Did Appo Shoot Itself In The Foot Tuesday Night?

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:

(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:

FY2017AppoPrelimBudget

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?

719AppoFOIARequest

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…

HS1ForHB225Sect352

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?

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Appoquinimink & The Sleight Of Hand Board Meeting Shows No Transparency Or Explanations

Appoquinimink finally released the documents from their board meeting on July 12th yesterday… six days later.  This morning they also put up the board audio recording from the same board meeting.  We got a bit of insight into their “special education costs” tax warrant “increase”.  And they clearly spell out how much of the money is going towards out-of-district placements and what is staying in-district.  We also find out something the money is going towards for those in-district costs.  Once again, the district is as quiet as a church mouse in a response to me.  I guess they don’t feel answering questions in the state where “sunshine is the best policy” is important.

AppoFY2017PrelimBudget&Tuition

Now we know the Middletown/Odessa area is growing.  I don’t think anyone is questioning that.  But they aren’t using this tax warrant increase of 7.76 cents per resident for increased special education costs.  They are using it to increase salaries as part of the FY2017 Delaware budget.  Which is provided by the state and local funds.  As well, they are also using it to increase benefits and pensions.  Keep in mind that in FY2016, their amount for needs-based instruction was $6,500,000.  Now we are expected to believe it has jumped to $7,860,000?  Without a final student enrollment count which won’t come until after September 30th?  I know, budgeting is predictive in nature.  But in my mind, they still haven’t justified the original $6,500,000 number.  They can say what it is for, but until I see a breakdown of exactly what these collected tax dollars in the form of tuition tax is going towards, I’m not satisfied.  Of particular interest is the fact that their out-of-district placement costs actually went down between FY2016 and FY2017, even though this was a major thorn in the side for the Appo board just five months ago.  I have to wonder who is calling the shots here and who knows about what.  I want to believe the board isn’t aware of what is going on.  Which is an issue in itself.  But clearly Dr. Charles Longfellow would have some insight into this but thus far has not provided ANY information.  Nothing.  I suppose we are just supposed to take this at face value without any logical explanation whatsoever.  How much does Superintendent Matt Burrows know about this?

AppoFY2017PrelimBudget&Tuition2

The entire operating budget is going up over $11 million dollars.  That is a lot of coin.  That is also a 10% increase over last year.  Did the district receive an additional 10% amount of students?  They had 10, 378 in FY2016, 9,877 in FY2015, and 9,750 in FY2014 based on their September 30th enrollment counts for the past three years.  But we are expected to believe this is about the students…

AppoFY2017PrelimBudget&Tuition3

Now things like a carryover budget don’t really concern me.  It is normal to have that.  If everything wound up exact I would be very alarmed.  That is to be expected.

To see the full presentation, budget, and the budget amendment to increase the FY2016 budget (done based on May 2016 numbers in the budget…very troubling in my opinion), see the below documents.  Of particular concern to me is the budget amendment request.  This is where it all gets very shady.  On the original pdf, if you do the right-click thing for this document and go to properties, it shows the document was created on 6/29/16.  But if the Appo Board of Education didn’t approve it until 7/12/16 how can their CFO write a letter like this before the board even voted on it?

After you read those, come back to see what the district wants to get in one of their schools.  Keep in mind, they seem to want this more than adding programs to take care of the complex special needs students that live in the district but have to go out-of-district to get the special education services they are rightfully and legally entitled to.

FY2017 Preliminary Budget Presentation

Actual FY2017 Preliminary Budget

FY2016 Budget Amendment Request

While all this is going on, the district really wants a pool.  Not just any pool, but a “shark tank”.  An actual, indoor pool.  While I don’t have an issue with any school having an indoor pool, I would think it wouldn’t be a priority until ALL students living in the district get what they need to succeed.  Especially the very students the district doesn’t serve: complex special education students.  Granted, this is just in the, pardon the pun, ground stages.  But how about an RFP for something similar to the Delaware Autism Program or something like that?  Nope, they really want a pool!

RFP for Nanotorium

In listening to the board audio recording from the July 12th board meeting, we once again hear there was not a quorum of their Financial Advisory Committee present at their last meeting, but the board once again approves their monthly financial report.  Who is on this committee?  Even more concerning is this comment from CFO Dr. Charles Longfellow:

I never budget for assessment growth.

So if we know the entire region of Delaware is growing rapidly, and their CFO doesn’t take this into account in any way, and the board is approving tax warrants based on this, what happens when the district experiences a surplus every year based on this growing population?  If the CFO is going to set firm guidelines with his budget like that, why does he overestimate on charter school payouts?  (This is the amount the district has to send to charter schools when a local student choices out to a charter school).  We did find out that in this district, for every $1.00 they spend in salaries, spends an addition 31 cents to cover Other Employment Costs which covers benefits and pensions.  The trailers the school is putting at select schools due to running out of room are all coming out of local funds.  This was correctly referred to as “portable classrooms” by a board member and Longfellow.  I found it very interesting that Longfellow stated the board couldn’t approve the budget if they didn’t approve the tax warrant for the tuition costs.  He did state that was later on in the board agenda, but the two went together.  The board is going out for a referendum in December.  There was obvious concern from one board member about pushing these tax warrants now prior to a referendum.  When asked what each revenue base goes towards, Longfellow said Tuition Tax pays for out-of-district placements and programs for students with disabilities.  When asked by a board member if it was accurate to say the increase in tuition tax was based on the district receiving more students with intensive and complex special needs, Longfellow said that was accurate.  Giving kudos where they are due, one board member did explain that assessed value and real value of homes are two different animals.  He explained the assessed value formula hasn’t changed since 1983.  Longfellow explained that the state gives local boards the “right” to increase tuition taxes to make sure students get what they need but it isn’t a “fun right to have”.  At no point did the board ask for a breakdown of how this amount increased at such a dramatic rate.  There was absolutely nothing put forth in the preliminary budget or the tax warrant request to the board.  Just numbers without any justification whatsoever.  The board voted unanimously on the tax warrant first and then the preliminary budget.

Later on in the meeting, the board approved an increase for all administrators and specialists of an additional $500 above the state increase of 1.5% or $750, whichever is greater.  So at a minimum, specialists will be getting a $1,250 raise for the year.  Note the board approved this increase after the preliminary budget was approved, not before.  A very careful sleight of hand on Longfellow’s part…

AppoAdminSpecPayScaleFY2017

Once again, I implore the New Castle County Council to ask for a full breakdown of these costs before deciding on the tax warrant.  If the district fails to give that requested information, I would highly recommend not approving their tax warrant.

In adhering to the district’s policy on Fair Use:

Fair Use
Unless otherwise noted, users who wish to download and/or reproduce text and image files from this website for non-commercial educational purposes may do so without the Appoquinimink School District’s express permission, provided that they comply with the following conditions:
  1. The content may only be used for noncommercial educational purposes;
  2. Users must cite the district, school, author and source of the content as they would material from any printed work;
  3. The citation must include all copyright information and other information associated with the content and the URL for the ASD website;
  4. None of the content may be altered or modified; and
  5. Users must comply with all other terms or restrictions which may be applicable to the individual file, image, or text.

All graphics, links, and pdfs in this article, as well as the ones about the Appoquinimink School District I posted on 7/14/16 and 7/17/16 are used for noncommercial educational purposes.  I hereby cite the district for ownership of all applicable material in all three articles.  No document was modified or altered.  The district did not notify me of anything associated with this but I felt it was prudent to inform my readers of this. All material can be found at http://apposchooldistrict.com/

This district and board can keep ignoring me but I will not cease publishing my findings and their extreme lack of transparency in regards to this and any other issues I find with them.  As such, I submitted a Freedom of Information Act request to Superintendent Matt Burrows and his office to obtain a full breakdown for each dollar spent on their tuition costs and where and to whom those costs are associated.  I also included, in the request, any documents presented to the Appoquinimink Board of Education for their July 12th board meeting in regards to the tuition tax increase of $815,000 and their approval of a tax warrant.