Lastly, to the charge that money was transferred out of the tuition fund, Longfellow said that was true, but said that happens nearly every year and is a legal maneuver.
Additionally, Forsten explained that the money went to funds that help settle costs that aren’t part of the tuition tax budget itself.
Mr. Forsten, could you please tell me what the legal maneuver is that allows Appoquinimink School District to transfer funds out of the tuition fund and how it is legal?
I saw an item on Appoquinimink’s board agenda for last night that said “Tuition Tax Clarification”. Assuming this was in response to my articles about their tuition tax warrant last month, I figured I would wait until their board audio recording to address this. But as luck would have it, I didn’t have to wait very long because Kilroy just wrote an article based off WDEL’s article on the subject at their board meeting Tuesday night. The above quote, taken from the WDEL article, clearly shows that Appoquinimink Superintendent Matt Burrows, Chief Financial Officer Dr. Charles Longfellow, and the Appo Board President Richard Forsten aren’t too familiar with Delaware accounting procedures and policies.
You can’t just take money from revenue collected through a tuition tax warrant and apply it anywhere you want. That isn’t how it goes. The law in Delaware is VERY clear about this:
§ 604 Special programs.
(a) If any pupil is counted in the preschool, intensive or complex unit and attends school in a program operated by a district other than that in which the pupil resides, by an agency of the Department of Education or is in an approved private placement pursuant to § 3124 of this title, the receiving district or the Department of Education shall collect a tuition charge for the nonresident pupil, provided approval for attendance has been granted by the sending district. Such tuition charge shall be paid by the school board of the reorganized school district in which the pupil is a resident from the proceeds of a local tax levied for this specific purpose, except that in the case of a district assigned by the Department with the approval of the State Board of Education to administer a school or program for children with disabilities, or special programs approved by the Department of Education for persons without disabilities such as programs for bilingual students or programs for pregnant students, the district so assigned shall be both the sending and receiving district in regard to that school or program and is authorized to collect tuition charges accordingly.
(b) In determining the tuition to be charged for a pupil counted in the preschool, intensive or complex units or for a person without disabilities attending approved special programs, such as bilingual programs or programs for pregnant students operated by a district other than that in which the student resides or by an agency of the State Department of Education, the receiving district or the State Department of Education shall compute the tuition by adding such receiving district’s share of educational related expenses as allowed by the Department of Education regulations. The sum so obtained shall be divided by the total number of pupils in the special program as of September 30 of the current school year. The resulting figure shall represent the amount of the “tuition charge” per pupil.
(c) In determining the tuition charged to the sending district in the case of private placement for children with disabilities, tuition will be defined as in § 3124 of this title and the sending district will be charged 30 percent of the total tuition cost. The remaining 70 percent will be covered through funding provided by the State Department of Education from the annual appropriation for this purpose.
(d) Section 602(c)-(e) of this title shall apply to this section.
And let’s see what Section 602(c)-(e) states:
(c) The bill for tuition charges shall be verified by the Secretary of Education within 20 days after receipt of such bill. No bill for tuition charges shall be paid until such time as it has been certified by the Secretary of Education as being true and correct.
(d) For each pupil attending a public school of another district as of September 30, the receiving district shall bill the sending district and the sending district shall pay the tuition charges per pupil on or before January 1 of the fiscal year in which the bill is submitted to the sending district for payment. In the case of pupils attending the public schools of the receiving district for less than a full term, the tuition charge shall be prorated by reference to the period of time during which such pupils actually attended the receiving district’s schools, provided that attendance for part of any month shall be counted as a full month of attendance.
(e) Any reorganized school district sending pupils to the schools of another district shall levy and collect a tax to pay any tuition charges to the receiving district, and such tuition shall be collected by local taxation within the sending district according to the provisions of taxation as set forth in Chapter 19 of this title, except that no referendum shall be required. The sending district shall estimate the amount of, determine the rate for and levy the tax upon the estimate at the time that regular tax levies are announced to the appropriate taxing authorities, and the levy shall be adjusted annually to correct errors in the estimate as provided for in subsection (b) of this section.
So the tuition tax that caused the Appo board to issue a tax warrant last month is based on Section 604, and only Section 604. There are additional areas where these funds can be used though, as per House Bill 1 from the Delaware 146th General Assembly:
House Bill 1, 146th General Assembly:
b. The following provisions shall apply to the Preschool unit:
v. Districts may use tuition to pay for the local share and excess costs of special education and related services.
b. The following provisions shall apply to the Pre-K – 12 Intensive Special Education (“Intensive”) unit:
ix. Districts may use tuition to pay for the local share and excess costs of the program.
b. The following provisions shall apply for the Pre-K-12 Complex Special Education (“Complex”) unit:
ix. Districts may use tuition to pay for the local share and excess costs of the program.
So districts can use tuition tax to pay for their local share of special education and excess costs for each specific program. But not for Basic Special Education students, just Preschool Special Education students, Pre-K-12th grade Intensive Special Education students and Pre-K-12th grade Complex Special Education students.
In Appo’s FY2017 preliminary budget, they state exactly what the Tuition Tax increase of $818,000 will be going towards:
I submitted a Freedom of Information Act request to the Appoquinimink School District last month which I promptly received. I had not gone through it extensively until now.
I can see the out-of-district placements for students with disabilities going to Special Schools or day or residential treatment centers going up by $100,000. For FY2016, they spent $2,441,295 for these students. In FY2017, they are projecting it will go up to $2,570,633. That seems like a modest projection based on the history with these payments. I have no qualms with those figures whatsoever. What I do take issue with though is the appropriation section #99970020/99999999 Needs-Based going up from $7,148,711 to $7,863,582 without any justification for that increase. As well, we can see their projected amounts for FY2018 which will generate another tax warrant next year but maybe 10% less than this year’s based on their projected numbers. But Appo did supply two other documents in my FOIA request…
In this document, we see a seven year history with students in the category of Pre-K, Intensive, and Complex. Also included are the teacher units generated from these increases. Note the Pre-K units are going down each year. On the flip side, Intensive and Complex special education students are going up which generates more teaching units as well as services related to those students, such as occupational therapists, speech therapists, and so on.
Now the district was kind enough to give a breakdown of how much went to each category for FY2016. I do appreciate that. It does give quite a bit of insight into where they think the funds should go. Now keep in mind Appo dated this document 7/20/16.
In their projections for FY2017, they based the FY2016 final figure at $9,590,006. But in this document, it is $9,424,524.26. That is a difference of $165,481.54. So they are already way off on their FY2017 budget by having this amount wrong. This is what they based their tax warrant on, the figure of $9,590,006 for FY2016, and they are basing their FY2017 budgeted projection off that number. They are already off. Even in their board meeting Tuesday night, they gave an amount spent as of 6/30/16 on Local Tuition Tax of $9,508,447.03. This was the part of their board meeting where they approved the monthly budget as of 6/30/16 based on their Citizen Budget Oversight Committee recommendation. Even they weren’t given the correct amount. Do I go by a FOIA request, which has to be legal, or their preliminary budget, or the amount their CBOC provided to the board which comes from their CFO? I’m sticking with the FOIA figure because that has the latest figures, as of 7/20/16.
Now look at the document and where it says “Indirect Cost” for an amount of $276,709.36. These are funds they transferred out of their tuition tax revenue bucket into another bucket with no explanation of where it went or why. So adding what they were already off and the “Indirect Cost”, we are up to $442,190.90, which is over half of their tuition tax increase of $818,000 going towards mathematical errors or shifting the money out of the revenue bucket it was supposed to stay in. You can’t just transfer funds out and call that a legitimate expense.
Which brings us to legal costs. In FY2017, Appoquinimink spent a total of $171,783.75 in legal costs for the entire district. But we are expected to believe they spent $124,279.20 out of that figure just for special education legal costs? Furthermore, should funds spent on legal costs in a special education dispute where a parent is suing the district be counted as legitimate funds to come out of a tax warrant? Because I can see at least $28,500 going towards that purpose right off the bat. That means the parents feel the school did not provide a Free Appropriate Public Education for their disabled child. And if the school is paying those attorneys, that means at the very least there was some type of settlement involved whereby the district paid the opposing attorney as well as their own attorney costs. As well, we see a payment made to another school covered under legal fees. This could be a case where a parent sued the district and the district agreed to pay the tuition costs for another school. That was for $25,575. So with these VERY questionable legal items Appo feels they can cover under funds generated from a tax warrant, we are looking at another $54,075 in questionable charges in their FY2016 tuition tax expenditures, which brings us up to $496,265.90. We are now up to over 60% of their $818,000 tax warrant increase. I won’t even get into the fact they are paying a school nurse under legal fees. Shall I keep going?
There are legitimate expenses they put on this document. Teacher salaries and their benefits are okay to have in there. Related services, which means “Specialists”, according to House Bill 1, does have some caveats:
“(12) Specialists. All related services units are earned at the district or charter school level. Preschool, Basic, Intensive and Complex related services units earned shall be used to support related services needs of students in those units. Districts may use earned units to hire any related services staff necessary or alternatively choose to provide all or part of those services through a contractual arrangement with a public or private agency. When providing services by contract, the dollar value of the contract shall not exceed the authorized salary for a teacher at the Master’s level plus 10 years and employed for a period of 12 months per year as provided for in 14 Del. C. § 1305 of this title, divided by the number of months in the terms of the contract. Partial unit funding is provided based on the dollar value of the unit. Any school district wishing to use funds under the contractual option set forth in this section shall make application to the Department of Education for that use, provided that the State Board may review any objection to the Department decision;”
So, as an example to this, Appo currently has two contracts with Therapy Services of Delaware for three occupational therapists and two physical therapists. This contract is for FY2017, and I could not find one for FY2016. But given that they keep projecting up with students who would need these services, it would stand to reason the contract for FY2016 was either similar or less. But I will operate on the assumption it is similar. That means, based on the above law, the district can’t pay out more than $60,558.00 for a full-time “specialist” based on the Appo Salary Schedule for a Teacher at the Master’s level plus 10 years. In the case of Therapy Services, the contracts call for three full-time occupational therapists and two full-time physical therapists. So they can’t pay more than $302,790. In FY2016, according to Delaware Online Checkbook, Appo paid Therapy Services $302,442.63. So it appears they are acutely aware of the laws surrounding these special education services given how very close to the maximum number they could go up to in the contracts.
The reason I brought up a situation where they are doing everything by the book was to illustrate they do know what they are doing. But for some reason, maybe because of how they are audited by the DOE for certain special education costs, they are able to curtail other things that have a dramatic effect on what they are including in the tuition tax part of their budget.
I could go through more of these, but I believe you get my point. Appo’s $818,000 tuition tax increase is based on very faulty math, bad accounting procedures, and violations of Delaware state code from their previous fiscal year. The expenses they are covering under tuition tax don’t hold water with my tests in some areas but in others they do. Yes, I do own the fact that when I originally wrote about this issues, I seriously questioned where $5 million disappeared to. But I quickly corrected that a few days later when I found the missing $5 million in related services. I just didn’t account for the related services amounts in my initial article. But when I’ve already killed over 60% of your increase of $818,000, and I have barely scratched the surface of your entire tuition tax expenditures for FY2016, I have no doubt that percentage would increase. So you are NOT justified Appoquinimink School Board of Education, to approve a tuition tax increase costing the Appoquinimink property owners an additional $7.76 per $100 of assessed property values based on this. As a board, and some have done this in Delaware so they don’t raise the ire of local taxpayers, they can forego or decrease a tuition tax increase based on the projected increase. But what you can’t do is charge more than what should be the budgeted amount. Something Longfellow seems to think is the opposite case according to WDEL:
He said, not only is the district justified to increase the tuition tax based on enrollment, Appoquinimink isn’t even increasing the tax to the fullest extent permitted.
Would I expect the Appoquinimink School Board to know these facts? Not really. Unless you really do some digging like I have, you won’t just find these things on a piece of paper looking at it. But should Longfellow and Burrows know these things? Absolutely. Let’s not forget, their board approved their FY2017 Preliminary Budget and the tax warrant before they approved a $500 increase for administrators in the district at their July board meeting. I called that a sleight of hand on Longfellow’s part. I believe he knew exactly what he was doing. But the board just skimmed right past that part.
“It was just a case of someone not understanding everything,” Board President Richard Forsten said to WDEL after the meeting.
I will give Forsten that. I knew something was wrong and I made some incorrect assumptions. But my gut instinct still told me something was wrong even after I found my error. And then I found Appoquinimink’s errors. To be fair, I received the FOIA request two days after I requested it. But did I get everything I asked for in the FOIA request?
For the most part, I did. But what the FOIA did not cover, and no one has been able to answer, is the breakdown of funds allocated in the categories of related services for intense and basic, as well as allocations for occupational therapists, physical therapists, speech therapists and so on. By lumping so much of their special education costs into very broad categories of “consultants”, “other professional service” or “medical services” would not give any member of the public the ability to see exactly what is going towards tuition costs.
Furthermore, neither Burrows or Longfellow ever replied to my email requests to discuss these matters after my original article on July 14th. Not one single email, phone call, or response. Until their board meeting last night.
Part of the blame for this lies with the state. We have a Division of Accounting within the Department of Finance. We have a State Auditor. We have an Office of Management and Budget. We have a General Assembly. They should all be keeping track of these things and providing oversight into not only what our schools are spending money on, but how they are spending money. When I hear a Board President state transferring over a quarter of a million dollars out of an account earmarked for only certain things related to special education as a “legal maneuver”, that concerns me.
“All the numbers are there and they’re all justified, its just that you have to know what you’re looking for,” said Forsten.
Are they Mr. Forsten? I beg to differ…
But the biggest concern I have is the extreme lack of oversight from the Delaware Department of Education in these matters. When it comes to special education funding, especially tuition tax expenditures, they should be looking into these matters. It isn’t a question of “may”, it is a question of “shall” according to Section 352 of HS1 for House Bill 225, the budget bill for FY2016. While this mostly concerns out-of-district placements, the last line says it all…
I’m fairly certain that special education lawsuits should NOT be covered in tuition tax payments. Nor should Indirect Costs going out of this fund. And tax warrants should be based on a specific amount based on the prior year spending, not the highest of three amounts (and most likely the most inaccurate amount). I look forward to their response to this article. Will I get an email, a phone call, or another special section of their board meeting? Or none of the above?
The Season Of Myths 