State auditor finds no fault in doctorate payment

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School district receives $4,946 bill from auditor

By Jeff Moore

A special examination by state Auditor Adam Edelen’s office found no wrong doing for Carroll County Board of Education’s payment for Superintendent Lisa James’ doctoral program. An anonymous phone call prompted the investigation.

The board of education paid $35,461 for James to participate in the first class of a new Executive Doctoral Program, created by Northern Kentucky University, which included a trip to Finland.

“Our review of the requested financial documentation revealed that supporting information was sufficient and adequately supported the reviewed expenditures,” Edelen said in a June 25 letter to board chairwoman Mona Kindoll. “In addition, the board meeting minutes reviewed were generally detailed and appeared to incorporate items that have been recommended by this office in previously reviewed expenditures.”

But in the letter to Kindoll, the auditor’s office went on to make several recommendations that they believe would “strengthen controls and improve transparency” when dealing with benefits provided to the superintendent. These include listing all benefits in the superintendent’s employment contract and putting language in it to require some type of repayment plan to prevent James from immediately leaving after receiving her doctorate.

Carroll County Board of Education attorney Jim Crawford said in a Friday interview that everything involving the doctoral program was handled properly and that he wouldn’t do it differently, despite the review and recommendations issued by Edelen’s office.

“The state auditor looked at every bit of that and did not find fault with any of it from the standpoint that it fit within our policies,” Crawford said. School District Chief Financial Officer Jon Conrad confirmed this, adding that the auditor’s office had all the documentation and copies of the district policies that were followed.

“All of that was handled in the normal course of how we handle all of our employees’ professional development,” Crawford said. “And the added steps that were done here were because it’s a superintendent’s expenditure and because it’s more costly than normal professional development. We’re going to deal with it in open board meetings where there could be open discussion, open questions by anyone that wants to ask them before the board acts on it. Which leads to my disgust with the article referencing that somehow it’s not transparent. I don’t know how you can go about making it anymore transparent and open.”

Kindoll received a call in April from the auditor’s office to inform her they were going to perform this examination. She notified James of the call, telling her she wasn’t concerned because she knew they had handled the matter properly.

 “I know we have done everything properly under the guidance of our attorney,” Kindoll said she told James in that call. “It’s just a process that we will have to go through. I’m not concerned about the final outcome at all.”


Auditor’s findings

In the June 25 letter to Kindoll, the auditor’s office stated they found no wrong doing in the board of education’s actions. However, the auditor’s office did release three findings tied to financial controls and transparency.

“While our examination resulted in an overall positive perception of the oversight and administration of the specific items reviewed, auditors identified issues in which there were opportunities to strengthen controls and improve transparency,” the letter from Edelen to Kindoll stated. “These findings should not prohibit the board from paying for the continuing education of a staff member when all costs have been fully and properly reviewed, approved, and disclosed in a transparent manner.”

In the first finding, the auditor’s office said the payment for James’ Executive Doctoral Program was not included as a specific and separate provision within her employment contract.

 “We recommend the board ensure that any significant benefits provided specifically to the superintendent outside of existing policies be included in the superintendent’s employment contract,” the letter states. “We further recommend that the board consider the development of a policy governing the payment of continuing education for individuals, if such action may occur in the future.”

Kindoll said that when James was invited to join this new doctoral program, they looked to their attorney for information.

Crawford said the board followed his guidance and school district policies on the payments for professional development.

After researching the doctoral program and policies in Carroll County and also in Gallatin County, where he serves as school district attorney (The superintendent there was also invited to participate in the doctoral program), he determined it best to handle approval by board resolution.

“Simply bring the whole thing up in a called board meeting, discuss it and, ahead of time, advance information to them so they are fully aware of what this is about and get on a public agenda,” Crawford said. “And it can be handled in that fashion.”

The board approved James’ participation in the doctoral program at the Jan. 6, 2011 meeting. The minutes show the approval of $32,000 to NKU for James to take part in the program, and the district also would pay for travel and books.

The district again approved James participation in the program Jan. 24, 2013 after it learned that a trip to Finland would be added to the program. The motion stated that the board would pay tuition and costs for books, travel, lodging and meals per the board’s policies.

However, in another of the auditor’s findings, Edelen’s office said the board did not specifically approve the additional cost for the superintendent to travel to Finland as part of the Executive Doctoral Program.

“We recommend the board pre-approve all out-of-state travel for district employees, including travel related to professional development. All known costs for the trip and any budgeted costs should also be specifically pre-approved by the board in a public meeting,” the letter to Kindoll states.

Kindoll said this is not accurate. When the Finland trip came up, she said the board voted to reaffirm that it would pay for the travel costs, along with others assocated with the program.

She said both motions clearly state that the school district will cover the cost of travel for the doctoral program.

Crawford said James and the board asked him to look into how the Finland trip should be handled. He received a similar request from Gallatin County for Perkins.

 “My advice was we are going to bring the whole thing up again in front of the two boards, explain it fully and completely again and let the two boards decide whether or not they want to pay for it.” Crawford said.

Because hard numbers on Finland component were not available, Crawford said he worded the motions in both counties to parallel policies in place on professional development, reimbursement for travel and room and board. “I tried to write it in such a way that it would be flexible enough to cover all of the expenses to the degree that they fell under our existing policies.”

Kindoll said the board saw every expense associated with the doctoral program and approved them in their monthly meetings.

The auditor’s findings state the board only approved $32,000 for the program, indicating the total cost exceeded that amount by $3,000. In a Monday interview, Steitzer repeated that the cost exceeded what the board had approved.

When asked about the language in the motions that states that travel, books and meals would be covered by the school district in addition to the $32,000 for tuition, Steitzer said it should have been included in the contract.

“The point is it didn’t spell out in the contract what the value of what it was worth,” she said.

But Crawford said the board approved every aspect of the doctoral program.

“I’m particularly disturbed by the inference in this press release that somehow the cost was $3,000 more than the alleged $32,000 ceiling cost,” he said. “First, there was never a total ceiling cost. It was approximated.”

Crawford said the school district followed its policies are that updated annually through a contract with the Kentucky School Board Association, which helps district ensure their policies are in line with all state and federal laws.

Crawford and James said the doctoral program approval was handled in this same fashion in five of the six districts where superintendents participated in the NKU program. In addition to Carroll and Gallatin, these include Jessamine, Madison, Simpson and Boone counties. Only one district included language about paying for the superintendent’s doctoral degree in the contract, he said. Crawford said that was not placed there specifically because of the NKU program, but because it was an issue raised by the superintendent during contract negotiations.

 “They were developing a contract when they put that language in there,” he said. “I deemed the Carroll County and Gallatin County situations different because there were existing contracts.”

James was two years into her contract when she was invited to take part in the doctoral program. Crawford said the same was true for Gallatin County School Superintendent Dorothy Perkins.

When asked if the auditor’s office looked at any of the other districts where superintendents were in the NKU program, spokeswoman Stephanie Steitzer said she doesn’t know if auditors were aware of this and that they had not received any calls from those counties. Steitzer said the auditor’s office believes “all benefits need to be spelled out in their contracts.”

In the the third finding by the auditor’s office, Edelen’s letter to Kindoll said the board should have implemented a policy or contract provision that would prevent James from leaving the district immediately after receiving the doctoral degree paid for by the district.

“We recommend the board determine if the payment of professional development tuition for current or future staff is a possibility. If so, the board should develop a policy related to the provision of such a benefit that will provide guidelines as to how staff are selected for this benefit, grade requirements, and employment retention,” the letter from Edelen said. “The guidelines should also include repayment schedules for the funds, either in full or on a prorated basis, if the staff member fails to meet the adopted employment retention requirements.

“We further recommend that the board ensure that an employment retention requirement is in place in any future superintendent’s or staff members’ contract that will receive payment for a further degree. Similar to the policies, the contract should also include repayment schedules for the funds, either in full or on a prorated basis, if the adopted employment retention requirements are not met.”

Kindoll and Crawford said this was discussed as part of considering the doctoral program, but it was decided not to act on it.

Crawford said James was invited to participate in the program, but also had to continue performing her duties leading the school district.

“It’s not as simple as he makes it out to be,” Crawford said on requiring a superintendent to repay these costs. “A four-year contract is all a superintendent can get.”

Crawford said they looked at the situation where James was willing to use her spare time on nights and weekends to further her education to benefit the district.

“We want you to do that, but we have to have you running this district and propelling us ahead,” he said. But they were also asking the superintendent to commit to the two-and-a-half year program that will involve a large amount of work on nights and weekends. “The superintendent has to say, ‘I’m willing to make that sacrifice.’”

James agreed to continue to perform all of her duties and tackle the doctoral program.

“It’s really easy to Monday morning quarterback this from this perspective of this auditor as it calls it best practices,” Crawford said. “The point is there was nothing wrong with how they did it in the first place.”

Kindoll recalled these conversations, saying the board believed it was important to have the superintendent set an example by furthering her education as they expect children in the district to do.

She said they believed the benefits from this process “would be endless” and would have done the same thing again.

During the doctoral program, James did sign another contract that carries her through June 30, 2016.

When asked, James said she’s not planning on going anywhere. “I’m happy and I love what I do,” she said.

But Steitzer said the auditor’s office believes it is important to protect the taxpayers of the county by locking in the superintendent. After receiving her doctorate, she said the superintendent could have looked for work in larger districts, such as Jefferson County.

“We are not saying it is improper,” Steitzer said, saying that James’ degree can help her and the school district. But the auditor’s office believes it is important to include this language “to protect the school district.”


News release

Crawford is not happy with how Edelen’s office announced the findings in a news release issued July 10.

The news release states “the findings — while not as egregious — share some similarities to those in exams the auditor’s office conducted in Mason and Dayton Independent.” Findings from both of those districts were turned over to authorities for criminal investigations, according to the reports on the auditor’s website.

“That is so infuriating … to read this article that seems to infer that by not putting all of this in the superintendent’s contract that somehow the board has done something wrong is preposterous,” Crawford said. “It is absolutely misleading as it can be.”

Crawford said all of the expenses involved in the doctoral program “were within pre-approved policies that are in place. And the state auditor had those policies.”

Both Kindoll and James also expressed displeasure with the news release, noting it was sent statewide and appears to infer the district had done something improper.

Steitzer defended the news release saying the examination in Carroll County did find factors that were similar to those from the Mason and Dayton Independent examinations.

The auditor’s office has completed nine of these investigations and found “common themes” where benefits for the superintendents were not included in the contracts, she said. She said the office clearly stated that the findings from Carroll County were not as “egregious” as others.

“We are not saying the $35,000 was inappropriate,” Steitzer said, just that it should be spelled out in the superintendent’s contract.

She pointed to the Dayton Independent case where she said the superintendent was afforded many benefits the school board was not aware of until the district’s bank account had been drained because of a payment of more than $50,000 for accrued sick leave.

For transparency, she said Edelen believes all benefits afforded a superintendent should be in the contract as part of the contract.

Crawford said that Edelen’s opinions on this are those from a “best practices” view for accounting. “As I sit here today, I still think that a board resolution, given what we were trying to deal with, was a more flexible and sensible way of dealing with it,” he said.


Cost of the examination

As if local officials were not already upset after reading the auditor’s press release, on Friday they received the bill for the auditor’s work.

The school district must pay Edelen’s office $4,946.18 for 86 hours of work on this examination.

Kindoll was not happy, saying she does not see how an anonymous caller can prompt an examination that would run up this kind of bill. She said she was told up front that the school district would be billed, but she never envisioned that it would be this much.

Kindoll said they don’t have any recourse but to pay the bill for the examination.

Steitzer said the auditor’s office carefully looks at calls they receive before beginning an examination. She said they receive a lot daily and many are reviewed but not acted on.

They “don’t go willy-nilly” into these examinations, she said, adding that officials in many of the districts believe the expense is worthwhile based on what they found.

“We do generally expect to be compensated for the work,” she said. She said their work is important to “minimize fraud and abuse.”

Steitzer said these examinations and news releases are “not to shame the school district,” but to get the attention of school board members that they should have everything spelled out in the contract.

She said Edelen believes it is important that the value of all compensation, not just the salary of the superintendent, be included in the contracts.

Five more examinations are underway, including one at Jefferson County Public Schools, according to the auditor’s office.

All completed school district examinations can be found on the auditor’s website.

The Kentucky Department of Education in March accepted Edelen’s recommendation to make superintendent contracts, benefits and evaluations more transparent. Districts have until Aug. 31 to submit contract and benefit information to KDE for posting on its website. Superintendent salaries are already available on the KDE website.

In an effort to increase transparency and accountability, KDE is requiring local boards of education to include in their superintendent evaluation specific performance measures tied to the district’s academic progress, fiscal well-being, resource management and ethics. Districts will have to document a discussion of these issues with the superintendent in an open meeting and submit evidence and assurances to the department by Dec. 20. It will be up to each district to post the evaluation on its website or make it available to the public in another way.

“My office receives new concerns and allegations about spending and operations at our public schools on a weekly basis,” Edelen said in a news release. “As long as that is the case, I will continue making these examinations a priority. We must make sure that every dollar that goes to education counts.”