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Board officials get multiple stipends for same meeting
By Carol Biliczky
Beacon Journal staff writer
Published on Thursday, Aug 16, 2007
State Auditor Mary Taylor slapped 19 community schools operated by White Hat Management in Akron for abusive business practices.
A spokesman for her office said this was believed to be the first time a for-profit charter school in Ohio had been cited for abuse in an annual audit.
The audit complained that some board members who sat on the board of more than one White Hat school were paid multiple stipends for the same meeting if their school was discussed.
Auditor's spokesman Steve Faulkner said that while the practice was legal for the 2005-2006 school year, the period the audits covered, it was not acceptable.
''This is not a practice that any prudent person would find acceptable,'' Faulkner said. ''It was legal, but improper. We cite government auditing standards.''
White Hat is for-profit company based in Akron that operates 50 publicly funded community schools serving 23,000 students in six states, according to its Web site.
Entrepreneur David Brennan is chairman of the company.
In a prepared statement released by White Hat spokesman Bob Tenenbaum, the company distanced itself from the board members, saying the boards and company are independent of one another.
''White Hat has no influ ence or control over Board policies and procedures, or performances of a fiscal officer they selected,'' it read. ''Their conduct is detrimental to these schools and the students they serve.''
The prepared release pointed out that 13 other White Hat schools in Ohio had never received any audit findings ''that rise to the level of significance in these reports.''
Policies defended
While acknowledging that errors had been made and that they needed to establish better controls, officials of the schools defended their policies in written responses to the state audit.
They said the multiple meeting stipends were compensation for service above and beyond routine participation on its boards.
In a response to the auditor, school officials said that White Hat had downsized its management and cut services to the schools.
''It was readily admitted by the management company that problems had occurred within its internal operations'' and some board members began performing additional tasks, school officials said.
Some board members chipped in anywhere from 15 to 50 hours a week to meet with disgruntled employees and faculty, check schools for ''custodial concerns'' and locate, interview and hire vendors to resolve the ''apparent crisis'' within White Hat, according to the response.
Board members were fiscally prudent in being paid only for board meetings, not the many committee meetings they attended and outside work they performed, the schools said.
''Board members were compensated reasonably for necessary business practices and services rendered for each separate school entity.''
Six Akron-Canton area schools are among the 19 whose annual audits were released this week. Eleven are Hope Academies, which are patterned after traditional schools. All are elementaries, with the exception of one high school in Cleveland. The other eight are Life Skills Centers, which enroll high school dropouts and move them through computer learning programs in four-hour shifts.
Public dollars
The schools are directly funded by the state, which moves money from the district the student would otherwise attend.
In the most recent year, White Hat-managed schools received about $100 million in public dollars. The company has been identified by groups that study charter schools as the fourth-largest management firm in the country.
In addition to inappropriate payments, the audit cited other problems with the schools, all of which shared the same fiscal officer, Ohio Community School Consultants in the Columbus suburb of Dublin.
All were cited for bookkeeping errors, such as charging a purchase to the incorrect school and not providing business reasons for purchases, such as two tickets for $110 to the Cleveland Zoo's Twilight at the Zoo and $850 in fees for the board president and a guest to attend the National Summit on Your City's Families sponsored by the National League of Cities.
The schools did not supply supporting documentation to the state auditor's staff in a timely way, said Faulkner, the auditor's spokesman.
In addition, for a part of the year board members were paid via individual contracts, but not all contracts were available for state review. White Hat later decided board members should be paid by stipend, not contract. While board members repaid contract amounts, they were not always properly recorded, according to the audit.
The audit found the board president for all of the 19 White Hat schools, Robert C. Townsend II, and two board members racked up improper credit card purchases of $2,005. The money was repaid during the course of the audit.
White Hat's fiscal agent also overpaid some board members by a total of $4,815, all of which since has been repaid.
For example, according to the audit, Marco Sommerville, president of the Akron City Council and a White Hat board member, was overpaid $125 for his work on a board.
But the audit reserved its biggest complaints for the schools' policy of holding meetings for schools one after the other and paying board members as if they were attending individual meetings.
That meant some board members earned anywhere from $250 to $2,175 per meeting. According to company policy, board members were to be paid $125 per meeting.
Starting in July, state law was changed to permit board members for community schools to serve on only two boards, instead of as many as 17, as was the case with the White Hat schools.
Carol Biliczky can be reached at 330-996-3729 or cbiliczky@thebeaconjournal.com.
State Auditor Mary Taylor slapped 19 community schools operated by White Hat Management in Akron for abusive business practices.
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