January 14, 2009

Interview with Gentry and Nellis on Cleburne ISD

Question:

CISD Superintendent Dr. Ronny Beard recently told the Cleburne Times-Review that the expenditures cited in the Texas Education Agency report were appropriate and for the benefit of the children, but the only thing CISD did wrong was to spend money out of the wrong account.

Dr. Beard’s words were: “I think it’s important that everyone understand that funds we did have to send back to the state were legitimate educational funds, but they were taken out of the wrong account. They were spent with federal funds, and federal funds didn’t allow those kinds of expenditures, but local funds would have. They would have been appropriate local expenditures.”

Can you comment on that?

Harold Gentry:

Legitimate expenditures from the wrong account is not what got CISD a 16 month investigation, an onsite audit, assessment as a high risk grantee, a $362,304.31 repayment, placed under sanctions and assigned a TEA monitor. The TEA monitor is a high-priced babysitter to help the district regain financial integrity and restore public trust because they can’t be trusted to do it without supervision.

Alden Nellis:

Maybe we need to remind folks of some of the things CISD claims were to educate the children. There was the $908 dinner for school board members and their spouses at Ruth Chris Steak House in San Antonio. There was the $10,000 retreat at Glen Rose that lasted less than 24 hours. There were hotel rooms approaching $300 per night. There was the trip to Mexico for some school employees and some not even associated with the school, which included a stopover at a well-known Mexican resort town. There was rental of a boat (plus meals) for a cruise dinner. There was the retreat to White Bluff, around $10,000. There was purchase of Samsonite luggage. There was purchase of T shirts and toys in Las Vegas, rental of an alligator and underwater slide for reading instruction. And it goes on and on. Do we need to go through those receipts and refresh your memory?

Are these expenditures appropriate, whether they come out of federal money or the local fund of taxpayer dollars?

Question:

Dr. Beard said that a final determination has now been made that there was no criminal wrongdoing. “It’s done. We’ve investigated everything, every allegation. We’ve had our lawyers go through that with a fine tooth comb. They have found nothing illegal,” Beard said. Comments please?

Harold Gentry:

TEA auditors told me days after the release of the preliminary report that they were going to recommend criminal charges against at least one administrator. They did say that this does not mean that TEA would make this recommendation in the final report because that decision was left to higher TEA management.

Since I filed the original complaint, I do know what it said. It did not say that anyone embezzled or stole money. The complaint alleged that CISD misused and mismanaged federal funds. The TEA found this to be true.

Alden Nellis:

Since when do lawyers have the authority to pronounce guilt or innocence? Only the courts have the authority to determine guilt or innocence.

$50,000 in missing receipts should be a starting place. Transfer of large sums of money from one account to another is also suspicious.

The Texas Constitution (Article 3 Section 51) prohibits the gift or grant of public money for other than public purposes. In my opinion, the gift of $30,000 per year to the Cleburne Economic Development fund is a gift of public funds. Payments to charities (including the Black and White Gala), and use of school property, equipment and personnel to raise money for various causes is also a gift of public funds. Also, Dr. Beard said that the travel allowances they paid were a gift of public funds. (Times-Review December 10, 2008: “One of the prior issues is that we were advancing money but (employees) weren’t turning in the receipts. If you don’t get the receipts and you don’t have some way to recoup that loss, you’re guilty of gifting public funds.”

CISD paid several employees thousands of dollars in travel allowances, including former Superintendent Damron, former Financial Officer Mike Bailey, Communications Director Lisa Magers, and John Warren, among others. Dr. Beard also said that travel allowances need to be reported as income. How many CISD employees reported travel allowances as income?

There is an Attorney General’s opinion (Opinion No MW-93) saying schools may not pay for spouses expenses. CISD routinely pays for spouses lodging at school board conventions. The $908 dinner at Ruth Chris Steak House included board members’ spouses. Isn’t this a Gift of Public Funds?

CISD paid for non-school employees as well as school employees to go to Mexico. Wouldn’t this be a Gift of Public Funds?

The exact wording of the Texas Constitution is “The Legislature shall have no power to make or grant or authorize the making of any grant of public moneys to any individual, association of individuals, municipal, or other corporations whatsoever.”

We can probably find several more examples if we try.

Gift of public funds is illegal. Doesn’t this fall under the category of criminal wrongdoing? 

Question:

Since the school administrators and school board insist there was no wrongdoing, are they saying it was incompetence? Does the school have the right to terminate employees who have not done their jobs, or done it incompetently?

Alden Nellis:

The school terminates employees regularly. The last termination was apparently because of alleged personal relationships. All the administrators named in the TEA report as being responsible for the  misspending were either rewarded by being paid thousands of dollars after they left CISD, or are still being paid. The financial officer in charge during the proven misspending is still on the payroll at $451 per day.

Let me remind you of what the TEA report said of the accounting records.

Page 21: “The grantee did not maintain an effective system of internal controls…”

Page 22: “…in many instances the grantee prepared an internal accounting document (e.g. purchase order) after goods were received and/or services were rendered… Specifically, auditors noted that the grantee prepared numerous purchase orders days after the original purchase date.”

Page 23: “…in many instances the grantee issued payment prior to receiving goods and/or services from the vendor. Specifically, auditors noted the following observations:

1. The third-party invoices were dated after the date that the check was issued.
2. The grantee issued a travel advance to an employee(s) for meals, lodging, etc. from a few days to a month prior to the first date of the employee’s actual travel.
3. The grantee issued payment for a number of consulting services prior to any services having been rendered.

Page 24: “…auditors concluded that the pervasive and systemic nature of the internal control weaknesses constituted material internal control weaknesses that resulted in a material impact on the grantee’s compliance …”

Does this sound like the financial officer did his job competently?

Question:

CISD’s public relations person, Lisa Magers, said in her press release that “…following an audit of federal expenditures over a three-year period” CISD was required to repay $362,000. Please comment.

Alden Nellis:

This is a partial truth if not a downright deception. The truth is that only 16% of expenditures for those three years were audited by TEA. Based on that 16% sample, the actual mis-expenditure of funds for those three years could have been more than $2 million. That is a serious misuse of taxpayer dollars by prior and present administrators.”

In my opinion, this is just more of the same puffery we were subjected to for 3 years before and during the audit when CISD claimed they were innocent of all wrongdoing.

Question:

On January 12, the CISD school board voted to terminate a middle school principal. While we have no actual knowledge of his alleged offense, the buzz around the school is that it was what the school deemed inappropriate personal relationships. Please comment:

Alden Nellis:

As I told the school board before they voted, it is totally hypocritical to hold that principal accountable for “alleged” actions while not holding the administrators who misspent the funds accountable for proven misspending and lack of performance.

Harold Gentry:

Of those named in the TEA report as having been responsible for misspending funds, one administrator left for another district and got a higher position. Two administrators were paid almost $34,000 each after they quit working at CISD, and one is still on the payroll at $451 per day, apparently until he takes another job.  CISD seems to have no problem with legislating morality but falls short when it comes to holding any central office administrator accountable for official misconduct and financial impropriety.

Question:

Five of the seven existing school board members live within about two miles of Gerard School. This is the school that former School Board president Donna Boles described in an open board meeting as “our own little Highland Park.” You have both proposed switching to election of board members by single member districts in order to ensure equal representation of all neighborhoods. What has been the reaction to that?

Alden Nellis:

I requested a meeting with Board President Stu Madison to explain the idea. He refused to meet with me. He said he was opposed to single member districts.

I wrote letters to all the board members, the administration, and local media proposing single member districts. It has fallen on deaf ears.

If the courts get involved, I see no way they can uphold the current at-large election of school board members.

Question:

There are well-founded rumors that Cleburne ISD is gearing up for a run at another bond issue in November. Speculation is that one thing this new bond would cover is a new stadium. Comments?
Alden Nellis:
First, we do NOT need a new stadium. I have been told that Burleson has a nice new stadium and we should also. I cannot think of a worse reason to build a new stadium. In fact, I cannot think of any reason for a new stadium. 
Burleson ISD is operating in the red. I am sure their new stadium is contributing to that. Cleburne ISD ended last school year with an $11 million surplus. Do we really want to be like Burleson?  
If the proponents for a new stadium really want one, I have some suggestions. They can raise the money for a new stadium and save until they get enough to build it.  
The can charge admission to games played at the present stadium and save that money for new construction. They can sell annual naming rights to the new stadium and save that money. They can have donor campaigns aimed at alumni. Students and parents can organize fundraisers and save the proceeds.  
Once the funds have been raised to build the stadium of their choice, they can start construction. Once built, annual naming rights should be sold to cover the increased maintenance and operations costs.  
If the new stadium proponents can build their stadium without a bond issue or expenditure of district funds, I will accept it. But I will still believe we do not need a new stadium. 
We do not need another bond issue now or in the near future – not for anything and certainly not for a new stadium. 

With the current poor economy, loss of jobs, government bailouts, and reduction in gas and oil drilling in Cleburne, asking the taxpayers to fork over more money to a school that misspent 43% of federal funds audited is an outright disgrace.