WECT INVESTIGATES: Closed charter school and state were at odds - WECT TV6-WECT.com:News, weather & sports Wilmington, NC

WECT INVESTIGATES: Closed charter school and state were at odds over tax money

SEGS Academy closed April 2 after giving parents two days notice. (Source: SEGS Academy) SEGS Academy closed April 2 after giving parents two days notice. (Source: SEGS Academy)
Randolph Keaton chaired SEGS Academy’s board of directors when the schools closed. (Source: WECT) Randolph Keaton chaired SEGS Academy’s board of directors when the schools closed. (Source: WECT)
Devoria Berry resigned as SEGS Academy’s executive director after a state review revealed violations of the board’s conflict of interest policy. (Source: WECT) Devoria Berry resigned as SEGS Academy’s executive director after a state review revealed violations of the board’s conflict of interest policy. (Source: WECT)
WECT requested all communication between SEGS Academy and the Department of Public Instruction about the school’s closeout. DPI sent an estimated 1,300 documents. (Source: WECT) WECT requested all communication between SEGS Academy and the Department of Public Instruction about the school’s closeout. DPI sent an estimated 1,300 documents. (Source: WECT)
COLUMBUS COUNTY, NC (WECT) -

As parents scrambled to enroll their students elsewhere when SEGS Academy closed suddenly this spring, leaders at the beleaguered charter school began a testy process of settling up with the state. Public records show the school requested thousands of state dollars for services rendered long after students left.

The principal of the Columbus County school, received an urgent phone call the night of March 31. A board member told her the small K-7 school in Delco would surrender its charter and halt classes in two days.

The non-profit’s leaders had decided to close the school on their own terms rather than allow the State Board of Education to revoke their charter, a process that was already underway following more than nine months of scrutiny involving finances and management.

The board’s relationship with the principal and state education officials already frayed, public records describe a contentious closeout.

“I cannot wait for this mess to be over!” Principal AnnMarie Johnston wrote in an email to an administrator at the N.C. Department of Public Instruction (DPI). She told another official, “I want to see this finished and justice done.”

Leigh Ann Kerr, DPI assistant director of school business, responded, “I am not happy at all about the school closing but I am glad we are able to prevent future financial gain by individuals.”

Financial and management issues

In December 2014, Kerr’s division published a review of SEGS Academy that found “serious internal control and financial issues” at the public charter school, which received $534,087 in the 2015 budget year.

The school ended the previous year with a deficit of $36,351 and failed to make payments to the State Health Plan to insure its employees. The review noted the state’s “serious concerns regarding the school’s financial management and its ability to meet operating expenditures in the future.”

DPI also found SEGS Academy’s board violated its own policies by employing and contracting with family members.

At the time of the report, Board Chair Randolph Keaton’s sister Devoria Berry was being paid to serve as the school’s executive director. Berry was the board’s previous chair and the school contracted with her company, Community Support Agency, for mental health services and buses. Her business also served as the school’s landlord. SEGS Academy’s attorney said the arrangement was made because the building’s owner wouldn’t lease directly to the school because it had no payment history.

One of Berry’s nieces, Andrea Simmons, served on the school’s board while being paid to serve as its finance officer. The review found Simmons’ work overlapped with accounting services provided by an outside firm.

Another one of Berry’s nieces, Leslie McLaurin, had janitorial and transportation contracts with the school. Community Support Agency, Simmons and McLaurin received $92,139 in the 2013-2014 budget year, according to the review.

Following the report, Berry stepped down as executive director and Simmons resigned from the school’s board and finance director position.

Berry explained to the school building’s owner that the state said her involvement in the closeout would be a conflict. But records show Simmons, who works at Community Support Agency, took an active role in advocating that her employer receive more state money as the school wound down.

Payments to “related parties”

The day classes ended at SEGS Academy, the school lost its ability to access local, state and federal funds. Based on state policy, DPI had to approve every transaction required to pay remaining bills.

Providing the state with an accurate financial picture was a challenge, according to Keaton, the board chair. That’s because the principal had removed all the records, he said.

Johnston, the principal, told DPI she took some financial documents because she felt they needed to be protected. She gave others to department staff who visited the school. Keaton repeatedly demanded to know which state officials asked for the records.

“The board is not sure who she was protecting the documents from,” he said.

DPI insisted they didn’t ask for the files and concluded Johnston handed them over because she misinterpreted their directions.

In an effort to satisfy the state’s closeout requirements, SEGS Academy’s board asked Simmons, its previous finance director and board member, for help. Keaton said it was because she was familiar with the documents.

“If DPI has a better solution to this problem please advise the board on how to do so,” he wrote.

As SEGS Academy worked to piece together financial documents, the building’s owner, Bob Destafano, became restless, according to emails. On May 4, he asked Berry about rent checks and reminded her that she had personally guaranteed the lease. In a May 10 email to Simmons, Destafano vowed to start the eviction process and file a suit for the remainder of the lease if he wasn’t paid within five days.

Even though classes ended April 2, Simmons wanted the state to pay through the end of May for the building guaranteed by her boss, Berry, and for buses provided by her employer, Community Support Agency.

DPI officials explained that only expenses incurred before the school closed would be paid, according to State Board of Education policy. Therefore, Destefano would receive $326, for two days rent in April instead of $9,570 for the entire months of April and May. Community Support Agency would get just $198 for two days of bus service, not $3,960 for two full months. And Leslie McLaurin, who the school had hired to support the closeout, would receive nothing. According to timesheets, she worked 100 hours in May and was to receive $1,500.

The state’s response didn’t sit well with Simmons.

“We have several thousand dollars of outstanding bills and are not sure why they have not been approved for payment when we have…$12,000 in our bank account,” Simmons wrote. She claimed officials from the Office of Charter Schools had agreed the building would remain open until May 22 to handle closeout matters.

In internal emails, DPI staff said Simmons wasn’t at the closeout meeting when the issue was discussed. They remembered suggesting the school move the documents to another location or use an electronic filing system.

DPI Director of School Business Alexis Schauss said Simmons’ statement probably had something to do with her office denying payment to “related parties” for services like rent and buses.

“Andrea is one of the family members who were the main focus of the report we issued last fall,” wrote Kerr, the division’s assistant director. “She had no tie with the school at the date of revocation so we aren’t really beholden to answer to her as far as I’m concerned.”

Kerr told another DPI staff member, “They keep saying the SAME thing over and over and over in hopes that we will either get confused and accept it or just give in. Not happening.”

Keaton and Simmons did not respond to a request for comment.

Copyright 2015 WECT. All rights reserved.

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