Kowalko Gives Markell The Knockout Punch Over NY Times Op/Ed Piece

Former Delaware Governor Jack Markell wrote an opinion piece for the New York Times this week called “Let’s Stop Government Giveaways To Corporations”.  In it, he urged states not to get sucked into giving away the farm for huge corporations.  Something, even Markell noted, he did himself during his tenure as Delaware Governor from 2009-2017.  I found the irony behind Markell’s piece astounding as I felt he sold Delaware public education students down the river with his insane Race To The Top and Common Core antics.  State Rep. John Kowalko takes it a step further n an open letter to Markell.  Some of Markell’s many corporate giveaways in Delaware still haunt us to this day.

AN OPEN LETTER TO FORMER GOVERNOR MARKELL

Dear Jack,

I’ve just finished reading your N.Y. Times op-ed and I feel it’s my obligation to Delaware’s taxpayers to respond. I’d like to think that your most recent missive has merely added to my disappointment in you but I think I’ve already passed the minimum expectations level in regard to your performance and legacy. I will try to be objective in my analysis and critique.

First, I find it unbecoming for you to use “revisionist history” as a crutch to support your crippling economic decisions. That pejorative explanation has become the trademark of Trumpism and the Republican Conservative ideologues and should be an embarrassing reference for any legitimate public servant who wears a “D” after his title. I’d suggest that you cease evading responsibilities, casting blame and rewriting reality or remove that “D”.

Your statement that “I was as guilty as any elected official at playing this game” fails to adequately express the reality that you were much more “guilty” then other Delaware elected officials. You blithely dismiss the seriousness of this ongoing “economic/corporate welfare” threat by writing “And I don’t blame public officials, either, for their efforts to attract businesses with enticements, since they otherwise would risk losing out on new jobs, the transfer of old ones elsewhere and the bad publicity that could come with abandoning efforts to entice or retain companies”. That attitude and admission would be better relegated to a confessional for your personal “mea culpa” and forgiveness ask.

In your article some of the revisions you make to your economic tenure as Governor are merely omissions, others are misrepresentative of reality and others seem to be deliberate distortions. So I will attempt to briefly summarize what you’ve conveniently forgotten. During your 8 years as Chief Executive your DEDO/Strategic Fund doled out over $250 million (in grants and subsidies) in taxpayer money. Approximately 37% of the recipients were huge fortune 400 companies. This number does not include the more than $80 million in lost corporate revenue from your hastily contrived “Delaware Competes Act” (House Bill 235 quickly ushered through the Delaware General Assembly during the first few weeks of 2016 session) along with the “Commitment to Innovation Act” (SB 200). You mention the failed Fisker debacle but choose to ignore/deny your other expensive yet failed economic enterprise the “Bloom” subsidy. Not only has the cash grant/subsidy failed to produce the promised jobs but you’ve ensured that 300,000 individual and commercial Delmarva ratepayers would be burdened with an additional 20 years of subsidies to a private speculator/entrepreneur at a cost of $12-$15 million per year. Your remarkably optimistic speculation that the two of three Dow/DuPont spinoffs was a victory belies the reality that a preponderance of the research jobs are gone and Delaware is left with a comparative handful of jobs at the two headquarters. This type of Pyrrhic victory should not be heralded as the sign of an economic boon to Delaware. You also failed to mention the layoffs of 1700 (six-figure) DuPont researchers especially in light of your Secretary of Finance Tom Cook’s testimony on the House floor in response to my query that those jobs are gone and not coming back despite the Competes/Innovates corporate tax cuts and the 13 million cash giveaways that Ed Breen publicly said would not affect DuPont’s plans for job cuts. To paraphrase Mr. Breen’s remarks in the News Journal article “that money won’t make a difference in our plans but I’m not going to turn it down”. And lest we forget Jack, $10 million to JP Morgan (declared $24 billion in profit the year before), $2.5 million to Sallie Mae ($71 million profit 2^nd qtr. 2017), $70 million infrastructure improvements to the Astra Zeneca campus (dramatically improving the value of their property now being sold) housing an ever dwindling workforce.

I do agree with your sentiments expressed as such “but it would be better for taxpayers if these kinds of cash incentives could be invested instead in such things as schools and infrastructure”. Maybe that will happen under your successor’s tutelage via the newly minted taxpayer giveaway mechanism named the “Delaware Prosperity Partnership”. Perhaps that corporate dominated cabal will accept applications for funding to restore the $27 million in cuts to education you made in 2009 that have continued to date (under the guise of flexible spending block grants) or the additional $31 million in cuts to public education in this year’s budget or maybe some of those poor and elderly former pharmaceutical assistance recipients could make their anguished cries heard.

Wow! Kowalko nailed it!  Jack Markell, you had your time as leader of Delaware.  I know you like to pontificate over your imagined “success” as Delaware Governor but far too many of us see past your hypocrisy.  And for the most recent news on the Delaware Prosperity Partnership, the following happened this week with that:

WILMINGTON, Del. – Governor John Carney on Friday announced that John Riley, a former state Director of Business Development, will serve as interim CEO of the Delaware Prosperity Partnership – the newly-established public-private partnership that will lead the state’s economic development efforts.

In the position, Riley will help launch operations, develop a strategic plan for the new nonprofit, and conduct a search for a permanent chief executive.

“John is well-known and respected across our state, and has significant experience in economic development,” said Governor Carney, who will serve as co-chair of the Delaware Prosperity Partnership board. “I’m pleased he has agreed to help us launch the partnership. We are committed to changing the way we do business, fostering innovation, and growing our economy. I’m confident John will help position the partnership to succeed.”

“Establishment of this entity was a critical step to enhance the state’s ability to attract, grow and retain companies; to build a stronger entrepreneurial culture and to support private employers in identifying, recruiting and developing talent,” said Rod Ward, President of CSC and co-chair of the Delaware Prosperity Partnership board. “As Interim CEO, John will work with the board on the recruitment of a permanent CEO and development of a strategic plan for Delaware.”

“Thank you to Governor Carney and the entire board of the partnership for this opportunity,” said John Riley. “Delaware has great assets – a talented workforce, a strategic location along I-95, responsive leadership, and great communities up and down our state. I look forward to doing everything I can to attract investment and additional good-paying jobs to our state, and setting up this new partnership to succeed in helping grow our economy.”

Riley served as Director of Business Development under then-Governor Thomas R. Carper. He retired from Ashland where he was Director of Government Relations and previously served as Director of Public Affairs for Hercules Incorporated. Riley has continued to be active in economic development and assisted Governor Jack Markell’s Administration with Delaware’s strategy in responding to the DuPont-Dow merger.

Members of the Delaware Prosperity Partnership board approved the hiring of Riley at an organizational meeting this week.

Governor Carney, who took office in January, has made it a top priority to restructure Delaware’s economic development efforts, and strategically partnering with the private sector on economic growth was a key recommendation of the Governor’s Action Plan for Delaware. Last month, Governor Carney signed House Bill 226, creating the Delaware Prosperity Partnership and a new division within the Department of State to support small business growth.

The Delaware Prosperity Partnership will be run day-to-day by the chief executive officer and a full-time staff. The nonprofit will lead business marketing efforts for the state, with a focus on attracting early-stage and technology-focused businesses, recruitment of large employers, and expansion of international business opportunities for Delaware companies. Its leaders also will work with employers and Delaware educators to fill key talent gaps in the state. The state will jointly fund the partnership’s operations with private business.

 

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