Lessons from Fox School District in Trust
Last night the Fox School Board met to address a single issue. Should the district request a state audit? The recent resignation of Fox Superintendent Diane Critchlow, in light of a libel lawsuit for comments made on-line ,has removed a mask that gave the district the appearance of success and called into question the fiscal operations of the district. The new CFO John Brazeal said that the previous board voted on things as matters of faith [in the Superintendent]. It turns out that faith was misplaced.
A brief background: Critchlow had been Superintendent of Fox since 2004. During her nine years in that position her salary doubled to become the third highest in the state at $260,598. This, despite the fact that neither enrollment nor student scores had increased significantly in that time. The district, whose student population of 11,600 students, had all the outward appearances of normalcy. Realtors and apartment managers confidently told prospective buyers that this was a really good school district. But that mask began to fall off when district, which is not a hold harmless district and therefore vulnerable to state income fluctuations, found themselves with a budget shortfall of almost $7 million. District leaders began the difficult task of finding $7 million in cuts, layoffs and furloughs necessary due to a number of factors including the increasing costs for administrator pay. An on-line discussion took place on a Topix website where inflammatory and libelous comments towards citizens who were criticizing the administration at Fox were traced back to Critchlow’s computer.
Critchlow retired amid the scandal and an investigation is still on going. Her contract calls for the financially struggling district to pay almost $12,000/month for her pension.
Last night Brazeal had even more bad news for the Fox School Board. His investigation into the finances at Fox in the last month revealed several irregularities, illegal payments and overall poor fiduciary controls. That is why he was recommending the board request an audit. Even if they did, it was going to be a difficult task. Brazeal reported that Critchlow had begun shredding documents early on so the paper trail will be difficult to follow. He hit the audience with another blow telling them that individuals inside the administration had also been working to destroy digital records. He found instances of documents altered after the board had voted on them. As if the audience wasn’t reeling enough from these revelations, he also said he found a culture of widespread intimidation of those who might speak out about what was really going on in the district.
All this from a Superintendent who justified her abnormally large pay increases by telling the board they needed to pay for her expertise, that quality management came at a price. Unfortunately the board believed her, as do many school boards who simply operate by taking the word of their Superintendent for granted.
There is an old Russian proverb “Trust but verify.” Good advice for school boards. One that would have served Fox well over the last two decades.
Board member Cheryl Herman noted that the district had been audited fifteen years ago. That would have been when Claire McCaskill was state auditor. They were given recommendations that were supposed to fix their accounting problems. It now appears that that audit did not go very deep, nor were the recommendations sufficient to address the problems they now have like illegal use of the district credit card to make a PAC donation or purchase personal items for district personnel. The financial statements themselves may have been correct, but the funds were being misused and there weren’t enough internal controls to prevent this. The current state auditor, Tom Schweich, with his rapid response team and 90 day follow up program, should provide better information for Fox.
Brazeal’s memo to the Board cited several improprieties that he is looking into:
- Financial transactions that appear to be of a personal nature rather than for a district purpose
- Unauthorized rates of compensation
- Misuse of district property
- Transactions that are potentially illegal
- destruction of physical and electronic records
- Irregularities related to the issuance of the most recent General Obligation bonds and te disposition of the bond funds.
The new CFO is working to recoup some of the district’s losses and implement some basic accounting measures to provide checks and balances going forward. He and his team are evaluating several options to try to get redress from the retired Superintendent for misappropriated funds. The PAC has already returned the money paid them from the district credit card since it would be illegal for them to accept it. He plans to make several recommendations for new policies for district finances. One that he may want to consider that is being used by many school districts around the country is the Open Checkbook program where all district checks are available for public viewing.
The board voted to sign a letter requesting a state audit. They also tabled discussion of the severance package for Mrs. Critchlow until their internal audit has been completed. This received a large round of applause from the audience as did the comment by Board member Dawn Mullins who said the board wanted to ensure that they created an environment where people felt safe about speaking up.
The extent of the damage caused by an unchecked Superintendent in Fox could be great. That may be an exceptional case, but the dynamics of the board and the Super there are not unusual. Far too many of our Superintendents operate as if the district were their own fiefdom and bristle or are openly hostile towards board members who question them. Board members should remember Fox School District when that happens and question what deep dark secrets their Super could be hiding.