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TEA Says Pay Back $362,304.31
Calls for Complete Audit, Administrative and Enforcement Action

July 14, 2008 –The Texas Education Agency called for Cleburne ISD to repay $362,304.31 in misspent federal grant money based on an investigation conducted over the past two years. TEA examined only a small portion of federal grant monies received and found that CISD misspent 43.8% of federal grant monies audited.

CISD asked for a $166,000 reduction from the TEA's original amount of $367,027.64 to be repaid, but was granted only a $4,723.33 reduction. This was based on CISD’s 1954 page response to TEA’s preliminary report..

Moreover, TEA recommended to the Department of Accreditation that an audit be conducted of CISD’s administration of federal funds for the 2003 through 2008 school years. TEA also recommended to the Department of Accreditation that the Division of Governance and General Inquiries consider appropriate administrative action pursuant to TEC 39.131. This can include appointing a conservator or management team. .

To the Department of Planning, Grants and Evaluation, TEA recommended that the Division of Formula Grants Administration and the Division of Discretionary Grants Administration consider administrative action pursuant to 34 CFR 80.12 and 34 CFR 80.43(a) and that they also consider enforcement action. This can include Debarment and Suspension of Personnel under Executive Order 12549.

Although this is the completion of TEA's involvement, CISD is still subject to action by the agencies listed above.

The Texas Education Agency issued the final report to Cleburne ISD on July 11 and made the report public on July 14.

TEA findings, listed on pages numbered 8 and 9 of the report, say that in several instances:

1) CISD did not maintain an effective system of internal control
2) CISD charged costs to the grants that did not meet the conditions of the grants
3) CISD charged costs to the grants that were not allowed by federal law
4) CISD did not provide adequate source documentation to support the expenditures
5) CISD did not demonstrate how the expenditures benefited the students during the grant period.
6) CISD did not expend the funds within the grant period
7) CISD did not support the expenditure of grant funds for payroll costs
8) CISD failed to develop and implement comprehensive administrative procedures to insure compliance
9) CISD did not comply with State guidelines on travel allowances
10) CISD paid for sales tax.

The Executive Summary of the report is on numbered pages 8 through 11 – download pages 8-11 here. Download a listing of disallowed expenditures here. The complete report is 177 pages. Download the complete report here.

Background

The TEA investigation has been a hard fought three-year battle between the watchdog group Access Cleburne and the Cleburne ISD administration and School Board.

A group of Cleburne citizens came together to look into school spending after the school lost a bond election for $36 million in 2005, then immediately called for another election even before the votes were canvassed. The second bond question passed by 35 votes, but there were voting irregularities.

The Administration and supporters claimed that it was imperative the bond be passed immediately so CISD would get $8 million in state money, and that three new schools were necessary for projected increases in enrollment.

The newly formed watchdog group called themselves Concerned Citizens for Cleburne, but later changed their name to Access Cleburne. They wondered if the school really needed $36 million, so they started looking at school finances. Harold Gentry spearheaded the effort and analyzed the findings. All information was obtained through Open Records requests. Each item they wished to examine had to be specifically requested and paid for. At one point the group was told that the administration said they were going to “see how deep their pockets are.” Assistant Superintendent and Financial Officer Mike Bailey began charging $40 per hour for his time. The Attorney General ruled that only $15 per hour could be charged. CISD was forced to refund part of the money charged for Open Records information.

One of the first things that turned up was a $906 meal on a credit card issued to Superintendent Damron for dinner at the Ruth Chris Steak House in San Antonio. The meal was for 6 Board members, their spouses, and Superintendent Damron. Board Member at the time Elaine Wilmore made a public statement that even though she was in Greece and didn’t attend, the school board “earned it.” Never mind that by law the school board is prohibited from receiving any compensation for their time, or that the meal exceeded the state-allowed per diem and also included spouses. Superintendent Damron later claimed he had written a check to reimburse the school $300. When asked for proof, Mike Bailey produced a hand-written receipt for $300 cash signed by Bailey. The receipt was written on a receipt book that had not been used for several years.

Watchdog members began showing the school board other examples of misspending. Actual receipts and invoices were posted on the internet at CleburnePolitics.com and in the Cleburne Eagle newspaper. The school board chose to ignore everything and turned a deaf ear. CISD’s Public Relations person, Lisa Magers, coined the term “Cave People” for the group. CISD’s sitting school board members at that time were Brad Allen, Brad Mead, Donna Boles, Dean Woodruff, Milton Walker, Elaine Wilmore and newly elected Stu Madison.

While the watchdogs had to painstakingly ferret out the information through Open Records requests, the school board, which had free access to all records, chose not to look at the expenditures.

Current Board Members include three of those serving at the time the problems were first brought to their attention - Brad Allen, Brad Mead and Stu Madison. (Board members elected since that time are Teddy Martyniuk, Jennifer Dugger, Brent Easdon, and 2008 electee M. J. Larrison.)

When the School Board and administration continued to ignore the evidence of misspending, and Superintendent Robert Damron belittled Access members from the podium and in private, Harold Gentry filed a complaint with the Texas Education Agency. Gentry continued to work closely with TEA throughout the investigation, preliminary report and final report.

Access Cleburne sponsored a Candidates Forum in 2006. Six school board candidates snubbed the voters and simply didn’t show up for the forum. Access Cleburne was told later that the administration had telephoned the candidates and suggested they not attend the debate / forum. When the League of Women voters held a “re-do” forum two weeks later, all the candidates showed up.

Four of the Access Cleburne members received threatening letters through the US mail. Harold Gentry and Alden Nellis received death threats. All were turned over to the Cleburne police department.

The TEA Preliminary Report was issued April 11. Auditors found that 44.4% of federal funds audited had been misspent. Less than a tenth of the $10 million in federal grants was audited. TEA called for CISD to repay $367,000 in misspent funds.

Dr. James Warlick from Cross Plains, Texas was hired as Interim Superintendent to minimize the damages. CISD submitted 1200 pages of paperwork to TEA as a response and asked TEA to forgive $166,000.

Since the TEA Preliminary Report, Superintendent Robert Damron’s contract was not renewed but he was reassigned as a consultant and paid his regular monthly salary through June 2008. Dr. Sharron Miles resigned as of June 30 but is being paid her regular salary through November 7. Dr. Sharron Miles’ daughter Amy Martin resigned. Assistant Superintendent Carolyn Cody retired but will be rehired to train her successor. Assistant Superintendent Mike Bailey was relieved of his duties as Financial Officer but retains his position as Assistant Superintendent at full salary.


Shortly after the investigation began, Assistant Superintendent Joe Ripple accepted a position as Superintendent at Brazosport ISD. Joe Ripple was in charge of Human Resources when around $177,000 of federal funds were paid to speech therapists and others who did not have certifications on file.

Dr. Ronny Beard from Sweetwater has been hired as the new Superintendent.

Cleburne ISD has finally admitted that there will be no $8 million from the state. Harold Gentry had submitted an Open Records request earlier for documentation that the school had received the money. Financial Officer Mike Bailey sent him 120 pages, which TEA’s Ramon Medina said had no relevance to his request. Now Dr. James Warlick has confirmed that there will be no $8 million. Dr. Warlick said that the school had received around $300,000 and will get some more at the discretion of the state, but nowhere near the $8 million.

Cleburne ISD’s enrollment increased by only 42 students last year instead of the projected 155. At this rate, one new school would have accommodated the growth rate for 14 years. The three new schools will accommodate the growth rate for 28.5 years, even with closing two old schools. CISD already had an excess capacity of 472 students at the time the bond election was called. In the three years preceding 2004, the actual growth rate was only 30 students per year.

The $36 million bond will cost the taxpayers $69 million with interest, even though the school receives only 36 million.

Cleburne ISD now has $11.2 million in unallocated (excess funds). The school board voted in May to spent $2 million on an indoor general purpose sports and practice facility.

The TEA Final Report stands unless CISD appeals it in court.

Watchdog members of Access Cleburne now have the option of accepting the district's remedies or filing a complaint for additional years and / or calling for a tax rollback election.