FC Board Not Acting Responsibly . . . Why?

As taxpayers know by now, the forensic audit was not approved by the board.

This blog applauds the efforts by Board Directors Chris Lauff, Jodi McKay and Leann Darnley to initiate an outside investigation of Fort Cherry’s finances.  All three voted for a forensic audit.  However, Tina Cottrill, Melinda Errett , Elmo Cecchetti, Brant Miller, Larry Heirendt, and Jamie White voted no.

For the past year the board has been mulling over the events surrounding the misuse of the district’s AmEx credit card by its Business Manager, Paul Sroka.  His direct supervisor, Robert Dinnen, did a shoddy job of investigating the incident and still has not provided the board with evidence that no district funds were spent to pay off the card.

Even if Sroka repaid the district for the inappropriate purchases, he still acted inappropriately and deceived the public and the board.

So why didn’t Cottrill, Errett, and the others vote for a forensic audit when there is clearly enough evidence of wrong-doing to warrant a forensic audit and outside investigation?

What would make the board members vote against doing the right thing?

Possibly, those who voted no fall into one of two groups:

• Complacent
• Afraid

The board, with legitimate concerns that should have resulted in a forensic audit, failed the taxpayers by voting down the motion.

Some of those who voted no may have done so because they have had positions on the board during the years of Dinnnen and Sroka's tenures.  This list would include Cecchetti, Heinrendt, Miller, and White.

In their complacency, could it be that they would be held culpable for any financial indiscretions that occurred during their time in office?  

This blog has discussed the board’s complacency in previous posts, but afraid?

What could board members possibly be afraid of?

That can be best summed-up in a quote from PSEA Attorney Todd Parks.  In 1997, Parks represented New Brighton School District librarian Marjorie McNie in a federal civil rights lawsuit against Dinnen, who at that time, was acting superintendent of New Brighton.  Speaking of NB board members and Dinnen, Parks said:

http://news.google.com/newspapers?nid=2002&dat=19970914&id=LyRWAAAAIBAJ&sjid=9kANAAAAIBAJ&pg=1334,2620819

It may be that Dinnen has brought his habit of using taxpayer money “to pursue . . .  personal and political vendettas against anyone who has the courage to challenge . . . numerous violations of laws, regulations and policies” to Fort Cherry and that Sroka is following his lead.

Since obtaining seats on the board, FC board members Cottrill, Errett, Darnley, Lauff, and McKay have been questioning Dinnen and Sroka’s actions.

So, why would Cottril and Errett vote down a forensic audit?

We can only assume that Dinnen, Sroka, or both have threatened the board with legal action, possibly for workplace harassment, if a forensic audit is pursued.

Did Cottril and Errett succumb to Dinnen and /or Sroka's threats?

Dinnen and Sroka are the two with the most to lose if an investigation ensues.  If they have nothing to hide, why are they not welcoming an audit?  If they are innocent of any wrongs, an audit would clear their names.

All discussion surrounding the forensic audit occurred in executive session, so the authors of this blog do not have proof that the board members were threatened.  However, the board’s inaction speaks for itself.

With all evidence pointing to the need for a forensic audit, for what other reason would the motion fail?

Even if you put the credit card issue aside, the district desperately needs a forensic audit. 

Here’s one recent incident that illustrates that need:

At the August 26, 2013, meeting, board member Darnley asked Sroka about a discrepancy between the Bills for Ratification and the July 2013 “Account Summaries” regarding the T Lee Carter Fund.  (Sroka’s “Account Summaries” page can be found here:  http://www.fortcherry.org/Page/11)

Sroka told Darnley that the discrepancy occurred because one of the checks did not clear and that there was a fee to transfer the money from the associated CD.

A fee to transfer money from a CD?  Really????!!!!!

With Darnley’s prompting, board treasurer Errett looked into the matter.  Turns out the fees were actually OVERDRAFT fees due to insufficient funds in the checking account.

So, Sroka, who is in charge of millions of our tax dollars, bounced a check.

Sroka, caught in the lie, changed his story and blamed Washington Federal for not transferring the money from the CD in a timely manner.

Even if that were true, wouldn’t  a competent business manager ensure that the money was transferred before cutting a check?

Furthermore, if you think this was a one-time occurrence, documentation proves otherwise.  Shown below are bank statements from 2010 and 2011 which show bounced checks from both the T. Lee Carter and the FFA Funds.

Record keeping , such as maintaining a checking account, is taught to FC students in Financial Math.   Debt and credit cards are also part of the curriculum.  Perhaps Sroka should sit in on a few classes.

So which will it be . . . forensic audit or playground? How about both?

In the last post the authors of this blog pointed out that money is available to pay for a forensic audit and an independent investigation.

In this post, the taxpayers will see that not only are funds available to pay for a forensic audit and an independent investigation, there’s probably enough surplus money in the General Fund to pay for the playground upgrade and more. 

Here’s why . . .

Fort Cherry administrators maintain a separate fund for technology purchases.  Each year the board approves the General Fund Budget, along with purchases which are to come from the Capital Projects Fund and the Technology Fund.  The Capital Projects and Technology Funds are in separate bank accounts from the General Fund.

In 2010-2011, the board approved $229,591 in technology expenditures.  Those purchases were to be paid from the Technology Fund.

Sometime during the 2010-2011 school year, Chris Lauff publicly questioned Paul Sroka about board approved technology fund purchases coming out of the General Fund instead of the Technology Fund.   At that same meeting, Sroka told Lauff that he would transfer the money from the Technology Fund back into the General Fund at the end of the fiscal year.

Let’s review:

• The board approved $229,591 in expenditures from the Technology Fund.
• Sroka used money from the General Fund to pay for the purchases instead.
• Lauff questioned technology expenditures coming out of the General Fund.
• Sroka told Lauff that the money would be transferred at the end of the year.

So, what’s the big deal?

• The money was never transferred.  The Technology Fund (held at Northwest Savings) remained intact, with interest credited, for the entire 2010-2011 fiscal year.
  
  
  

  July 31, 2010, ending balance is $708,526.94:

  
  

  

  
  

  July 4, 2011, ending balance is $712,087.35:

  

  
  
  
  
  
  
  

  Why does it matter?

  
  

  As stated in the last post, by law, the district must follow the budget as approved by the board.  In this case, the administration pulled $229,591 of expenditures that were not approved as General Fund expenditures from the General Fund.

  
  

  In addition, having $229,591 available in the General Fund for unapproved expenditures indicates a gross mismanagement of taxpayer funds.  Sure it’s always nice to have extra money available, but responsible budgeting dictates that revenues and expenditures balance out.  There should not be an extra $229,591 available in the first place.

  
  

  
  

  What does this mean?

  
  

  If the administration pads the budget in this manner, then more than likely money is available to pay for a forensic audit and outside investigation as well as playground upgrades.

  
  

  
  

  Why doesn’t the board just ask that the money be transferred from the Technology Fund into the General Fund now?

  
  

  The administration has not been truthful with the board concerning the 2010-2011 technology expenditures; and as of this date, the board has not required the administration to produce documentation to support their claims.

  
  

  At the June 3, 2013 budget meeting during the discussion of the 2013-2014 technology budget, Dinnen publicly stated that the board routinely spends around $160,000 per year on technology, except for the 2010-2011 year when “there were no purchases for technology due to the drastic cuts”.

  
  

  During the 2013-2014 budget hearings, Lauff asked Sroka for a list of technology expenditures for the past few years.  Here’s the total amount spent on technology each year, as presented to the board by the administration:

  
  

  • 2012-2013:  $176,777.99
  • 2011-2012:  $150,730.63
  • 2010-2011:  No Purchases
  • 2009-2010:  $92.922.92
  • 2008-2009:  $156,952.54

  
  

  How do the authors of this blog know the administration has not been truthful with the board?

  
  

  A resident, who is in possession of 2010-2011 General Fund bank statements (obtained through a RTK request), found $300,000 worth of checks written from the General Fund to pay for technology purchases (list of checks at the end of this post).

  
  

  This was brought to board members attention with this public comment at the June 17, 2013, meeting:

  
  

  At the last budget meeting, Mr. Dinnen stated that the board routinely spends around $160,000 per year on technology, except for 2010-2011 when “there were no purchases for technology due to the drastic cuts”.

  
  

  I am holding bank statements for the 10-11 fiscal year which were obtained through a RTK request submitted to the district.  In 2010-2011, the Technology Fund located at Northwest Savings remained intact, no expenditures at all.

  
  

  However, cancelled checks from the 2010-2011 General Fund account show a large amount of technology purchases.  According to these documents, which were obtained from the school district, from July 1 to October 31, there were over $214,000 in technology purchases paid for out of the General Fund. 

  
  

  I recall Chris Lauff asking Mr. Sroka about technology purchases coming out of the General Fund that year.  Mr. Sroka told him that he would transfer the money spent on technology from the Technology Fund back into the General Fund at the end of the year.  According to the 10-11 Annual Financial Report and the bank statements, that did not happen.

  
  

  I respectfully submit two questions to the board:

  
  

  If your administration is budgeting properly, how can you possibly have that much extra money in the General Fund to spend on items that were not budgeted for?

  
  

  Why isn’t your administration being upfront with you about the technology purchases made in 2010-2011?  Clearly, purchases were made even though Mr. Dinnen said there were none.

  
  

  
  

  In addition, this follow-up email was sent to board members:

  
  

  

  
  

  
  

  
  

  How did the administration respond?

  
  

  At the June 24, 2013, meeting, the administration admitted that there were technology purchases in 2010-2011, but Dinnen and Sroka claimed that the purchases were made with grant money.

  
  

  
  

  How did the board respond?

  
  

  The majority of the board accepted the administration’s excuse.  However, board member Leann Darnley asked Sroka for documentation supporting the administration’s claim that grant money was used.

  
  

  Although directly requested by a board member, Sroka never produced that documentation.

  
  

  Also, grant money or not, school code requires that the board approved Technology Fund purchases be written out of the Technology Fund.  Any grant money received would then replace the money used from the Technology Fund.  By law, administrators cannot override school code.

  
  

  It should be noted that Trisha Craig, who reports on all grants received by the district (no matter how minimal), never announced over $300,000 in grants awarded to FC during the 2010-2011 year.  Any grant or grants of that magnitude would have been a major achievement considering the cuts in state funding facing Pennsylvania school districts that year.  Such grants would also provide a significant increase in administrative pay – don’t forget, according to FC’s Act 93 Compensation Plan, administrators get 5% of grants they sign-off on – a potential $15,000 increase in administrative pay. 

  
  

  
  

  Can this situation be even more dismal?

  
  

  Actually, yes . . . back in May of 2011, near the end of the fiscal year that the administration pulled $229,591 or more from the General Fund to pay for technology, the administration convinced the board that cuts in federal and state funding as well as the low fund balance in the General Fund necessitated the need to furlough teachers and cut vital programs.  (So if the $300,000 was truly grant money, administrators were rewarded with a $15,000 pay increase while teachers and programs were cut.)

  
  

  

  
  

  
  

  
  

  Were the furloughs and cuts necessary?

  
  

  In May of 2011, when the curtailment resolution was adopted, there was $229,591 to $300,000 of taxpayer funds sitting in the Technology Fund that should have been transferred into the General Fund and used to retain Fort Cherry teachers and programs.

  
  

  Did the administration purposely drain the General Fund of hundreds of thousands of dollars to advance an agenda to eliminate teachers and programs?  (This was also discussed in a previous post:  http://www.fortcherryinfo.blogspot.com/2012/01/shell-game.html)

  
  

  FC needs an independent investigation into the credit card abuse as well as a forensic audit into the finances of the district.

  
  

  There should be enough money for the audit, investigation, and a playground upgrade as well.

  
  

  
  

      - - - - - - -

  
  

  List of checks written from the General Fund for technology expenditures:

  
  

  CHECK NUMBER	DATE CLEARED BANK	DESIGNEE	AMOUNT
  205017	7/27/2010	COMPUTER RESOURCES LLS (MMS SOFTWARE)	$3,475.00
  205033	7/23/2010	SUNGARD	$4,246.96
  205044	7/30/2010	WIRELESS GENERATION	$1,560.00
  205067	7/30/2010	ORBIT SOFTWARE INC.	$2,940.00
  205069	7/30/2010	SUNGARD	$1,297.92
  205144	8/11/2010	SUNGARD	$1,297.92
  205213	8/31/2010	CENGAGE LEARNING	$2,871.99
  205221	8/30/2010	DELL COMPUTERS	$835.14
  205232	8/31/2010	??? SOFTWARE COMPANY	$1,400.00
  205235	8/31/2010	GOV CONNECTION (IT SUPPORT)	$32,900.00
  205288	8/31/2010	SMART SOLUTIONS TECH. (SMART BOARDS)	$28,125.00
  205301	8/31/2010	VERNIER SOFTWARE & TECH.	$1,098.32
  205337	8/31/2010	SUNGARD	$1,297.92
  205212	9/2/2010	CDW GOVERNMENT, INC.	$13,522.00
  205219	9/2/2010	COMPUTER RESOURCES LLS	$2,622.00
  205262	9/3/2010	ONHAND SCHOOLS (SOFTWARE AND TRAINING)	$22,700.00
  205297	9/3/2010	THE UPGRADE PLACE	$1,045.00
  205423	9/22/2010	SMART FUTURES	$3,250.00
  205435	9/15/2010	NEW HORIZONS CLC PGH	$500.00
  205476	9/24/2010	RELIANCE COMMUNICATIONS	$2,967.25
  205482	9/24/2010	SUNGARD	$1,000.00
  205492	9/28/2010	A.V. LAUTTAMUS COMM.	$167.26
  205495	9/29/2010	BOZIC COMMUNICATIONS	$497.50
  205521	9/28/2010	BI TRONICS (PRINTERS)	$220.00
  205742	10/21/2010	QWEST BUSINESS SERVICES	$19.04
  205560	10/18/2010	MICROSOFT CORPORATION	$349.00
  205565	10/5/2010	SUNGARD	$1,297.92
  205648	10/15/2010	ACHIEVE 3000	$13,105.00
  205650	10/18/2010	APPLE COMPUTERS INC.	$17,134.10
  205660	10/18/2010	CDW GOVERNMENT, INC.	$9,455.50
  205658	10/14/2010	CARNEGIE LEARNING	$12,301.45
  205667	10/15/2010	DVS DIRECT	$15,494.00
  205678	10/18/2010	INFORMATION WORKS	$194.00
  205682	10/15/2010	LANCASTER LEBANON IU13	$3,995.00
  205724	10/18/2010	WIRELESS GENERATION	$5,285.00
  205726	10/19/2010	A.V. LAUTTAMUS COMM.	$75.00
  205780	10/20/2010	BOZIC COMMUNICATIONS	$3,990.00
  205823	11/2/2010	CDW GOVERNMENT, INC.	$994.00
  205883	11/2/2010	INFORMATION WORKS	$1,052.00
  205851	11/2/2010	ROSETTA STONE, LTD	$2,725.00
  205854	11/2/2010	SMART SOLUTIONS TECH. (SMART BOARDS)	$698.00
  205873	11/4/2010	BOZIC COMMUNICATIONS	$62.50
  205891	11/4/2010	INFORMATION WORKS	$179.00
  205913	11/5/2010	SUNGARD	$1,297.92
  205914	11/5/2010	SUNTEX INTERNATIONAL (ON-LINE MATH)	$1,249.50
  205951	11/12/2010	CDW GOVERNMENT, INC.	$7,999.55
  205961	11/15/2010	INFORMANT TECH INC.	$450.00
  205970	11/10/2010	PGH TECHNOLOGY COUNCIL	$99.00
  206003	11/17/2010	QWEST BUSINESS SERVICES	$16.84
  206005	11/17/2010	SUNGARD	$1,280.00
  206011	11/22/2010	CDW GOVERNMENT, INC.	$296.22
  206045	12/3/2010	AB CONSULTING	$111.00
  206047	11/29/2010	CDW GOVERNMENT, INC.	$1,723.00
  206068	12/3/2010	CDW GOVERNMENT, INC.	$23,550.30
  206098	12/6/2010	FOLLETT SOFTWARE CO	$106.67
  206112	12/13/2010	INFORMATION WORKS	$194.00
  206130	12/9/2010	SUNGARD	$1,297.92
  206140	12/14/2010	CDW GOVERNMENT, INC.	$2,271.00
  206155	12/13/2010	VISION OFFICE PRODUCTS	$269.45
  206218	12/22/2010	KC DISTANCE LEARNING	$7,356.00
  206256	12/27/2010	BOZIC COMMUNICATIONS	$725.00
  206259	12/28/2010	CIMA SOFTWARE	$1,018.22
  206269	1/5/2011	KC DISTANCE LEARNING	$836.40
  206333	1/12/2011	SUNGARD	$1,297.92
  206487	2/1/2011	BOZIC COMMUNICATIONS	$4,725.00
  296537	2/3/2011	INFORMATION WORKS	$218.00
  206630	2/16/2011	SUNGARD	$1,297.92
  206698	3/11/2011	APPLE COMPUTERS INC.	$5,609.00
  206703	3/9/2011	CDW GOVERNMENT, INC.	$308.00
  206708	3/8/2011	INFORMATION WORKS	$278.00
  206739	3/8/2011	SUNGARD	$1,349.84
  206741	3/8/2011	TREBRON COMPANY, INC.	$6,443.37
  206852	3/30/2011	PROSOFT	$1,494.00
  206864	4/1/2011	BOZIC COMMUNICATIONS	$275.00
  206892	4/5/2011	APPLE COMPUTERS INC.	$2,003.00
  206896	4/6/2011	CDW GOVERNMENT, INC.	$235.00
  206910	4/5/2011	SMARTED SERVICES	$2,248.00
  206916	4/6/2011	BOZIC COMMUNICATIONS	$512.00
  206926	4/5/2011	SUNGARD	$1,349.84
  206913	4/5/2011	VERNIER SOFTWARE & TECH.	$1,583.25
  206947	4/14/2011	A.V. LAUTTAMUS COMM.	$1,200.00
  206948	4/14/2011	BOZIC COMMUNICATIONS	$684.90
  206970	4/15/2011	LANCASTER LEBANON IU13	$31.50
  207061	5/4/2011	LANCASTER LEBANON IU13	$166.50
  207125	5/10/2011	SUNGARD	$1,349.84
  207150	5/31/2011	MONOPRICE, INC.	$280.20
  207185	5/17/2011	BOZIC COMMUNICATIONS	$326.00
  207250	6/15/2011	GREEN SCREEN WIZARD	$170.90
  207253	6/9/2011	INFORMATION WORKS	$949.00
  		TOTAL	$308,776.66