Friday, December 17, 2010

TOP STORY > >Can anyone save this district? Future at stake as takeover looms

Leader senior staff writer

The state Board of Education could place the Pulaski County Special School District back in fiscal distress as early as next month, Education Commissioner Tom Kimbrell told the Joint Legislative Audit Committee on Wednesday, after it finishes reviewing the extensive investigation by state auditors.

“We looked at the previous report and were awaiting this report, but it would be January under statute before we could place the district in fiscal distress,” Kimbrell told The Leader Friday morning.

The state Education Department put PCSSD in fiscal distress in 2005, from which the district emerged in 2007 after careful oversight by the state.

At that time, the district’s reserves had run unacceptably low.

Meanwhile, Superintendent Charles Hopson—who met with Kimbrell Friday afternoon—dismissed as false the rumors posted as fact on the teachers’-union-friendly website, that he would resign or that he would ask Kimbrell to dissolve the school board.

Hopson said Friday afternoon that he was committed to the task of giving PCSSD students a world-class education and that he would not be deterred by or yield to the distractions.


School board president Bill Vasquez has called a special board meeting for 6 p.m. Monday to review and discuss the latest audit and has scheduled an executive session to discuss personnel—presumably to discuss whether or not to discipline or fire Hopson.

In October, Hopson promised members of the Joint Legislative Audit Committee that they would be pleasantly surprised when he and board members appeared before them for a fourth audit update in December.

Instead, the surprise was Hopson’s, and not at all pleasant Wednesday morning as he found himself in the hot seat over $23,919 in what the auditors deemed “unallowable (moving) expenses.”

Hopson attributed most of the auditors’ concerns to misunderstandings regarding the $25,000 moving stipend in his contract, and said he would not repay the money but would declare it as income on his W-2 for the IRS.


Kim Williams, deputy legislative auditor over investigations, said Friday that Hopson’s plan would satisfy the concerns of the auditors.

Hopson’s contract, in addition to an annual salary of $205,000, included the $25,000 moving stipend.

Most of those expenses stem from costs related to his moving himself and his family from Portland, Ore., to Little Rock. The money was to cover costs to obtain Little Rock area housing for the first six months while he sold his house in Portland.

Five thousand dollars of that $25,000 didn’t require any documentation, while the other $20,000 was documented with a district-provided debit or credit card. When those expenses appeared on the credit card issued him, the auditors were alarmed, but Hopson says they were covered under the terms of the contract.

Here’s what his negotiator says was the final contract language regarding those costs and documentation:
“Further, the board will provide a moving and relocation stipend of $25,000, with expenses of up to $20,000 to be documented with receipts. The moving and relocation stipend may be used by the superintendent to cover the cost of moving his family and belongings to Pulaski County, Arkansas, for up to 12 months following the effective date of this agreement, including all related travel and other expenses for the superintendent, his spouse and child, and may be used for any and all costs for him to obtain housing in Pulaski County and the cost of his housing for the first six months of his residency in Pulaski County. At its discretion, the district may allow the superintendent to document his moving and relocation expenses by using a district-provided debit or credit card to pay for such expenses.”


“I will not apologize for my salary and benefits,” Hopson told the joint audit committee. He said they were in line with the compensation for other superintendents of districts with the size and difficulty of PCSSD, and that he needed to be compensated for the substantial equity he had built up in 22 years with the Portland school district.

In August, because the state Bureau of Legislative Audit discovered the unauthorized purchase and sale of about $439,000 of school property by employees, improper reimbursement of some school board members, overpayment of former Supt. James Sharpe and poor oversight of other financial matters, Kimbrell warned the district by letter of “early indicators of fiscal distress.”

The specific indicators for PCSSD were: “State or federal audit exceptions or violations and failure to comply with state law governing purchasing or bid requirements.”

The district subsequently took actions aimed at tighter controls of purchasing, requested the return of Sharpe’s alleged overpayments, and the employee who diverted hundreds of thousands of dollars of school property to his own use or enrichment pled guilty to theft of property and is in prison.


Other new concerns of the auditors included:

Board member Gwen Wil-liams owes the district $1,233 for cell-phone usage, mileage, gratuities, parking and travel advances. Board member Mildred Tatum owes $95 for National School Board Association dues and $21 for mileage overpayment.

Three new members of the superintendent’s cabinet were hired as consultants prior to beginning full-time employment, and also were paid for days worked before they started work.

The district’s chief financial officer, Anita Farver, told legislators that occurred because of a shortcoming in the payroll software that would be rectified. She said those in question would either use leave to offset the extra pay or else would reimburse the district.

Auditors were concerned that Hopson spent $760,500 to purchase 39 used school buses without first getting board approval. Hopson said it was an emergency and that the buses were bought through state procurement.


Auditors found that internal financial oversight was still deficient.

“The board should increase and maintain its knowledge and awareness of fiscal oversight, accountability and fiduciary responsibilities,” the auditors said and should, with administration, strive to demonstrate to personnel the necessity of standards and fiscal prudence.

They also were concerned that the district had legal expenses of $961,000, of which about half was related to matters pertaining to the desegregation agreement and attempts in federal district court to have the district declared unitary.

Much of the rest related to unsuccessful attempts by the district to decertify the Pulaski Association of Classroom Teachers and the Pulaski Association of Support Staff.

Both the auditors and some members of the joint audit committee were concerned that the district left more than $4 million of the $20 million it received in desegregation funds unspent.

The auditors also noted that salaries and benefits for administrators for the current school year were about $713,000 more than a year ago.

Vasquez said the board would scrutinize both central administration and school-based administration with an eye toward cutting positions and salaries through either attrition or by laying people off.

The district has perhaps three times as many principals and assistant principals as is required by state minimal standards.