INDIAN RIVER COUNTY — The Indian River County School District last week issued a statement based on an internal investigation that claims a $2.3-million budget error was due simply to inept accounting.
That flies in the face of Superintendent Mark Rendell’s attack on Assistant Superintendent Carter Morrison over the snafu. At a July 31 public hearing on the school district budget, Rendell portrayed himself as the hero and Morrison as the villain, claiming he had just discovered shady budgeting practices perpetrated by Morrison – even though those same practices were pointed out to Rendell and the board twice over the past two years.
Rendell claimed Morrison, without his knowledge, transferred $2.3 million into 12 school accounts for instructional salaries, even though teaching positions at the schools had already been funded in the budget. Rendell said Morrison told him he was also preparing to add funds for raises.
The money, thus diverted from the general fund, makes the district look poor during the year, so it can deny employees raises, charge them more for health insurance and delay repaying its debt to the charter schools.
At the end of the year, the unused funds pour back into the general fund, giving the district a prosperous profile when its mandatory reserves are evaluated by the state.
Indian River County School Board Chairman Shawn Frost played along with the charade, praising Rendell for exposing the “shell game.” Other board members stayed silent.
Although Rendell proclaimed Morrison guilty July 31, the district has since said a preliminary investigation must rule guilt in or out before it divulges any information on Morrison, citing a public records exemption in state law allowing them to go dark for 60 days.
Two documents, if considered in the investigation, would widen the dragnet beyond Morrison. The teachers’ union and the five charter schools put Rendell and the Board on notice in 2016 and 2017 that phony budgeting had been standard operating procedure for years. Only Board Member Laura Zorc has gone on record denouncing the practice, during last year’s budget hearings.
After a judge ruled the district owed the charter schools $3.3 million in withheld tax revenue and interest, the charters’ attorney, Shawn Arnold, in a July 31, 2017 letter to School Board Attorney Suzanne D’Agresta, argued the district was not negotiating repayment of its debt “in good faith.”
“The stated purpose that the District cannot afford to pay its debts simply isn’t equitable nor reality for numerous reasons,” Arnold said. “These reasons include that the document shared by you is not the official budget of the District, rather it is a budget prepared by staff but not approved by the School Board.”
Arnold’s statement indicates D’Agresta may have been a participant in presenting false budgets.
“Moreover, the Charters are frustrated that this proposed budget is the second time that the District has made representations either in court or in correspondence to the Charters that it is short on monies, when the truth shows otherwise,” Arnold continued.
Arnold accused the district of hiding money in the same accounts where Rendell claims Morrison hid $2.3 million – instructional salary accounts. “Compensation for positions were overstated in relation to actual costs . . . The charters suspect. It is the modus operandi of the District to engage in [deceptive accounting] as well as other habits, in the preparation of the District’s budget.”
The Indian River County Education Association – the teachers’ union – presented the same arguments to the board at an impasse hearing, Dec. 6, 2016. The district had money it could put in the health insurance fund, which was $7 million in deficit due to poor management, the union argued.
Graham Picklesimer was then the union’s Treasure Coast Unit Director. He showed the general fund balance far exceeded projections. He, too, pointed primarily to instructional salaries as a favorite hiding place for money, with excess expenses budgeted but monies never expended. He also pointed to other funds used to hide money.
Their arguments did not prevail. The employees’ premiums skyrocketed and the board said it would pay off the $7 million health insurance deficit over four years, but now seems set to renege on the third payment. Similarly, the charters’ debt is on a four-year payment plan, the district making the schools wait for their money.
Rendell and board members were asked to respond to Rendell acting shocked and blaming Morrison for practices brought to light twice over the last 18 months. Only Zorc responded.
“I see this as a common district practice to circumvent the board’s authority to fund items that might not have made it through board scrutiny,” Zorc said. “Drilling down to find this hidden money is a task I’ve taken on, [which] is finally coming to light after two years of consistently voicing my concerns.
“I am very pleased that the superintendent is willing to join me in acknowledging we need to take a closer look at the school district numbers.”
