This article describes an extreme case of School District mis-management in Arizona that caused massive financial problems that could lead to bankruptcy, or being closed and students being bused to another District. The district had to pay an outside consultant to write a 107 page report on how to unravel a financial mess apparently created by a former Superintendent, and the consultant said he should be "should be stripped of his teaching, principal and superintendent certificates."
I don't have any information that Lake County has problems anywhere near those described like in Arizona, but read this and learn the red flags to look for. Once again, this Arizona example seems to indicate the K-12 "education" profession lacks requirements for Superintendents to have management ability to actually be able to manage business operations of a District.
Favorite quote on how bad this was... "Possible outcomes for resolutions of the district's financial problems include no change in the district's overexpenditure corrections period, legislative extension of that period, converting into a transportation-only district, converting into a charter school district, or bankruptcy."
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from Kingman, AZ
2/1/2008 1:44:00 PM
Report: Educator should be stripped of credentials
Terry Organ
Miner Staff Writer (Kingman, AZ)
Gene Thomas, former superintendent of the Peach Springs Unified School District, should be stripped of his teaching, principal and superintendent certificates.
That is one of the recommendations contained within the receiver's 120-Day Report and Financial Improvement plan for the District released last Friday by Veriti Consulting of Phoenix. Veriti was appointed receiver last August, two months after Thomas left to take the superintendent's position with the Tuba City Unified School District.
PSUSD spent $1.5 million above its maintenance and operations budget during 2006-2007.
The Miner attempted to contact Thomas on Tuesday afternoon, leaving a message on his office voicemail requesting he phone within 48 hours to answer questions about the report. He did not call.
In its report, Veriti Consulting states, "It is important to note Mr. Thomas' mismanagement not only resulted in increased debt for the district, but also student enrollment is down because parents did not know if the district would survive financially. The impact of Mr. Thomas' mismanagement will be felt in Peach Springs for many years to come and will compromise the long-term quality and availability of education to this community.
"In addition to certification revocation, the receiver recommends the State Board of Education consider other legal actions against Mr. Thomas as appropriate and justified under Arizona law. Veriti Consulting was not engaged to perform a separate fraud investigation of Mr. Thomas. However, the Mohave County Attorney's Office is conducting a separate investigation of the gross mismanagement that caused the district to be placed into receivership."
Veriti also recommended members of the district governing board receive education and training on proper procedures for conducting meetings. The board has violated open meeting laws in the past, the report states.
Steve Condict, current superintendent at Peach Springs, is credited in the report for significantly cutting operating costs and addressing disciplinary and other administrative issues.
He was asked why board members were not more on top of finances.
"(Thomas) gave them a lot of information that looked good on paper and was not true," Condict said. "There was a lot of grant money coming in, and cash flow looked right but was not used for intended purposes. He led them astray."
Future training of board members is being planned, he added.
Several governing board members interviewed by the receiver allege Thomas did not allow them sufficient time to review agenda items before a vote was taken. In addition, they allege Thomas exerted pressure on them to make hasty decisions with significant financial consequences.
Three pages of the 107-page report state Thomas failed to comply with many district policies. Some of the alleged violations include: failure to maintain and report accurate attendance records in accordance with the Uniform System of Financial Records; inadequate consideration of fiscal matters related to the budget and inadequate control/review relative to expenditures; failure to account for funds resulting in severe budget overexpenditures; failure to provide the district's true financial condition to the governing board on a regular basis; failure to establish inventory procedures and maintain fixed assets as required by the USFR; failure to go through proper procurement procedures according to Arizona school district procurement rules; and failure to account for various district bank accounts and cash collected by school employees and student treasurers in accordance with the USFR.
Further report conclusions offer evidence of Thomas' gross mismanagement of district finances regarding obligations existing when he left that were not there when he joined the district nearly two years earlier as follows:
• The district was in debt to Jebco Building Systems for more than $1.5 million for the construction costs associated with the junior high and administrative buildings, neither of which was needed.
• A substantial amount of money owed on a bond the governing board understood was to be used to pay Jebco to construct those buildings appears to have been used for other purposes, some of which were absolutely unnecessary for the education process. These are examples of waste of district resources related to the expenditure of bond proceeds.
• The district was months in arrears on its United States Department of Agriculture loan for Music Mountain High School. That debt was incurred before Thomas was hired, but it increased during his tenure.
• A substantial amount of vendor payments were months behind and were fast accruing additional debt.
Total estimated debt for the district, excluding the $1.5 million for new construction, is $5,703,000.
The report contains a section titled "Waste of District Resources." Some of its findings attributed to Thomas include: $171,000 for elementary school playground equipment (including $47,000 for fill dirt) purchased with bond proceeds intended for building construction; about $15,600 of bond proceeds spent on "smart boards" and projectors for teachers instead of more basic necessities like textbooks; about $91,000 spent on computer equipment, including huge extravagant monitors for district personnel, with about nine laptop computers missing; about $64,000 allegedly spent on a keyless lock system which needs expensive maintenance and has keys that either don't work or are not accounted for; nine mobile homes for teacher housing purchased for $366,000; and three vehicles bought for more than $31,000 whose purposes are unknown.
Possible outcomes for resolutions of the district's financial problems include no change in the district's overexpenditure corrections period, legislative extension of that period, converting into a transportation-only district, converting into a charter school district, or bankruptcy.
In order for the district to survive, several conditions would have to be met as follows: legislative action; sale or lease of non-operational buildings; sufficient cash flow and budget capacity to permit paying existing debts for facilities and vendors; and increased funding based on enrollment and attendance.
Unless one or more of the conditions are met, PSUSD would become a transportation-only district. That means students would be bused to other districts to receive their education.
Keywords: K-12 School district mis-management, waste fraud and abuse.
