Contract led to Chapel Hill-Carrboro schools resignations. Here’s what a review found.
An external review found Chapel Hill-Carrboro City Schools staff either were confused about district policies and state rules, failed to complete the paperwork or were just sloppy in handling big-ticket contracts and purchases over the last five years.
The school board heard Thursday night from two consultants, who in addition to reviewing roughly 100 contracts and financial documents from the last five years, also interviewed 26 central office employees.
The report from Kerry Crutchfield and Don Martin noted at least one case in which a contract may have been spread out over two fiscal years to avoid seeking the board’s approval — a requirement for contracts worth at least $90,000.
Fifteen contracts exceeded the $90,000 threshold but did not have the school board’s approval, some dating back many years, while no contracts were found for payments being made to at least 18 vendors. The district exceeded the contract price four times without seeking an amended contract, the report said.
While the report noted that some decisions potentially violated state law, Crutchfield told the board that he “did not discover any evidence ... that somebody was deliberately either trying to misappropriate funds or engage in activities that were not legal.”
District staff members have made “sincere attempts to rectify and correct all serious shortcomings and compliance lapses,” he said, since concerns were raised late last year about a controversial, $767,070 professional development contract with Education Elements.
The 2019 contract was not approved by the school board, because it was broken into 10 separate invoices priced at just below the $90,000 threshold. While board members heard about the program in July 2019, records show they learned about the cost in November 2019.
The district suspended the contract in December and — after paying over $342,000 — ended the it in January. In February, district finance chief Jennifer Bennett resigned, followed by Superintendent Pam Baldwin in April.
The board is narrowing its search now for a new superintendent.
Sloppy records, potential violations
Among a number of findings, the report noted that district officials were not seeking the board approval required for contracts over $90,000 or for construction contracts valued at over $300,000, as long as money was available through an approved line-item in the annual budget. Staff in different departments also were unaware of multiple contracts with the same vendor that combined to exceed $90,000.
Other problems, including some that violated state law regarding school contracts and pre-audits, included:
▪ A transportation equipment loan with an “excessive” interest rate and another loan that lacked details about what the district was getting for its money and how much of the monthly payment was repaying interest. The report advised paying off those loans now.
▪ Three contracts that were documented, pre-audited and signed but did not include a cost or maximum payment allowed
▪ Three contracts, two with board approval, that did not have the pre-audit signature required by law
▪ At least two contracts approved by the board that did not have the board chair’s signature
▪ Vendors paid under two contracts that did not yet have the board’s approval
▪ No evidence of informal bids or price quotes for at least two purchases exceeding $30,000, which is a legal violation
▪ Only one price quoted for another purchase exceeding $30,000, which also could be a legal violation
Financial, management changes
Board members agreed the report is a good place to start improving how the district handles its money.
The district already has taken some steps, including the creation of a finance committee and limited policy changes, school board vice chair Amy Fowler said. She urged the board to begin implementing the report’s recommendations.
“I really appreciate that not only did you uncover lapses, but you provided us a real playbook for how to continue to improve,” Fowler said. “I do believe that all of our current staff are dedicated to these improvements and to transparency and fiscal responsibility.”
The report also supports the need for business management software and regular, in-depth financial reviews, board member Rani Dasi said.
“I think we ought to consider a similar review with some frequency, because I think this really highlighted what have been really persistent issues over a number of years in our district,” Dasi said. “This has really helped us understand in a better way.”
In the short term, the board could form smaller committees to review curriculum contracts, as well as buildings and grounds contracts. The board’s Policy Committee also will review a number of suggested changes at its Oct. 20 meeting.
Board member Joal Broun also voiced support for a recommendation that the district hire classified staff, such as teacher assistants and data managers, through a temporary employment agency. That also would provide a pool of qualified applicants if a permanent position became available and save the district money, the report said.
The consultants also recommended regular training for district staff and for a new financial officer, who will be key to ensuring the financial controls and budget goals are being met, Martin said. Additional business and finance staff could be hired.
Crutchfield noted that a finance officer needs adequate budget information to succeed. The lack of details and communication “contributed greatly to all of the deficiencies that we noted,” he said.
“It was obvious to us that especially for school year 2019-20 and to a lesser extent for several previous years, the Chapel Hill-Carrboro City Schools budget was not prepared with enough detail to be the financial control intended by the statute,” Crutchfield said. “It was also not communicated adequately to the finance office staff responsible for monitoring the expenditures, and it was not communicated adequately to many staff members who manage pieces of the budget.”
This story was originally published October 9, 2020 at 7:54 AM with the headline "Contract led to Chapel Hill-Carrboro schools resignations. Here’s what a review found.."
