State finds ‘financial distress’ at Blackfoot charter schools

BLACKFOOT — The financial status of two Blackfoot charter schools is “concerning” and “critical,” according to a state commission, and a variety of improvements must be made — from reducing staff reimbursements and paying vendors on time to eliminating charge accounts at grocery and hardware stores.

A lack of “strong internal controls” of school finances is another problem, so the state will pay for a forensic audit to review past use of public funds at Bingham Academy and Blackfoot Charter Community Learning Center.

These are among the conditions outlined in letters to trustees at both schools from the Idaho Public Charter School Commission, a state agency that oversees about 40 charter schools across Idaho.

The commission’s letters outline a range of improvement conditions following commission director Tamara Baysinger’s recent three-day visit to both embattled public charter schools. Baysinger said she interviewed trustees and examined documents to reach her conclusions.

The on-site visit came after some commission requests for financial documents from the schools went unfulfilled. The commission has been investigating the schools for months over allegations of questionable internal controls and financial practices. 

Since Baysinger’s visit, the commission has exonerated Bingham on some items, including a past allegation that the school mishandled a sexual misconduct claim.

Baysinger’s letters also reference cashflow challenges, “overall financial distress” and recent declines in the commission’s financial ratings of the schools. Blackfoot’s score dropped to 45 percent from 75 percent in 2017. Bingham’s dropped to 23 percent from 43 percent in 2017.

“Implementation of stronger internal controls and operational practices will help you better manage … expenditures and protect the interests of all parties, including students, employees, taxpayers, and the school itself,” Baysinger wrote to each school.

Baysinger’s letters echo renewal conditions delivered by the Idaho attorney general’s office. In a Jan. 15 letter to Blackfoot’s head administrator, Fred Ball, deputy attorney general Leslie M. Hayes detailed conditions Blackfoot must meet in order to keep operating. These conditions range from launching a purchase order system that ensures documented, advanced approval of all expenditures to ending the use of prepaid credit cards loaded with school funds.

Blackfoot and Bingham each receive state funding based on average daily attendance. The schools together serve about 750 students, with budgets totaling some $4.3 million. Ball is head administrator at both schools.

Fred Ball

Improvement conditions for both schools

Baysinger’s letters outlined a range of conditions, including:

  • Fewer reimbursements for purchases by employees, contractors and board members.
  • Timely payments to vendors in order to eliminate late fees and avoid the risk of suspended employee benefits.
  • Clear, detailed contracts with outside contractors, before receiving services.
  • Elimination of reimbursements from one school to the other.
  • Elimination of charge accounts at a local local grocery and hardware stores and Amazon.com.
  • Annual reviews of independent financial audits between trustees and the auditor.
  • Ensuring contracts are signed by appropriate employees, and ensuring no contracts are backdated.
  • Ensuring employees work within the scope of their job descriptions.

Ball teaches a driver’s education course at Bingham, though he is not contracted with the school to do so, according to documents obtained by Idaho EdNews.

“(T)he director should not be teaching driver’s education unless his job description and contract specifically include this duty,” Baysinger wrote. EdNews has asked for but not received a contract between Ball and Bingham.

Baysinger said the commission will work with the schools to ensure they meet stipulations included in her letters. Commissioners will meet March 1 to consider Blackfoot’s charter renewal.

Baysinger said her findings and past issues with the schools’ finances have prompted the commission to contract with an independent firm to conduct a forensic audit of both schools.

It’s still unclear when the audit will happen and how much it will cost, Baysinger told EdNews.

Certified fraud examiner Susan Langley explained in general terms the differences between a regular audit and a forensic audit.

“A forensic audit will look at every transaction in a designated area of the books over a specified period, whereas a regular audit will look at samples of transactions,” said Langley, of Boise-based Coles Reinstein Accounting and Consulting.

The cost of a forensic audit depends on the scope of the work and the length of time, Langley added.

Idaho School Boards Association Executive Director Karen Echeveria said forensic audits of schools are “very rare.”

“I’ve never heard of one being imposed by another entity,” Echeveria said. “I have heard of boards authorizing them when someone on staff has taken money. Maybe three times in my time in this business.”

Click here to read Baysinger’s letters to Blackfoot and to Bingham.

Ball received payroll from Bingham but has not produced a contract with the school

In January, EdNews requested employee contracts from both schools because the contracts were not posted on their websites, as required by Idaho law. EdNews received contracts in February, including Ball’s 2017-18 annual contract with Blackfoot for $71,706. No contract between Ball and Bingham was included. EdNews received a 2018-19 contract between Ball and Blackfoot but no contracts between Ball and Bingham.

Yet Ball told EdNews he received payroll payments from Bingham during the 2017-18 school year. An EdNews investigation revealed that he cashed eight checks from Bingham, each worth $855.60, simultaneously on Aug. 21, 2018. Ball told EdNews in December that the successive payments were payroll checks he decided to hold for months before cashing in order to help the school weather the prospect of a “large number of upfront expenditures.”

School business manager Randy Ruger also received a series of payouts from Bingham from August 2017 to August 2018, including eight checks, each worth $939.07, which he also cashed on Aug. 21, 2018.

Randy Ruger

EdNews’ financial inquiry into the school also revealed other payouts to Ball, including a $22,099.37 check for “modulars and other expenses.” Ball told EdNews he resold to Blackfoot two modulars he purchased from Salt Lake Community College for the “spectacularly low price” of $16,000, or “what he had into them.” The college says it has no documentation of selling modulars to Ball, though Blackfoot reimbursed him $16,000 for their purchase.

Ball has received numerous reimbursements for a range of items over the years, from a basketball and a music stand to the modulars.

Bingham cleared on other allegations

Baysinger’s three-day visit included investigations into allegations of leadership inappropriately addressing sexual misconduct at Bingham. She said allegations were based on incomplete and partially misunderstood information.

“We appreciate the school’s documentation of administrator (Bingham Principal) Mark Fisk’s response to an alleged incident and ongoing efforts to ensure that all employees and board members fully understand reporting requirements,” Baysinger wrote to the school.

Baysinger also dismissed other allegations of inappropriate use of school funds for travel and building-safety concerns, though she said she was unable to review all requested Bingham documents during her visit.

The Division of Building Safety indicated that safety concerns “previously noted” at the school “have been corrected.”

EdNews is still awaiting documents from the schools

EdNews began investigating expenditures at Bingham and Blackfoot in December and is still awaiting requests for public records.

EdNews requested bills of sale, lease agreements and purchase receipts for all modular buildings on the campuses. EdNews received a one-page invoice for two modulars but no documents for at least six other modulars on the schools’ campuses. Ball responded to EdNews through an attorney, who wrote the schools have no additional records to provide for modular buildings.

EdNews requested all expenditures for both schools, which must be posted on school websites, under Idaho law. EdNews received some expenditure documents, but not all of them. Totals of bank statements and checks do not match expenditures.

EdNews is awaiting a public records request for payroll records.

EdNews is awaiting expenditures and employee contracts associated with an in-house daycare at Blackfoot. Ball’s attorney wrote that employee records related to the daycare will first need to be reviewed by an attorney, at a cost of about $150. The attorney, Chris Yorgason, also wrote the schools will not begin performing a search for the requested records until they receive a check from EdNews.

Idaho Education News data analyst Randy Schrader contributed to this report.

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