Audit of the Helen Y. Davis Leadership Academy Charter Public School
November 19, 2018 · Helen Y. Davis Leadership Academy Charter Public School · Read the full official report on mass.gov ↗
Published November 19, 2018 Audit covers July 1, 2014 – June 30, 2017 Under Suzanne M. Bump · 2011–2023
source
“DLA’s board of trustees made an unallowable payment of $117,743 for unused sick time to the school’s former executive director.”
Read the plain-English breakdown
This is a Massachusetts State Auditor performance audit of Helen Y. Davis Leadership Academy Charter Public School covering July 1, 2014 through June 30, 2017.
“This report details the audit objectives, scope, methodology, findings, and recommendations for the audit period, July 1, 2014 through June 30, 2017.”
The state education department asked for the audit to check whether the school’s board was properly overseeing school operations.
“This audit was initiated at the request of the state’s Department of Elementary and Secondary Education (DESE) and was intended to assess whether the school’s board exercised proper oversight of school activities.”
The issues matter because public school money may have been spent improperly or without enough proof, reducing money available for students and school needs.
“In making this excessive and unallowable payment to the former executive director, the board unnecessarily used the school’s limited funds, which could have been used for other school-related purposes.”
If you are a taxpayer, parent, student, or community member, this report shows whether public education funds were protected and whether school leaders followed rules meant to ensure accountability.
“Commonwealth charter schools are funded through deductions from the local aid accounts2 of the sending districts (the districts in which the students reside) and are generally based on the per-pupil tuition rates of the sending districts.”
The auditor concluded that the board did not provide adequate financial oversight and did not fully comply with several legal, training, records, and term-limit requirements.
“Did DLA’s board of trustees provide adequate financial oversight over school expenditures?”
The audit recommended tighter controls, better documentation, no unauthorized employment payments, stronger board compliance tracking, better meeting minutes, and adherence to board term limits.
“The board should not approve any employment-related payments to a person unless the payments are specifically authorized under the person’s employment contract.”
The problems were significant enough that DESE later renewed the school’s charter but placed it on probation and required major improvements.
“After our audit period, in February 2018, DESE renewed DLA’s charter and placed the school on probation with conditions requiring major improvements in the board’s governance and financial oversight and the school’s academic program and performance.”
A “performance audit” means auditors checked how well the school and board followed rules, managed money, and carried out responsibilities, rather than just reviewing financial statements.
“We conducted this performance audit in accordance with generally accepted government auditing standards.”
2 figure(s) pending source verification - not shown
What the Auditor checked
- Did not comply Did DLA’s board of trustees provide adequate financial oversight over school expenditures?
- Did not comply Did the board of trustees operate in compliance with Section 89(u) of Chapter 71, Sections 27 and 28 of Chapter 268A, and Sections 18–25 of Chapter 30A of the General Laws and DLA’s bylaws as they relate to term limits for board members?
What the Auditor found
Why it matters: The payment used limited school funds that could have been used for other school-related purposes.
Standard: The former executive director’s employment contracts did not allow carryover of sick days before fiscal year 2016, and 603 CMR 1.06(1) requires charter school boards to fulfill fiduciary responsibilities. ( Section 1.06(1) of Title 603 of the Code of Massachusetts Regulations )
1 recommendation
- The board should not approve employment-related payments unless specifically authorized by the employment contract.agency: disagreed
Agency response & Auditor reply
Agency: "For the above reasons, the one-time sick leave payment to the ED was made pursuant to unique circumstances not previously encountered by DLA, but was nonetheless within its authority as a charter to tender."
Auditor: "We do not agree with DLA’s board of trustees that its decision to provide its former executive director with a one-time payout of $117,743 for her purported unused sick time was consistent with its duties of care and loyalty."
Why it matters: Excessive compensation reduced funding that could have supported students’ academic performance.
Standard: 603 CMR 1.06 requires boards to hire and evaluate administrators and hold them accountable for specified goals. ( 603 CMR 1.06 )
2 recommendations
- Develop and document a formal process for evaluating executive director compensation using comparable charter school positions.agency: disagreed
- Tie executive director compensation increases to measurable performance outcomes, including student academic performance.agency: disagreed
Agency response & Auditor reply
Agency: "The Board does not believe that the salary was ”excessive” when the former ED’s entire body of work is considered."
Auditor: "OSA believes that the compensation DLA gave its former executive director under her most recent contract was excessive."
Why it matters: DLA could not be certain credit card expenses were necessary and school-related.
Standard: DLA’s Fiscal Policies and Procedures Guide required credit card charges to be school-related, supported by documentation, reconciled, and approved. ( Section 209 of DLA’s Fiscal Policies and Procedures Guide; Section E(2) of DESE’s Charter School Administrative and Governance Guide )
2 recommendations
- Establish monitoring controls over credit card policy compliance and credit card statement reconciliation.agency: already implemented
- Follow DESE guidelines on nonpayment of state sales tax and monitor compliance.agency: already implemented
Agency response & Auditor reply
Agency: "DLA currently has established monitoring controls to ensure adherence to its policies and procedures related to the use of its credit cards and reconciliation of credit card statements."
Auditor: "Based on its response, DLA is taking measures to address our concerns in this area."
Why it matters: The advances risked loss of public funds if employees left before repayment and created a risk of abuse.
Standard: DLA’s Fiscal Policies and Procedures Guide prohibited lending money or extending credit to private or related individuals. ( Section 202 of DLA’s Fiscal Policies and Procedures Guide )
2 recommendations
- The board should ensure it is aware of school policies.agency: already implemented
- Management should stop salary advances and ensure school funds are not used contrary to school policy.agency: already implemented
Agency response & Auditor reply
Agency: "To the extent the practice of providing salary advances existed, it has been permanently discontinued."
Auditor: "The use of school funds to make salary advances to employees is prohibited by DLA’s policies and, in OSA’s opinion, presents a higher-than-acceptable risk of abuse of school funds."
Why it matters: Transactions may not have been recorded, and inappropriate transactions could have gone undetected.
Standard: DLA’s Fiscal Policies and Procedures Guide required monthly reconciliation of cash receipts, deposits, bank statements, and general ledger control accounts. ( Section 1201(H) of DLA’s Fiscal Policies and Procedures Guide; Section 1202(G) of DLA’s Fiscal Policies and Procedures Guide )
2 recommendations
- Gain access to the PayPal account, review audit-period transactions, and reconcile the account to DLA’s financial records.agency: partially agreed
- Establish PayPal administration policies, procedures, and monitoring controls.agency: agreed
Agency response & Auditor reply
Agency: "DLA has since deleted all known PayPal accounts for security reasons."
Auditor: "During our audit period, DLA did not monitor or reconcile its PayPal account, and as a result, there is a higher-than-acceptable risk of improper transactions in this account."
Why it matters: DLA could not be certain payments were for authorized school-related expenditures.
Standard: DLA’s Fiscal Policies and Procedures Guide required valid accounts payable transactions to be supported by documented vendor bills, receiving reports, or other approved documentation. ( Section 408 of DLA’s Fiscal Policies and Procedures Guide; Section 1601(B) of DLA’s Fiscal Policies and Procedures Guide )
1 recommendation
- Develop monitoring controls to ensure vendor payments follow established policies and procedures.agency: already implemented
Agency response & Auditor reply
Agency: "DLA management has developed monitoring controls to ensure that all vendor payments are processed according to established policies and procedures."
Auditor: "Based on its response, DLA is taking measures to address our concerns in this area."
Why it matters: Board members may not have been aware of their obligations, putting the school at risk of losing its charter.
Standard: DESE guidance requires trustees to file financial disclosures, acknowledge conflict-of-interest law summaries, and complete conflict-of-interest training. ( Section 5.2.2 of DLA’s bylaws; Chapter 268A of the General Laws )
1 recommendation
- The governance committee should routinely assess and ensure board member compliance with all training and filing requirements.agency: already implemented
Agency response & Auditor reply
Agency: "All current Board members are in compliance with mandated financial and conflict-of-interest reporting and training requirements."
Auditor: "Based on its response, DLA’s board is taking measures to address our concerns in this area."
Why it matters: Stakeholders may not be able to understand the board’s decision-making process, and transparency is reduced.
Standard: Section 22(a) of Chapter 30A of the General Laws requires accurate minutes of all meetings, including executive sessions. ( Section 22(a) of Chapter 30A of the Massachusetts General Laws )
1 recommendation
- Recruit and retain a board secretary to ensure sufficiently detailed meeting minutes are created.agency: partially agreed
Agency response & Auditor reply
Agency: "The Board has adopted the [OSA] recommendation and has already acquired recording equipment to record Board meetings to ensure greater accuracy of minutes."
Auditor: "However, we again recommend that it recruit and retain a secretary to ensure that sufficiently detailed written reports of all meetings are created, as required by Section 22(a) of Chapter 30A of the General Laws."
Why it matters: DLA may have denied other community members and board members opportunities to serve in leadership roles.
Standard: DLA’s bylaws limited officers to two consecutive two-year terms in the same office. ( Section 4.2 of DLA’s bylaws )
1 recommendation
- Do not allow board members to serve terms longer than those established in the bylaws.agency: partially agreed
Agency response & Auditor reply
Agency: "Having that in mind, the Chair anticipates that the term expiring on June 30, 2019 will be his last term of service."
Auditor: "Going forward, DLA should not allow any of its board members to serve a term that exceeds the period established in its bylaws."
Verified dollar findings
Money paid out that the audit found should not have been - overpayments, unallowable and nonreimbursable charges, improper claims.
Identified dollar findings that do not fall in a named band.
Prior findings revisited
"Since 2013, the Department of Elementary and Secondary Education (DESE), through its charter renewal process, has identified a variety of issues with DLA’s operations, including board governance, and has instructed the school to take measures to correct these deficiencies (see Appendix)."