter schools.  While this most likely isn’t a Sean Moore kind of deal, it is symptomatic of what is wrong with our education funding oversight in Delaware.  I’m not looking for the causes as much as I truly want a solution to these kind of problems.  I would love to stop writing about these matters.  So Governor Carney, I am throwing you the gauntlet one more time: are you ready to talk about this or do I need to keep writing?

Delaware Auditor’s Office Issues Follow-Up Report To Indian River School District Audit Investigation

The Delaware State Auditor, Tom Wagner, released a follow-up today to the Indian River School District audit investigation.  The original report, released days before the district’s December referendum, showed very damning allegations against the district’s former Chief Financial Officer Patrick Miller.  Today’s memorandum from Wagner came out before another referendum the district will be holding on March 2nd.  While the follow-up shows significant improvement there are still some areas of concern as shown in the below report.

Earl Jaques Threw A Doozy Out There On Friday. Does It Have Legs?

Last Friday, Delaware State Rep. Earl Jaques responded to a post I put up on Facebook concerning the Delaware State Auditor’s office.  One of his replies was news to me as well as everyone else I asked about this reveal. Continue reading “Earl Jaques Threw A Doozy Out There On Friday. Does It Have Legs?”

Carney’s Pick Of Susan Bunting For DE Secretary Of Education May Not Be The Wisest Choice

Today, Delaware Governor-elect John Carney picked Indian River Superintendent Susan Bunting as the Delaware Secretary of Education when his term begins in January, 2017.  This is probably the worst choice he could make and it has the potential to become ripe with scandal. Continue reading “Carney’s Pick Of Susan Bunting For DE Secretary Of Education May Not Be The Wisest Choice”

17 Who Will Make An Impact In 2017: Delaware State Auditor Tom Wagner

tomwagner

Tom Wagner is going to have a VERY busy 2017.  Why?  Because I’m going to make sure he does.  Everyone and their mother is talking about education funding and how to change it.  But all of these funding advocates aren’t bringing up in the elephant in the room.  Do our districts and charters in Delaware spend the money they already have for the benefit of children?  Is that foremost in their minds when they spend their money?

Indian River School District, Family Foundations Academy, Delaware Military Academy, Academy of Dover, Providence Creek Academy, Odyssey Charter School, Sussex Academy, Charter School of Wilmington, Delaware Academy of Public Safety & Security, Delaware College Prep, Kuumba Academy, and Pencader Business School have all been investigated by the auditor’s office and found to have some pretty major financial issues.  The extremes, outright theft of tens, if not hundreds, of dollars which should be going toward the kids.  And they were the ones that got caught.

I believe, no, make that KNOW there are others.  I’ve been investigating an educational establishment the past few weeks.  You can ask, but I won’t tell you who.  There are not enough flags that would trigger an audit by Wagner’s office.  So I will create those flags and I will plant right in the middle of Wagner’s office.  The days of playing with school funds are over.  And if anyone should start to feel bold, I’ve made arrangements to make sure information gets out no matter what.

We live in complicated times with no clear direction of what is up and what is down.  This is the world we have created.  We can sit and talk about education until the cows come home but we have already slaughtered those cows and served them for dinner.  Everyone wants to feast on the scraps.  Tom Wagner’s office is, by law, supposed to audit every single school district in Delaware.  But he can’t.  Because our General Assembly won’t fund his office to do the work needed to hold our districts accountable for how they spend money.  Which is why I find it VERY ironic that certain charters and districts want to go after certain things in their quest for more money.  I find that to be completely despicable and if it continues I will not rest until that conversation ends.  Because NOTHING would tick me off more than something going forward with one particular certain thing.  If you thought I was a pain in the ass about opt out, that will be an episode of Romper Room compared to THAT.  Out of respect, I am not going to make that public at this point but it is a fair warning.  And I will say it is not even remotely connected with the charter school lawsuit against Christina and the Delaware DOE.

So, Tom Wagner, my plan is to keep you so busy that you will have no other option than begging the General Assembly to beef up your staff.  And I will have an apparatus so this won’t just be talk coming from you.  Our General Assembly will be VERY aware why you are so busy.

Someone has to get in the dirty and ugly trenches and dig around.  That’s me.  If you don’t like it, too bad.  If you have nothing to hide, you have nothing to worry about.  If it isn’t good for kids it isn’t right.  As for Wagner, there is one thing you need to resolve once and for all.  We both know what it is.  I’ve dug around in that abyss as well.  And it reeks of corruption.  The tide is high.

Delaware Audit Investigation Slams Indian River School District For Nepotism, Fraud, Conflict Of Interest, And Personal Spending

Delaware State Auditor Tom Wagner released the Indian River School District Audit Investigation at 2pm today.  The numerous allegations in the report include using facsimile signatures for purchases, the Superintendent receiving gifts in the form of jewelry, the former CFO donating over $50,000 to non-profits where he served as the President of the boards, the business office lying to the auditor about a discrimination lawsuit against the former CFO, incorrect paychecks and salaries for teachers, not following the state rules for accounting, the CFO’s sister-in-law working in the business office, almost $160,000 in payment vouchers that had half for invalid purchases and the other half breaking rules all over the place, possible allegations of the district paying for a board member’s tuition at a Maryland school, many reimbursements to the CFO’s personal American Express Card, over $20,000 on in-state food purchases, the Superintendent buying White House Christmas ornaments, over 20% of certain scholarships given to relatives of board members, and much more.

Indian River has a referendum in five days, on November 22nd.  Do you support this referendum after reading this report?

Updated: 3:02pm, 11/17/16: The Dover Post is reporting the district will hold a press event tomorrow at 10am to discuss the Auditor’s report.  Newsflash, Bunting was mentioned in this report a lot.  She doesn’t get to just walk away and blame everything on Patrick Miller, the former CFO…

Indian River Has A Referendum In One Week. Where Is The Audit Investigation?

Delaware State Auditor Tom Wagner promised the citizens of Indian River School District the audit investigation his office is working on would be released before their referendum.  I assumed it would be released at least a week before the referendum to give the citizens in the district enough time to digest it.  I pray to God his office does not release it the day before to soften the blow.  We all know there will be some very serious stuff in there.  We know something happened in this district.  A chief financial officer with a checkered past in another district doesn’t get put on leave and then “resign” a month later unless something very serious went on.  When is Delaware going to stop playing this game?  When will full transparency actually happen in this state?  I feel citizens should have at least a week for this so perhaps the district should put in a request with the Delaware Dept. of Elections to postpone the referendum.

Ominous Media Advisory From State Auditor Does Not Bode Well For Indian River

This can’t be good at all!  Not sure how I missed this one.  But it is out there.  Delaware State Auditor Tom Wagner publicly announced the Indian River audit inspection will be released before their referendum.  The November 22nd referendum could definitely swing one way or another based on this audit.  From what I’m hearing, it is NOT going to be pretty.  It could be a game-changer for the district with very bad things coming out.  Remember the whole Joey Wise thing up in Christina ten years ago?  Think along those lines.  Christina still gets bashed for that one even though it happened a decade ago.  This one will stick with Indian River for a long time.  And while everyone is playing the “Who will be the next Delaware Secretary of Education” game, I think Indian River Superintendent Susan Bunting will be off that list the second this audit comes out.  The last thing citizens of this district would want to happen is a referendum victory and then an audit inspection coming out that would have caused votes to shift to a no.

MEDIA ADVISORY

State Auditor’s Investigation into the Indian River School District

Posted On: Thursday, October 20, 2016

Dover, Del. – In response to media inquiries regarding the Auditor of Accounts’ (AOA) investigation into the Indian River School District, members of the media are advised that AOA intends to release its report in advance of the District’s referendum vote scheduled for Tuesday, November 22, 2016.

State Auditor R. Thomas Wagner, Jr. has authorized compensatory time for individuals working on this investigation in an effort to expedite the release of the report.

For more information, please contact John Fluharty at 302-857-3937. 

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

Big Issues In Indian River: Upcoming Referendum, Pending Audit Inspection, Federal Discrimination Lawsuit, and A Shrinking Budget

indian-river

The Indian River School District has seen better times.  While the embattled district faces an upcoming referendum in November, they must also contend with a huge influx of new students, a discrimination lawsuit, a budget that cannot handle itself, and an audit coming out this month from the Delaware Auditor of Accounts office.  Hopefully the last will answer the question of what their former Chief Financial Officer Patrick Miller was up to.  As I reported last month, sources contacted me under anonymity that Miller somehow absconded with millions of dollars in his time as CFO of the district.

Coastal Point reported on September 23rd that Indian River is not the only school district under review by the state Auditor’s office.  But, as usual, they are not ponying up any details.  I get that, but at the same time it gives them the capability of making things disappear when things get too hot in the kitchen, like the charter school petty cash audit.

“We like doing these things quietly (and make the announcement) when we’re done and we have a report for the public, so there’s not speculation out there,” Wagner said. “People get into wild speculations, and we try to avoid all that.”

On November 22nd, the district will attempt an operating expense referendum, as detailed on their website:

The district is proposing a tax increase of 49 cents per $100 of assessed property value. The measure will raise $7,350,000 in additional local revenue. The average district taxpayer will see an increase of $95.41 in his or her annual property tax bill.

But Coastal Point indicates this may not be the only referendum the school will ask for this school year:

More students means less space for each, so IRSD is working with the Department of Education to potentially build new schools and classrooms. That could possibly mean another referendum in the spring of 2017, for major capital improvement (to build new schools) and current expenses (if more money is needed for continuing costs).

Taxpayers in the district, especially elderly ones, are not going to like the proposition of two tax increases in less than a year.  In the Coastal Point article, Delaware State Auditor Tom Wagner indicated the investigative audit against Indian River School District will most likely be released to the district first for them to review.  After that it will be released to the public.  Will it come out before the November 22nd referendum?  That could be important for many reasons.  If the audit comes back finding something bad, and it comes out before the referendum, that could cause voters to vote no.  If it comes out after, taxpayers will say they felt cheated.  As well, a post-referendum release could assure a failure of the potential 2nd referendum vote next spring.

The district was very clear about the ramifications of a failed referendum on November 22nd:

If the referendum is not approved by voters, the district could face cuts to school safety, a significant reduction in staff due to an inability to meet payroll, larger class sizes, further discretionary budget cuts, the loss of staff to other school districts and inadequate instructional supplies and materials.

But financial issues are not the only crisis in the district.  There is also the matter of what happened earlier this week.  On Tuesday, October 4th, it was publicly announced the Coalition for Education Reform filed a federal lawsuit against Indian River.  Their allegations claim the district sent a disproportionate number of African-American students to an alternative special education school called the George Washington Carver Academy.  According to Randall Chase with WDEL 101.7FM:

The Coalition for Education Reform claimed that the district is using the George Washington Carver Academy, a special education school, as a “punitive dumping ground” for black students branded as “troublemakers.”  The group says black students are being removed from mainstream schools and sent to Carver in disproportionate numbers on flimsy pretexts and for arbitrary periods of time, while their educational needs are neglected.

As a parent of a special needs child, I can’t even begin to express how much this concerns me.  Shuffling off any students to different schools over discipline issues has become the quick Band-Aid for many Delaware school districts.  And some charter schools either expel the student or counsel them out.  While a federal lawsuit may not play out for a long time, I have to wonder if the district knew this was coming and is beginning to look at this in future budgets should they lose.

It looks like the Christina School District is not the only district in the state facing an avalanche of issues all at once.

 

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.

How Newark Charter School Cooked Their Books To Break The Law In Delaware

Newark Charter School found a way to overtly break Delaware charter school laws and they are using parents and students to do it.

Yesterday, an anonymous source informed Mike Matthews that Newark Charter School’s student body activity funds are legit.  Be that as it may, they aren’t reporting the revenue generated from these activities.  Instead, they are putting at as an expense on their monthly budget.  They aren’t reporting this revenue anywhere.  But they are showing the expense on their monthly budget.  How much are they getting overall?  That is unknown, but I was able to find out they are using student body activity revenue to pay for items they should not be according to Delaware law.

Newark Charter School does not post a 990 IRS tax form on their website.  They are exempt from even filing this return.  Why?  Because way back during the Bill Clinton years, they had elected officials on their founding board.  Granted, none of those elected officials are there anymore.  No one has ever questioned NCS at a state level about this before and they just assume it is alright.  Even though the IRS issued very specific guidance to charter schools about this type of exemption.  But of course Newark Charter School takes advantage of this ambiguity.  Until the IRS determines they are not exempt, they will continue to not file tax returns.  Even though they should and the reasons for them not doing so are the most ridiculous thing I’ve ever heard.  On IRS 990 tax forms, non-profit corporations are required to show any revenue they receive.  They don’t have to pay taxes at all, but they are required to show their numbers.

There are a multitude of reasons why Newark Charter School would not want to file an IRS tax return.  They are the only Delaware charter school specifically exempt from this.  Academy of Dover had their corporation status rescinded by the IRS some years ago, but the Delaware Dept. of Education turned a blind eye to this glaring fact during the school’s formal review last year which was in part over financial viability.  Eventually, Academy of Dover was able to restore this status and are now filing their 990 forms on their website.  But Newark Charter School took advantage of the bogus loopholes in this IRS regulation and have had a field day with it ever since.

This was my biggest issue with any changes to House Bill 186, the original charter school audit bill.  My sense was that anything even associated with charter school audit legislation would only be tainted by Senator David Sokola.  This would somehow benefit Newark Charter School and keep their finances in the dark.  Anyone can make a budget and show numbers on it, but a true audit and an IRS return would show a lot of information.  They would have to report the revenue they receive from students or their parents for field trips and student body activities.  But they aren’t.  No one can see this information.  If they get such a huge amount of money from these activities, they should be fully transparent and post their revenue stream on their website.  But they don’t.

On their monthly budget sheets they are required by state law to post on their website each month, they list student body activities as part of their operating budget.  Operating funds are part of state and local funded expenses.  If they have students pay for field trips and they write a big fat check to, say, the Bermuda Institute, and put that as an expense in their budget, that means they are getting these funds from the state and local funds.  Granted, their budgeted amount for student body activities in FY2016 was $300,000 as shown in the below pictures.  But their budget forms the picture of how much money they will need to operate as a school.  This is the spine of any charter school or district’s operations.

Newark Charter School 7/2015 Monthly Budget: Revenue

NCS715Budget

In the above picture, we see the school’s projected revenue for FY2016 as of July, 2015.

Newark Charter School 7/2015 Budget: Expenses

NCS715Budget2

Above, we see their projected expenses. Note the Student Body Activities amount of $300,000.

Newark Charter School 6/2016 Budget: Revenue

NCS616Budget

By June of 2016, their revenues looked completely different.

Newark Charter School 6/2016 Budget: Expenses

NCS616Budget2

Their expenses, especially Student Body Activities went up as well, mushrooming to over $445,000. This was $145,000 over what they budgeted for this category.  As if it was almost planned…

This brings us back to the current situation at the Delaware Auditor of Accounts office.  As I wrote earlier this week, there is some shady business going on there.  Kathleen Davies had my tip about NCS and Academy of Dover’s lack of IRS 990 forms and I believe it was an active investigation.  I know this because I received a call from John Fluharty about it in March, two months before Davies was put on “leave”.  He wouldn’t call to get information if it was not active.  If that office was leaning towards NCS needing to put up their 990 tax forms, invariably the inspection would lean towards “Why aren’t they putting up this information?” which could further lead towards a full investigation of their finances.

Senator David Sokola has been the Senator for the 8th District since 1995. This district surrounds most of Newark Charter School’s five mile radius.  Sokola helped in the creation of Newark Charter School.  He even joined their board for a stint in the mid 00’s while also an elected Senator, which is perfectly legal in Delaware.  But in his stint as a Delaware Senator, he has essentially served as a buffer between the school and true accountability.  Sokola is a senior-ranking Delaware Senator.  Not only is he the Chair of the Senate Education Committee, but he is also the Senate Chair on the Bond Committee.  If you look at a lot of the legislation about education he writes, every single bill has benefitted Newark Charter School in some way.  I’m sure if you look at some of his non-education legislation, including ones about land usage, those would benefit the school as well.  This isn’t the first time I’ve thought out loud about Senator Sokola.

In my fictional novel I am working on about Kathleen Davies and whodunit, I would put Senator Sokola as the lead suspect in this mystery.  He has the means, the motivation, and the pull to get something like this done.  He is well-connected with the Delaware Charter Schools Network and Rodel.  Since he is also in tandem with many House and Senate Republicans over charter schools, it would stand to reason he would lend his ear to them and get a fire going.  As well, he has a very cozy relationship with the State Board of Education Executive Director Donna Johnson and Delaware Secretary of Education Dr. Steven Godowsky.  As the Chair of the Senate Education Committee, this is to be expected, but he always seems to be able to get support for his bills that do more damage to public education.  His connections with the Delaware Charter School Network go back many years.  He has frequently been involved with the Rodel Foundation sponsored Vision Coalition.  He is a firm believer in standardized testing and teachers being judged by those scores.  He put in very damaging amendments to House Bill 199 a couple months ago based in large part on feedback he received from his beloved Newark Charter School.  He is no friend to traditional school districts.  As the Newark Charter School legislative cheerleader, he can count on votes from his constituents who have students attending that school.  With a student population of over 2,000 students, that is a lot of votes.  In exchange, he allows them to operate with no transparency, accountability, or oversight through his legislative input.

Now some will say Tom Wagner is a staunch Republican and Sokola is a Progressive Democrat!  How could Sokola convince Wagner to do anything?  He didn’t have to.  Somehow, someway, the “whistleblowers” in the Davies complaint to the Office of Management and Budget were told exactly how to get Davies.  This idea had to come from someone with advanced knowledge of the rules and regulations of the Delaware accounting procedures and policies.  We know Newark Charter School knew about what was going on with Davies and her “administrative leave” from the Auditor of Accounts office based on what they put in their June Board meeting notes:

NCSTravelReimbursementBdMtg

In Delaware politics and education, there is no such thing as a coincidence.  The fact Schlossberg would bring this up a month after Davies was put on leave is very telling in my opinion.  We know the Delaware DOE already knew about all this because one of their employees told me about in late May.  So if that person would tell an education blogger, it would stand to reason many in the state knew as well.  NCS, in their board meeting minutes over the past year, has been very diligent about discussing legislation that could impact charter schools (especially the charter school audit bills).  But to write about how Davies was specifically put on leave, something I wasn’t even aware of until last Saturday when the News Journal came out with their article, would suggest having very intimate knowledge of the case against Davies.  So much so that they wanted to adopt this into their board policies.  The News Journal article never even specified if their information was coming from their “sources” or the Office of Management and Budget.

NCS connection with Sokola would give them instant knowledge of anything going on at a statewide level.  But this has always been my big question about the charter school audit bills: why were they fighting them so hard?  Especially Newark Charter School?  Some answers can actually be found in the oddest of places.  Newark Charter School’s selected auditor for their annual required audits is Barbacane Thornton and Company.  As seen below, they do this work for many Delaware charter schools.

BarbacaneThorntonFY2016

In looking at this list, I see quite a few charter schools who have landed in hot water at the State Auditor of Accounts office: Academy of Dover, Delaware Military Academy, and Providence Creek Academy.  One of their lead accountants, Pam Baker, testified in opposition to Kim William’s third attempt at a charter school audit bill, House Bill 186, in June of 2015:

She said this bill takes away responsibility from the board to select (an) independent auditor and takes away the opportunity for charter schools to do that effectively.

Now why would someone who is hired by many of these schools to do their audits put her neck out there for schools she knew were under investigation?  As well, her statement basically said “they may not be able to hire the firm I work for” which would show a clear conflict of interest in her sworn testimony.  A lobbyist for the Delaware Charter Schools Network even spoke on behalf of the business office of Newark Charter School at this meeting:

Nitin Rao, DCSN, spoke on behalf of the business manager of Newark Charter School in opposition to the bill.

For a school that seems to have a great deal of extra revenue after their year-end expenditures each year, this was a head-scratcher.  Like many who felt the same way, I questioned whether the charters opposition stemmed from the cost involved with the legislation or more what these new audits through this legislation would find.

But what Kathleen Davies said at this meeting was the essential problem with the charter school audits in Delaware:

Kathleen Davies, Chief Audit Administrator at AOA, said AOA does not have any firms under contract that conducted any charter school audits. She rebutted that the IRS filing mentioned by Pam Baker is a non-audit service and those fees are not part of the audit work. She said there have been a lot of terms thrown around and the only requirement for charter schools, with regard to oversight, is GAP compliant financial statements. She said there are currently seven investigations on charter schools underway because of mismanagement of funds. She said fraud and abuse were never brought to anyone’s attention for these seven schools. She said AOA has subpoena power and a firm, under AOA contract, can be used to address the issues found. She said those seven charter schools got a “clean bill of health” with no findings and no body to identify issues. She said this bill would change that.

Notice Davies brought up IRS filings.  As we all know, Newark Charter School doesn’t even have to file with the IRS because of their “special” exemptions.  IRS filings require all sources of revenue.  Which brings us back to Student Body Activities.

If student body activity expenses are an item in the school operating budget, they are counting on this money from the state and local funds.  But the issue comes in when these student body activities are pre-planned field trips and events that students or parents pay for prior to the actual event.  I can certainly buy the notion that teachers or the school would have to pay for many of these events ahead of time.  And as Head of School Greg Meece is the only person in the school who has a state procurement card, teachers or the school would have to pay out of pocket ahead of time for these activities.  But to spend $445,000 in student body activities for a school population of over 2,100 students, there would be a bucket load of revenue coming in from field trip money.  This is the revenue we are not able to see.  At all.  Anywhere.  Trust me, I looked.  All over the place.  There is nothing on Delaware Online Checkbook showing any such revenue.  If this revenue was put back into the school, we would see it as negative amounts in their expenses.  But they don’t exist through the state accounting system.  Therefore, they are only showing the expenses of student body activities and not the income that comes back as revenue to offset those costs.

Without knowing exactly where they put that revenue, I can safely guess where they put the entire $449,575.29 they reported as “student body activity” on Delaware Online Checkbook.  They used that revenue to pay for the remaining amounts on two capital building projects they contracted with one company to perform.

In the fall of 2014,  Newark Charter School started talking about building a Performing Arts Center and a STEM Laboratory Suite.  Since these are capital projects, not minor capital improvements, they would not be able to get funding from the state as dictated by the Delaware charter school law.

MinorCapitalFundingLaw

So even though Newark Charter School received $273,447 from the General Assembly for FY2016 for minor capital improvements, they could not use it for projects of this magnitude and scope.  Since the Performing Arts Center would be an entirely new addition to the school and the STEM labs would require structural change to the building, these two projects did not qualify for minor capital funding.  So how much capital funding would they need to obtain for this project?  Quite a bit according to their application for the Delaware Charter School Performance fund in the Spring of 2015.

NCSCharterSchoolPerfFundAppl2015

As part of Delaware charter school law, NCS had to submit a minor modification request for these projects.  They did so, and it was approved by then Secretary of Education Mark Murphy according to their December 2014 board minutes:

NCSDec2014BoardMinutesMinorMod

But in their application for the minor modification, Meece either greatly underestimated the costs for the project or later added more bells and whistles to the whole thing.  Because the original projected amount was $853,088.  At no point in time did NCS resubmit a new minor modification based on the financial difference between the original amount and the projected amount, a difference of $636,061.  But the section of the application where it asked about financial impact on the school was very enlightening:

NCSMinorModApplication2014

Greg Meece and Joanne Schlossberg, their Business Manager, knew they would have to get a lot of money for this project and began working the foundation circuit.  They were able to obtain funding from the Longwood Foundation ($500,000), the Welfare Foundation ($125,000), and the Calder Foundation ($79,000).  They applied for $400,000 in the Charter School Performance Fund (even though the maximum amount any Delaware charter school could win was $250,000 that year).  They received the maximum amount of $250,000.  Even though they were able to generate a lot of funding in a very short time, they were still short from the budgeted amount.   By $535,149.00.  Since construction was already underway by this point, the school had to raise the remaining  funds for the projects or  use funds from their reserves.

In June of FY2015, the board’s treasurer stated the school was $668,000 favorable for revenue “due to the annual fund and pledges from the capital campaign”.  The school received the Longwood Foundation grant in June of 2015.  In July of FY2016, the treasurer stated the school was not $1,283,000 favorable in state revenue due to the grant funds received from the Longwood Foundation and the Welfare Foundation in FY2015.  As well as the other grants they received in June of 2015, they received the $79,000 grant from the Calder Foundation and $250,000 from the charter school performance fund in July of 2015.  At their September 2015 board meeting, it was announced the funds received from the Longwood and Welfare Foundations were received in FY2015 so they could not put this as revenue in FY2016 even though they budgeted these funds for FY2016.  This caused their revenue to be unfavorable in the amount of $961,000.  But they were going to amend their budget to make this happen.  While a lot of these revenue figures are all over the map, it is important to look at the $668,000 talked about in June of 2015.  If the school already had pledged amounts coming from the Longwood and Welfare Foundations totaling $625,000.00, it would stand to reason their remaining “favorable revenue” came from their annual fund.  Which leaves $43,000 they had remaining from their FY2015 annual fund which they committed towards this project.  This reduced their shortage for the two projects to $449,149.00.

Earlier this week, I posted an article about Student Body Activity funds and questioned why Newark Charter School is showing such a high amount for this.  Based on this article, I showed how a FOIA received by a Delaware citizen showed NCS as spending $445,000 in student body activities as of 7/2/16.  As of 8/2/16, that amount increased to $449,557.29.  Now if you notice the projected amount for the STEM Laboratory Suite in the above picture, that amount is for $449,588.  Almost the exact same amount as the expenditures for their student body activity.  If this fund is meant for just student body activities, they should not be going towards capital costs, such as the creation of a STEM Laboratory and a Fine & Performing Arts Center.  Delaware law is very specific about this and the business manager and Greg Meece are well aware of these laws.

How much did these two projects actually cost Newark Charter School? $1,512,599.08.  They contracted with Daystar Sills, a construction company in Delaware.  The difference between the projected amount in their charter school performance fund application and the actual amount was $23,540.08.

NCSBldgImprovDaystarSills

If you add up the following figures:

$43,000 from their FY2015 Annual Fund

$500,000 from Longwood Foundation

$125,000 from Welfare Foundation

$79,000 from Calder Foundation

$250,000 from Charter School Performance Fund

The total amount is $997,000.  Which leaves them very short of the eventual $1,512,599.08 those projects were going to cost.  We know, as of  their November 2014 board minutes, the school received $64,000 from an auction they had.  This was their 11th annual auction.

NCS1114boardmtg

They had their next auction in November of 2015, but at their November 2015 board meeting, Greg Meece did not give an amount of how much they generated.

NCSNov2015BoardMinutes

By not publicly mentioning how much they received in their FY2016 auction, they could leave this open for future use as they saw fit.  Since there was never a capital fund amount given, we would have to assume it was close to the amountselaw they received in prior years.

Since they are so short on this capital project, and we don’t know where the money is coming from to pay for the rest, watch what happens when we add this to the $997,000:

$449,575.29 from FY2016 Student Body Activity expenses

We now get a grand total of $1,446,575.29.  They are still short $66,023.79.  We can safely guess where those funds came from based on their FY2015 Audit with Barbacane Thornton & Company:

NCSFY2015AuditStmntOfNetPosition

Note how NCS received $77,226 in pledged monetary support in FY2014 and $67,812 in FY2015.  It would stand to reason they used their FY2016 pledge amount to supplement the rest of this bill from Daystar Sills.  The school could never use extra local reserve funds because those funds could only be used for operating expenses or minor capital improvements based on Delaware charter school law.  They could not be used for capital building projects.  Meece knew this, and Mark Murphy should have.  The fact that Meece applied for a minor modification for this huge project and didn’t know the true estimate of the costs, didn’t have the capital funding when he applied for it, and operated on the assumption that Mark Murphy would just take it at face value that the school could always fall back on local appropriation reserves speaks volumes about the arrogance behind Newark Charter School.  Meece and Schlossberg, in my opinion, knew exactly what they were doing with all of this.  They knew the project would be short and planned ahead of time.

In June of 2015, they budgeted $300,000 for student body activity.  This would have been a very good guess on the amount they would need to pay towards the final bill for this project.  Because at that time, they somehow thought they could get $400,000 from the charter school performance fund.  This turned out to be a huge error on their part because they had to somehow find a way to get another roughly $150,000 when they only got $250,000 from the performance fund.  This is how their Student Body Activity expense amount went from a budgeted $300,000 to a little bit shy of $450,000.  They actually planned for this amount, in my humble opinion, based on how the project was turning out.  Once they realized their error with the performance fund, they got to work.

To use a shell student body activity account to pay for Capital projects is an obvious violation of Delaware state law.  To never report the revenue they received from parents and students should be a violation of state law.  To use parents and students money to disguise illegal activity is fraud, pure and simple.  Because I am not a judge or a jury, I cannot say with 100% certainty this is exactly what Newark Charter School did.  If I were writing a fictional novel, either as part of the Kathleen Davies whodunit or a new one on Newark Charter School, because no criminal charges or official allegations of wrongdoing have been laid out by any type of legal authority in the State of Delaware, I would say there is most likely a strong connection to this activity going on at Newark Charter School and Kathleen Davies eventually being put on leave.  I believe NCS knew there was an investigation going on with their IRS 990 forms.  I believe they knew their exemption was a glass house that would eventually have many stones thrown at it.  While I don’t think it was a case of Senator David Sokola going to Tom Wagner and saying “You have to stop this audit inspection cause my buddies at Newark Charter School could get in trouble”, I do believe the goal was to slam the character of Kathleen Davies.  By doing so, it would undermine the audit inspections she already completed (the September 30th Enrollment Count inspection and the Millville Fire Department audits which were either pulled or redone).  As well, it would cast a doubt on audits already underway.  I believe the right amount of pressure was put on Tom Wagner by the Office of Management and Budget to get Davies put on leave.  Aside from the false accusations of Davies abusing the travel reimbursement accounts by not using the state procurement card, there had to be a confrontation to push Wagner towards that decision.  The accusations by itself wouldn’t be enough.  There had to be that one final straw.

The Delaware Department of Education wanted the September 30th Enrollment Count done.  When the report came out, they disagreed with Davies recommendations in the report.  They complained to Wagner.  This I do know.  What happened next, I can only surmise.  Wagner wanted Davies to change the report.  Davies said no.  Boom.

Once Davies was gone, Wagner could kill the petty cash audit which would have shown charter schools abusing the petty cash policies in the state.  He did that and instead sent letters to all the charter schools that violated the petty cash policy with no ability for the public to see those letters.  He pulled the September 30th audit.  He took out Davies letter at the end of the Millville Fire Department inspection report.  We don’t know what is happening with the Newark Charter School IRS 990 Form Audit Inspection.   I have to assume we will never see it.  Unless someone gives a very good reason why the school would strongly benefit from not filing such a tax return.  Someone would have to show how they hide things financially so they can get what they want.  Then Tom Wagner’s office would have to act fast and get into that school and investigate ALL of their finances, from top to bottom.  He would want to subpoena all of their bank deposits.  He would have to turn the information over to the Delaware Attorney General’s office and in an ideal world, that office would act on that information.  If any federal funds were found to be abused in the findings of this investigation, the FBI would have to get involved.  Since this school has been around fifteen years with no IRS tax filings, I would assume the FBI would be very interested in how much revenue this Delaware corporation has received and would want to account for every single penny going in or out of the school.  If the FBI didn’t have anything to go on, I would have to imagine the State of Delaware would based on the information they would get out of their investigation.  Not to mention the very shady and scummy enrollment practices this school has had over the years in their attempts to have perfect high-stakes test-takers.  In their isolated and non-transparent world with a five-mile radius around the flagpole at their high school, some of which goes into a neighboring state, but determines what students can or can’t go to their elite wannabe private school.  Where parents can afford to pay for extravagant field trips because they don’t have to use those funds for a private school because this school is so perfect.  In an ideal world, we wouldn’t have this.  But this isn’t an ideal world.  This is Delaware.

I have no doubt Newark Charter School is not alone in Delaware with these kinds of financial games.  I think it has happened quite a bit, and not just in charter schools.  I think it has happened in our districts as well.  Maybe not the same chess move NCS pulled on this one, but other moves designed to give an advantage of some sort.  We’ve seen it before and we will see it again.  Until someone turns the board over and makes new rules for the game.  That is what needs to happen in Delaware.  This is my mission and others have this vision as well.  We keep waiting for someone in power to step up and do the right thing.   All we hear is silence.

To see the full FY2015 audit for Newark Charter School, please see the below report:

Senator Colin Bonini Has The Best Idea I’ve Heard From Any Of The Candidates Running For Governor

Yesterday, Delaware State Senator Colin Bonini responded to a constituent via email about an initiative he wants to create in Delaware.  It is an idea that is so simplistic, but it makes perfect sense.  He wants to create a “Does It Work?” program which would lead to the creation of an Inspector General in Delaware.  This is exactly what Delaware needs.  Our budget is out of control.  Education funding has little to no oversight.  Our State Auditor seems to be asleep at the wheel as he put his chief investigator on leave for the most bogus of reasons.  With Markell leaving his post in January, the education mafia in our state will lose a lot of power.  They know this.

Bonini just shot way up on my interest list.  Carney has been relatively mute with actual ideas.  He is too busy planning for his assumed reign to actually get out and talk with the people in a public forum.  Out of all the candidates for Governor, Carney is the only one that has not reached out to me.  Colin has, Lacey Lafferty has, and so has Sean Goward.  Sorry Carney, your response form letters don’t count.  The invite to talk is still there, but if you want to squander that opportunity, don’t get mad when I write about you like this.

Bonini needs to get his ideas out now.  He needs to be very vocal as of yesterday.  This is an excellent idea, and I am looking forward to hearing more about it.  Now some might say this was in the planning stages already by the Joint Finance Committee.  The same JFC who knew this year would be a tight budget year, but kicked the can down the road another year to take a “serious look” at things.  I don’t have faith in the JFC led Democrat tag team of State Rep. Melanie Smith and State Senator Harris McDowell that others may have.

This is what Bonini wrote:

Reality is that it’s very difficult to get reliable information from the bureaucracy. One of the main reasons I vote no on the budget, in addition to the growth in spending, is the lack of accountability in our state government. I am rolling out an initiative in the next several weeks called the “Does it work?” Initiative which will call for the creation of an Inspector General’s office and the requirement that each program in State Government, large or small, be evaluated every year as to efficiency, and most importantly, effectiveness.

We have the right to know where our money is going and whether it is being used for what it’s supposed to be used for. We also have a right to know whether the expenditures are actually producing results.

Way to go Colin!

Student Body Activity In Delaware Schools A Hotbed For Fraud & Abuse! Why Is $118,126.88 Such An Important Number?

The Delaware accounting system is a train wreck of epic proportions.  I found 100% proof funds were switched around that benefit certain schools.  We have one charter school that can’t even follow proper accounting procedures and another charter school that seems to think Student Body Activities are their personal playground.

FY2016StudentBodyActivityDistrictCharters

For something like this chart, I would expect to see school districts firmly in the lead, but we don’t see that at all.  Cape Henlopen is a bit of an oddity when it comes to Delaware school districts.  They get a lot of money from school taxes and the residents in those areas don’t seem to mind paying them.  But Newark Charter School, with $445,000 in student body activities?  That is an excessively high amount.  For a charter school with a student population of less than 14% of the neighboring Christina School District, they spend 17 times more on activities for students than Christina.  Four districts and one charter don’t even have anything coded as “Student Body Activity” with the state: Caesar Rodney, Colonial, Delmar, Sussex Tech, and Sussex Academy.  Do they not have any student body activities or do they just put it somewhere else in the Rubik’s Cube called the Delaware Financial System (DFS)?

So how does this even work?  Are districts and charters paying out for field trips and fun activities and then reimbursing those costs as revenue generated from parents paying for them?  Are these schools paying for them without collecting any money from students?  Or is it a combination of both?

Do these activities affect the bottom line for the per student costs for each district and charter school?

FY2016StudentBodyActivityPerStudent

Rocketing to number one with $108,000 in student body activity costs based on their number of students is Delaware Academy of Public Safety & Security (DAPSS).  That sure is a lot of field trips!  We know they bought a fire truck for their students last winter, but those funds were generated from a collection by students.  So what accounts for such a high amount based on their student population?  I went on Delaware Online Checkbook and found that DAPPS is coding all their student transportation costs under student body activity.  So that throws their numbers way off!  We can clearly see the transportation costs as part of this category, with an amount totaling $84,236.  Had they coded this correctly, under student transportation, their costs for student body activity would have been a little over $23,000.

For Newark Charter School’s student body activity expenses on Delaware Online Checkbook, there is no explanation for their very high amounts.  While we do see transportation costs, they are not as high as DAPSS.  They appear to be transportation costs associated with field trips.  What is even more bizarre are the many payments going to certain individuals.  As if they are parents or teachers.  We see amounts going out to American Airlines for 26 purchases of what I assume to be airline tickets at $818 each and one for $875 totaling over $21,000 on 2/5/16 which were bought with the state procurement card on 1/15/16.  I reviewed NCS board minutes and found no mention of any big field trips for students taking place that would warrant such high airline ticket prices.  The state’s accounting manual is explicit that no state employee can purchase first class airline tickets.  So where was this trip to that cost $818 for each ticket?

Cape Henlopen has an obscene amount of p-card activity associated with student body activities under student body activity.  Like Newark Charter School, I see a lot of names associated with these charges.

Where this gets incredibly odd is when I went to look at examples of student body activity for different school districts and charters.  A Delaware citizen submitted a FOIA request to the state and received the FOIA in early July.  All of this citizen’s information was run by the Department of Finance on 7/2/16 for every single district and charter school’s expenses for Fiscal Year 2016.  June 30th was the end of the fiscal year.  All the charts and graphs I have made to date have been based on those figures.  But upon review, amounts are changing in the state accounting system.  The total expenditures for each district and charter are the same, but funds are moving around in the coding system.  As an example, Odyssey Charter School showed over $35,000 in student body activity costs.  But when I look now on Delaware Online Checkbook, the amount is over $153,000.  This trend occurred with many districts and charters, some for nominal amounts and some for rather considerable amounts.  And this is just under student body activity expenses.

In looking at Odyssey, it became clear something was up, so I was able to actually find the exact amount that was shifted over to student body activity.

odysseystudbodyactivity

In the above picture, we clearly see Odyssey Charter School, as of 21:06:44 on 07/02/16 had a total amount for FY2016 in Student Body Activity in the amount of $35,831.91.

odysseystudbodyactivitydeonlinechkbook

In the above snapshot, taken from Delaware Online Checkbook today about ten minutes ago, we clearly see an amount showing $153,958.79.  The difference between the two is $118,126.88.  That is a rather steep increase for student body activities!  In looking at their expenses for student body activity for Odyssey, I found two rather large amounts going to First Student Inc.  This is the bus company Odyssey uses.  As seen in the below picture, the two charges were for $69,486.40 and $48,640.48.  If you add those up, you get $118,126.88.  Now why would those funds be shifted from some other category to student body activity?

OdysseyFirstStateIncBusPmtsFY2016

The two payments to First Student Inc. are listed in the below picture.

odysseyfirststateincpmts$118k

So if $118,126.88 was shifted to Student Body Activity, where did the funds come from?  If Odyssey’s total expenditures didn’t change, what happened to the money?  In the FOIA from 7/2/16, it clearly shows Odyssey’s Fleet Rental costs at $612,546.34.

OdysseyFleetRental

Now watch what happens when I go on Delaware Online Checkbook to find out the current Fleet Rental amount for Odyssey Charter School…

OdysseyFY2016FleetRentalDEOnlineChkbook

Wait, it went down from $612,546.34 to $494,419.46.  That is a difference of $118,126.88

There is one thing charter schools get that traditional school districts don’t get.  Some call it the transportation slush fund.  Every year, in the epilogue to the state budget, there is a stipulation that allows charter schools to keep any difference between their budgeted amount for transportation and what they actually spend.  For Odyssey, this is listed as “Transportation” in their budget.  These costs go up each year.  But how much did charter schools get to keep from these surplus funds.  Surely it wasn’t that much.  In the below pictures from FY2014 and FY2015, we see how much charters get back from this slush fund.

OdysseyFY2014TransportationFunds

FY2015BusContracts

Odyssey has clearly benefitted from this arrangement with legislators that has continued for the past seven years in the epilogue of the state budget.  I sincerely hope charters aren’t hiding any funds so they can actually get more from the Delaware Charter School Transportation Slush Fund then they already are!

What I am more curious about with these coding changes are 1) Why are they happening, 2) Who is making the changes, and 3) Are both the districts or charters and the state aware of these changes if only one of them are making the changes?  Something to keep in mind is this simple fact: this is only for Student Body Activity.  There are hundreds of codes in the Delaware Financial System.  This is just what I could find for our schools in one code.

FY2016CodingChangesStudentBodyActivity

In the picture above, this is based on rounded off figures to the nearest dollar which is why the Odyssey number doesn’t match up with the $118,126.88 I mentioned a few times.  I have not been able to look at the other schools to see where the money is going to.  Odyssey was easy because of the high amounts involved.  While some of these amounts are small, what other shifts are going on?  Why are they going on for other areas if they are?  We know districts and charters code things incorrectly but who monitors that?  Does anyone?  And how much does all this shifting of taxpayer dollars affect funding for the next fiscal year?

I would strongly recommend each district or charter school Chief Operating Officer or Business Manager proactively gets in touch with me and voluntarily lets me know of any changes being made to the Delaware Financial System, the justification for these changes, and how they are able to do it.  If they aren’t aware of these changes, they need to let me know that as well.  Because as I go through each of the different codes in the coming weeks, I will find more.  I’ve already done a cursory glance at different (and major) categories and found excessive sums of money shifting around.  If you don’t get in touch with me, don’t get upset when I blast the lack of transparency from your school or district in each article.  We know this is happening.  So the choice is simple: be held accountable or be honest.  If there is funny business, you know I will expose it and call you out on it.  And each time, I am submitting requests to the State Auditor’s office for each and every category.  So you can ignore me all you want, but know that someone else will be knocking on your door.  And if the State Auditor’s office ignores this, it is time to take steps at a Federal level.  None of you who are manipulating funds will be allowed to do so anymore.  If the Auditor won’t hold you accountable, I will.  And I will make so much noise you won’t be able to hear above the outcries of the citizens in your district or charter school.  This begins now.  I don’t want to hear any crap about “I didn’t know” or “no one ever told me”.  You are all subject to the rules of this state.  Your excuses are exactly that: an excuse.  If you aren’t doing anything wrong, you won’t have anything to worry about.  But someone has to shake all this up and see what settles at the bottom.

I sincerely hope I’m not spoiling anyone’s party and ruining a chance to get some extra money for themselves.  The party’s over.  Deal with it.

 

A Delaware Citizen Hits The Bullseye With The Scandal At The State Auditor’s Office

I’ve mentioned Jack Wells a lot in the past few weeks.  He is a good guy.  He has some very strong opinions about the mandated “leave” of Kathleen Davies, imposed by Delaware State Auditor Tom Wagner.  We all do these days.  I have yet to hear anyone say “Wagner did the right thing”.  It just reeks of corruption!  But enough babbling, let’s hear it from the good Jack!

During the last 6 years the Auditor of Accounts has expended $29,500.27 for Lodg-Hotl-Out of State, of this amount Kathleen Davis expended $1,953.01 or $325.50 a year.  Three other employees expended $1,262,55, the Delaware Online Checkbook does not identify the employees who expended the other $26,284.71.

 

The article that appeared in yesterday’s News Journal did not reveal what Kathleen Davis did wrong, it did not contain the above facts nor did the article identify;

a.       Who approved Kathleen Davis travel.

b.       Who approved Kathleen Davis request for reimbursement that have to be supported by invoices/hotel bills.

 

Hopefully The News Journal will, in a very short time write a follow-up that provides the answers to the above questions and  informs the readers if funds were misused.  I would think since two months had passed since she was placed on leave, this could have been determined before the information was released to the News Journal. 

 

The article stated that using the P Card provided more oversight, however when I checked the P Card for this category of expense, it identified the hotel not the individuals.  {Marriott, Chicago received $893.96. FY2016}

 

http://checkbook.delaware.gov/catDetails.aspx?Dept_Name=AUDITOR%20OF%20ACCOUNTS&Spend_Cat=LODG-HOTL,%20MOTL%20OUT-STATE&Fis_Q=FY%202016&Div_Name=AUDITOR%20OF%20ACCOUNTS

 

Over the last several years under Kathleen Davis supervision detail reports have been written on fraud, waste and abuse.  The Performance Reviews on Entitlements reveal big problems, as have audits on the used of Petty Cash in some of our Charter Schools.  The report on DDOE procedures on verification of student enrollment by category revealed a major problem, that DDOE made no effort to verify funds were being used for the purpose they were provided.  The report also revealed DDOE requested Auditor of Accounts conduct a review to verify funds were used for the purpose provided, but AOA refused. {This report was rescinded by AOA, no reason have been provided.}

I find it unacceptable that hundreds of hours are devoted to verify the state is not providing more funding to our children than they earn, while both AOA and DDOE provide NO oversight to verify the expenditure of these funds are legal and used for the purpose the funds are provided. 

 

While I support audits on travel and use of petty cash to reduce fraud, waste and abuse, I find it obscene NO oversight is being provided on the expenditure of 2.4 billion annually the public has provided for the education of our children.  Clearly the lack of oversight on $2.4 billion annually provides opportunities for fraud, waste and abuse, and based on the findings in audit reports conducted under the supervision of Kathleen Davis on the used of credit cards, it is clear we have fraud, waste and abuse. Last year our children with special needs represented 14% of our enrollment, however these children earned 33% of Div. I Regular and Special Education Units and many other units.  Are we sure all this funding is used for the purpose the funds were provided? 

 

Jack Wells

Well said Jack, well said!

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…

The Smear Campaign At The Delaware Auditor’s Office & What The News Journal Didn’t Tell You

Revenge is ugly business.  When it takes place at a very high state level and the object of that revenge gets a whole article about it in the state’s biggest newspaper, it is really ugly.

Today, James Fisher and Matthew Albright published an article about the Auditor of Accounts, Kathleen Davies.  The article claims Davies was put on leave over two months ago due to not using the state procurement card for travel expenses.  According to the story, sources who would only be named as “state employees” contacted the Office of Management and Budget, then run by Ann Visalli, in November of 2015.  They alleged Davies spent over $7700 in travel expenses (over four years) and received personal reimbursements instead of using the state p-card.  She did do this.  But was it wrong?  Absolutely not.  I’m not buying any of this.  Let’s take a close look at what else was going on at the time these “sources” (as the News Journal calls them) filed this complaint.

Davies had just come out with a report on many charter schools, not just Delaware College Prep (the only school mentioned in the article).  Kuumba Academy was also named in the report on personal reimbursements as using funds against the accounting policies of the state.  Two other charters did not have any inappropriate use of state funds: Odyssey Charter School and Thomas Edison Charter School.

But there was more going on at that time.  The reports on Family Foundations Academy and Providence Creek Academy had not come out yet.  The September 30th enrollment inspection was just beginning (which was published earlier this Spring and pulled from State Auditor Tom Wagner’s website after Davies was put on leave).  Another Delaware charter school, The Delaware Met, was under formal review.  Hearings and meetings with the Charter School Accountability Committee took place in November and December of 2015.  One of the big questions surrounding Delaware Met was how they were spending their money.  And by default, their operation management company, Innovative Schools, would also be looked at.

There was also an inspection released by Davies on December 7th.  This surrounded an anonymous tip about Delaware Department of Education employees abusing travel expenses.  No wrongdoing was found in the inspection report.  But why would the News Journal not mention such an important part of this timeline in their article as well as the actual inspection?  If this accusation by sources who have now become “whistleblowers” was made to the OMB in November of 2015, this would have been the same time when Davies would have been working on the DOE travel expense report which came out on December 7th.  The timing on this is uncanny!

If it took six months for Davies to be put on leave, what was the OMB doing for six months?  Why did Davies just happen to be put on leave at the same time the DOE was pitching a conniption fit about the September 30th Inspection Report written by Davies?  The report, published by Wagner’s office on May 5th, can be found here.  Why did Wagner pull the report which had absolutely nothing to do with her supposed reasons for being put on leave?  Which other pending audits was Davies working on?  I do know the answer to a couple of these, especially one that I submitted to the auditor’s office.  John Fluharty, the policy analyst from the Auditor of Accounts office, contacted me on March 17th to discuss the tip I sent that office.  I talked to him on March 18th with what I knew.  No follow-up has taken place since then nor has any report been released on my tip.  I find that to be very odd…

And then we have the charter school audit bill crisis.  Delaware State Rep. Kim Williams released three different bills in the first part of the 148th General Assembly.  The first two were stricken in lieu of the third one which passed the Delaware House on June 30th, 2015.  It’s next destination was the Senate Education Committee, chaired by Delaware Senator David Sokola.  Prior to the second part of the 148th G.A. beginning last January, rumors began circulating that Sokola was going to introduce his own charter school audit bill.  With his friends at the Delaware Charter Schools Network, Sokola crafted new legislation which weakened Williams bill considerably.  Williams and Sokola battled publicly on Facebook over the bill, resulting in an eventual compromise a few months later.  They both met with Davies, who supported Williams bill, and the Delaware Charter Schools Network.  The new legislation, House Bill 435, passed both the House and Senate and awaits Governor Markell’s signature.

But the biggest question is this: what did Davies do that was so wrong, that would warrant such a drastic action?  While the guidelines regarding travel expenses published by the News Journal said the state prefers state employees use the p-card, it doesn’t rule out personal reimbursements.  Furthermore, the article states she told employees she was doing this.  If you have something to hide, you don’t tell everyone in the office!!!  The only way she would have been reimbursed for those travel expenses is if someone approved it and saw the receipts.  Who approved the expenses?  More importantly, where is the fire here?

Davies was not put on leave over this.  This is a cover.  The whole thing reeks of corruption at a very high level.  Tom Wagner won’t talk about it because it’s a personnel issue.  So how did the News Journal get the story?  I can tell you this: I was contacted by an employee of the Delaware Department of Education who asked me if I heard about Kathleen Davies.  This was on May 26th, a week after the September 30th report disappeared.  This employee said “word is she had a falling out with Tom Wagner.  And won’t be back.”  Now I hear from sources all the time about different state employees.  But how is that a DOE employee would have intimate knowledge of a situation between Tom Wagner and his second-in-command?  And how in the world would they know Davies wouldn’t be returning?  That would indicate a conversation took place with someone from the State Auditor’s office with either an employee of the Delaware Dept. of Education or an employee of the State Board of Education for that much knowledge to come out for what we are being told is a “personnel issue”.

This is my firm belief: someone was very frightened about an audit inspection Davies was working on.  Something that would make someone or several people look very bad.  This person would have to have the power to be able to pull strings with an elected official to get Davies put on personal leave.  Because this fabricated nonsense about personal reimbursements is absurd.  Other state employees do it.  Even our own Governor was mentioned in an audit report for not following state accounting rules with travel.  Was he put on leave?  Hell no!  Was Tom Wagner put on leave when it was announced he “accidentally” let his own house go into foreclosure?  Nope.

I’ve been going through all district and charter expenses the past few weeks and I can say with certainty that any travel expense amounts incurred by Davies are a drop in the bucket compared to what they spend.  And I seriously questioned one district about an outrageously high amount in one coding area.  No response on that one over two weeks later.  So why target the one person who has the ability to produce reports that can put others in a very bad light over financial abuse?  I believe I just answered my own question.  To pull this off, that takes a serious amount of cunning and guile.  Someone with pull and motivation.  I would have to think Ann Visalli would know that other state employees use personal reimbursements for travel expenses.  I don’t know much about her, except to say she resigned shortly after Davies was put on leave.  The Director of the Office of Management and Budget.  Who resigned before the budget passed.

As for Kathleen Davies, I hope she gets the vindication she deserves from this oh-so-obvious smear campaign against her.  This is a woman who has spent most of her time at the Delaware Auditor of Account’s office finding actual situations of financial abuse and scandal.  Most of them have been against charter schools.  Delaware Military Academy report in 2013.  Academy of Dover, Family Foundations Academy, Kuumba Academy and Delaware College Prep reports in 2015.  Providence Creek Academy, EastSide Charter School and Prestige Academy in 2016.  And potentially more.  But for those reading this smear article on Davies in the News Journal today, they won’t know all of this stuff going on behind the scenes.  So if you read this, please share it so all Delawareans can know that Kathleen Davies is deserving of much more respect than this.  I am positive she has enemies in this state.  Those who expose the truth often do.  Those who do wrong fear exposure more than anything.  So who did Davies frighten so much that they would go to these lengths to remove her and tarnish her good name?

Updated, 6:12pm, 7/31/16: This article has been updated to reflect there was no wrongdoing on the part of Gateway Lab School in any audit report.  This was an error on my end, and I did write an article to apologize to Gateway regarding this.

Auditor Report On 9/30 Enrollment Counts Shows Inconsistency Statewide & Major Reporting Issues At 4 Delaware Charters

Four Delaware charter schools will have to return funds based on 28 students they received funding for from the state based on not meeting specific criteria for those students.  Yesterday, Delaware State Auditor Tom Wagner released the final report of a statewide audit on the September 30th Enrollment Counts which determines how many units a school gets for salaries, energy costs and equalization funds.  The report does an excellent job of describing how funding in Delaware education actually works without needing an advanced accounting degree to understand.  The report showed the biggest problem is inconsistency with the districts and charters on how to submit the data as well as no specific requirements for the school or district unit count coördinator to even attend the training offered by the Delaware Department of Education.

Four charter schools were specifically called out for not having the proper documentation for early Kindergarten entrance students.  This is for students who are considered gifted and talented and are not the age of 5 by August 31st, as required by state law.  The Auditor of Accounts found 28 students at these four charters should not have been counted in the unit count and the schools should return the funding they received for those students.  The charter schools were EastSide (11 students), Family Foundations Academy (12 students), Kuumba Academy (3 students), and Delaware College Prep (2 students).  Given the fact that EastSide and FFA are run by the same executive director, Dr. Lamont Browne, and that over 82% of these unlawful unit count claims are occurring at the schools he runs is very troubling.  As well, the Board President is the same at both schools: Charles McDowell.  FFA already had an audit report released late last year based on the prior school leaders massive fraud and theft of school funds.  Kuumba Academy was spotlighted with irregularities based on an inspection report released last year.  Red flags came up over unauthorized compensation for the Head of School and a custodian.  Delaware College Prep did not have their charter renewed by their authorizer, Red Clay Consolidated School District, and will close at the end of this school year.  They were also mentioned in the same audit inspection as Kuumba with unauthorized reimbursements to their Board President.

One thing the report showed, which I was not aware of, was the role special education service providers play in the unit counts.  According to the below report, providers such as speech-language pathologists, physical therapists, occupational therapists, school psychologists and other providers are based on the following:

1 unit per 57 Regular Education students in Kindergarten to 3rd grade, Basic Special Education students 4th-12th grade, and Regular Education students 4th-12th grade

1 unit per 5.5 Intensive Special Education students

1 unit per 3 Complex Special Education students

If there is one thing I have heard in Delaware it is how schools are unable to provide these services consistently, especially for basic special education students.  This is an even bigger problem with having the unit formula be the same for Kindergarten to 3rd grade basic and regular students.  But all students in basic special education from Kindergarten to 12th grade are not given any advantage over regular students in receiving these services.  This is a major problem and I would urge any legislator to remedy this problem immediately!

The report also highlighted the role Innovative Schools plays in enrollment counts.  The Auditor of Accounts felt Innovative Schools should not be the agency conducting the enrollment counts but the school unit count coördinator.  They advised either way the accountability falls on the school leader.  Several charters and a scattering of traditional public schools were mentioned in the report in various sections covering details such as training participation for the unit-count system and having a clear policy manual on the process.  The full report is below.