The long-delayed 2016 state audit of the Richard Allen charter schools was released Thursday and features five findings against the schools or their leaders, including a referral asking the Ohio Ethics Commission to review the relationship between the school and its management company.
“The arrangement between the management company and the school appears to be a violation of (Ohio law) as the management at the school has an interest in the affairs of the management company,” the audit documents say.
Michelle Thomas has served as both superintendent of Richard Allen Schools and director of the management companies (IMR and later EMDG) that were contracted to run the school’s day-to-day operations. The audit says school and management company funds were commingled, and the management company sometimes “benefitted at the expense of the school.” The audit says Thomas’ stepfather, Earl Harris, nominated people to the school’s governing board.
In the audit, Richard Allen Schools offers a written response objecting to the auditor’s finding. They claim the board of the school, of which Thomas is not a member, independently entered into a contract for IMR to run the school, and that contract made IMR responsible for operation of the School, including hiring a superintendent.
But the auditor’s office responded with a “conclusion” that “the Richard Allen Schools and the schools’ management company, Institute of Management and Resources (IMR) are managed by the same group of individuals.” They cite IRS forms and school financial statements to support their claim.
Another state finding says the school illegally overpaid its governing board members by a total of $14,850 in 2015-16. Ohio law limits school board members to $125 in pay per meeting. Richard Allen’s school board held six meetings that year, at which they discussed general operation of the chain’s four schools, according to the audit. But school officials argued in their response to the audit that each meeting counted as four meetings because of the four different schools.
The auditor’s office disagreed and has issued findings for recovery of $1,650 each against Alphonse Allen, Michael Brown, Gerald Cooper, Wanda Mills, Lonnie Norwood, Rhonda Ragland and Kelly Vaughn (who attended all six meetings), findings of $1,375 each against Dixie Allen and Laquetta Cortner (who attended five), and a finding of $550 against Mia Wortham-Spells, who attended two meetings.
A “joint and several” finding for recovery of the total amount of $14,850 was made against Brian Adams, the schools’ treasurer at the time.
“Community school leaders are not entrusted to their positions to fill their pockets, while ignoring the law,” Ohio Auditor Keith Faber said in a statement Thursday. “These are taxpayer dollars and must be spent appropriately and legally.”
History of problems
The audit release comes almost three months after a Dayton Daily News investigation of the Richard Allen schools uncovered several issues. The state attorney general had sued the school’s previous management company (IMR) and its leaders for $2.2 million that it said was illegally spent.
That lawsuit was delayed when IMR filed for bankruptcy. But the attorney general’s office was unaware, until informed by the Dayton Daily News, that former IMR director Michelle Thomas had simply formed a newly named company (EMDG) and was still running the schools, out of the exact same office.
Ohio law says, “No person shall … operate the community school (if) the person owes the state any money …”
“You can’t change hats and change names to comply with the law, and it appears that may have been going on here,” State Sen. Peggy Lehner said earlier this year.
In recent years, Richard Allen has technically operated four schools, although they are located on only three sites — Richard Allen I, Richard Allen II and Richard Allen Prep at 184 Salem Ave. and 627 Salem Ave. in Dayton, plus Richard Allen III at 1206 Shuler Ave. in Hamilton.
In 2018, the state’s Office of School Sponsorship terminated its sponsorship contracts with all four Richard Allen Schools, but the schools signed on with a new sponsor, St. Aloysius Orphanage. They continued operating all three sites, but for state identification purposes, they merged into just two schools — Richard Allen Prep in Dayton and Richard Allen Academy in Hamilton.
Other audit findings
** Pensions: The 2015-16 state audit could not confirm the accuracy of the school’s share of pension liability because IMR did not turn over their general ledger to reconcile amounts.
But the audit said there were “variances” totaling $30,625 between the employee contribution amounts listed in the payroll records and the employee contributions remitted to the state retirement systems. There were also variances totaling $14,664 for the school’s “employer” pension contributions.
** Financial errors: The audit identified a series of errors in the schools’ financial statements. These included reporting more than $2 million in management fees, pension expenses, credit receipts and cash payments in the wrong categories, resulting in totals being overstated or understated by large amounts.
** Withdrawn students: The audit said the Richard Allen III school violated Ohio law by failing to withdraw students from their enrollment list within 30 days after the students had been documented as enrolling in another school. In five cases of the 25 that the auditor checked, the students were not withdrawn until 100-106 days after the school received a request from another district. State funding for schools depends on enrollment numbers.
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