Transactions in 23 school districts cited for no state OK
Posted on Sunday, February 10, 2008
State auditors have cited about two dozen school districts over the past several years for failing to obtain the state Department of Education’s approval, as required under state law, for transactions involving possible conflicts of interest.
How often auditors cite districts for failing to get the department’s approval is a question that arose after the Division of Legislative Audit cited five districts in December. Rep. Nathan George, D-Dardenelle, said then that lawmakers are seeing more and more such findings.
Districts cited include Bearden, Bergman, Bruno-Pyatt, Clarendon, Concord, Conway, Cross County, Dierks, Dollarway, East End, England, Flippin, Jasper, Helena-West Helena, Horatio, Huntsville, Junction City, Magazine, Mammoth Spring, McCrory, Mineral Springs, Spring Hill, and West Side of Johnson County, according to the Arkansas Democrat-Gazette’s review of the division’s records since July 1, 2001.
The transactions at issue totaled about $ 700, 000. They ranged from the Mineral Springs School District making payments for services to a firm in which the superintendent’s brother has a financial interest to the Helena-West Helena School District making payments to a radio station co-owned by a School Board member.
The violations involve Act 1599 of 2001. It says it’s intended to prohibit self-dealing in transactions between school districts and board members, administrators or employees. That law resulted from findings such as the Huntsville School District’s purchase of more than $ 500, 000 in computers from a company partly owned by the school superintendent.
Among other things, the law requires any transactions with school board members, their family members, or school district employees totaling at least $ 5, 000 in a fiscal year to be approved by the school district’s board in a resolution and the Education Department’s director. The transactions may be approved only under “unusual and limited circumstances.”
A companion law is Act 1381 of 2005. It’s aimed at restricting school districts from employing relatives of school board members. Its sponsor, then-Rep. Jodie Mahony, D-El Dorado, said it was needed to prevent “abuses.”
Among other things, the law bars a board member’s relatives from being initially employed by the school district during the board member’s tenure for compensation of more than $ 5, 000 unless the director of the state Department of Education issues a letter of exemption and OKs the employment contract based on unusual and limited circumstances.
The laws include provisions for criminal penalties. Any board member, administrator, employee or nonemployee who “shall knowingly violate the provisions [of these laws ] shall be guilty of a felony” under Arkansas Code Annotated 6-24-115.
If an individual pleads guilty or is convicted of violating the law, the court is required to order restitution to the school district under the law. In addition, the court may fine the violator any sum not to exceed the greater of $ 10, 000 or double the dollar amounts involved in the transactions, impose a sentence of up to five years in prison, or levy both penalties. Among other things, auditors have found in the past several years that:
The Mineral Springs district paid about $ 148, 000 for fiscal 2005 and fiscal 2006 to Educators Consulting Services in which Superintendent Max Adcock’s brother, Pat Adcock, has a financial interest. But the School Board didn’t adopt a resolution authorizing the contracts or obtain the department’s approval.
Superintendent Adcock said he wasn’t aware of the state law requiring the department’s approval for the contracts. Although he went through training to learn about the state’s laws, “I just missed it,” he said. He said he and his brother decided to discontinue the contracts because they weren’t worth the hassle.
The Junction City district had a one-year cleaning services contract in fiscal 2006 for $ 78, 000 with a business in which bus driver Margie Gray had a financial interest, though the board didn’t adopt a resolution authorizing the contract or seek the department’s approval.
Superintendent Gary Wayman said the resolution was not sent to the department due to an unintentional “oversight” by him and the board.
The Helena-West Helena district paid $ 75, 900 to Joe Thelman Paint Co. for painting services in 2005, and didn’t obtain the approval of the Education Department’s director for the transaction. Thelman is half brother of former board member Bobby Jones. A Phillips County jury later acquitted Jones and Thelman, a painter, of charges of theft and conspiracy to commit theft from the district. The jury found Jones and Thelman innocent of charges that Jones hired Thelman to paint schools in the district without properly bidding the project and without Thelman having a contractor’s license.
The Mammoth Spring district purchased property totaling $ 52, 500 from maintenance worker Neil Rogers on Sept., 9, 2003, one day after the board approved the purchase. But a written resolution justifying the reasons for the purchase wasn’t passed by the board and forwarded to the department.
District Superintendent Ronald Taylor said the transaction was not forwarded to the department due to “an oversight” and “an honest mistake” on his part. The purchase was made through a real estate company, which had an exclusive listing on the property, and not directly from a school employee, he said.
In virtually every one of these cases, school officials said they made an inadvertent mistake in failing to obtain the department’s approval.
That’s even though school board members and superintendents are required to undergo training that includes education about the state’s ethics laws, state officials said.
“To be honest with you, if we wanted to be unethical, we could have doctored the paperwork to make it look different,” said Huntsville Superintendent Alvin Lievsay, whose district was recently cited for paying maintenance worker Ted Brumbly $ 9, 000 for various painting jobs without a board-approved resolution or approval of the Education Department.
“But it was an honest mistake,” he said. “We try to keep up with the laws. [But ] sometimes things slip up through all of us.”
He added, “I am totally responsible because I am superintendent and the buck stops here.”
Clarendon Superintendent George La Fargue said “there is no explanation” why the Clarendon School Board didn’t obtain the department’s OK in a resolution to sell the Holly Grove High School property to the city of Holly Grove in 2005. Then-board member Lula Tyler was the mayor of Holly Grove. She resigned from the board in May.
Clarendon School Board President Margaret Simpson said she didn’t know whether the department’s approval was required for the transaction, though legislative auditors said that it was needed.
The department’s records show that department officials approved hundreds of these transactions and hirings under these laws during the past several years.
Most of them were transactions OK’d under the provisions of Act 1599 of 2001. The department’s records show that proposed hirings under Act 1381 of 2005 were more likely to be rejected than proposed transactions under Act 1599 of 2001.
Department officials believe district officials’ compliance with these laws is good for the most part, said Julie Johnson Thompson, a spokesman for the department.
The laws have benefited the state because they have caused school boards and district officials to slow down and carefully consider their hiring and purchasing decisions, she said.
“It has caused some additional work for the department, but the benefit has outweighed the extra work that it had caused,” she said.
Sen. Jimmy Jeffress, D-Crossett, said he believes the laws are working as intended.
“I don’t know that there has been a lot of flagrant cases that have been called to my attention since we passed the laws,” he said. “I think by and large that the districts are abiding by the law. There may have been some cases where things slipped under the radar of local authorities.”
In the meantime, Prosecuting Attorney Fletcher Long said he’s trying to reschedule a trial for former Helena-West Helena School Board President Raymond Simes, who has been charged with a felony for a violation of the state’s school board ethics standards under Act 1599 of 2001.
A grand jury indictment, issued in May 2006, accused Simes during 2003 and 2004 of “willfully and knowingly” participating in causing a contract for services to be entered into between radio station KCLT and the district when he was a School Board member, knowing that he was directly or indirectly interested in the contract valued at more than $ 5, 000.
Simes has pleaded innocent.
Auditors said the district paid $ 11, 825 to a radio station co-owned by Simes. The district was billed for broadcasts of athletic events and advertising, the auditors said. Auditors said the district didn’t get the approval of the state Education Department director for the transaction.
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