In February, we contacted Vermont auditor Doug Hoffer’s Whistleblower Line, requesting that they conduct an audit of our newly unified district referencing the following well-established red flags for fraud:
- The district refused to fulfill public records requests for credit card statements for four credit cards for which vendors were all redacted on board warrants (the packets of expenses for the board to review and approve) and for consulting contracts and invoices.
- The district improperly recorded and reported multiple employee severance payments as payroll, impacting our tax rates, violating GAAP and GASB accounting rules and masking these expenses from board and public view.
- The district moved to an out-of-state auditor that dramatically curtailed audit management reports (where financial control and audit issues are raised).
- The district dramatically contracted board warrant review and approval from the standard minimum of three board members for each of our six merging boards to a single board member for the entire unified district.
- The district submitted grossly distorted staff-to-student ratios for our schools to the Agency of Education (AOE) and has failed to correct statewide news articles inaccurately fingering Fayston School (a school they are targeting for closure) for gross inefficiency on the basis of their misinformation.
- When confronted with the inaccurate data reported statewide, the district misrepresented the source of the incorrect data as the Agency of Education (AOE) and then fabricated backdated communications requesting corrections (as revealed by a Public Records Response from the AOE).
- And, finally, and most consistently in cases of public fraud, the district has aggressively attacked and disparaged anyone pressing for basic transparency and accountability.
These are red flags for fraud, recognized as such by anyone who has served as a corporate executive, as Seth has for many years, but also as clearly set forth in many risk management frameworks. Of the New York state comptroller’s list of Management Red Flags (NY gets top marks for audit practices nationally and we could find no Vermont framework), our district ticks off at least seven of them. But, do you really have to be experienced in expense fraud and risk management to see a problem with the above behavior and lack of controls?
The case for being very concerned builds when you consider the following:
- The HUUSD Board has refused to take action with regard to any of the aforementioned issues and has backed the administration’s decision to not fulfill public records requests for district expenditures that the board should be reviewing as part of its fiduciary responsibility and which we are all clearly entitled to by law. Why are warrants getting approved when what is being purchased and from whom is redacted?
- How is in our interests for the HUUSD and board to undermine access to basic public information and dramatically and irresponsibly reducing financial oversight of our $36 million school district? This is clear evidence of a captive board, even if some members of that board don’t realize it or appreciate its significance.
- Why would a public school district be so hostile to basic financial transparency and oversight? There is really no acceptable or ethical reason that we can identify. We made our initial public records requests out of a concern that central office may be playing it a bit fast and loose in the wake of reduced budget detail, financial reporting and oversight. The refusal to provide the most basic expenditure information in response to those requests, however, raises a completely different issue, the prospect of misuse of public funds.
With Act 46, which mandated district consolidation, we totally disrupted and dramatically contracted school district governance. This latest in a series of education mandates from Montpelier introduced a whole host of risks to our school districts, not the least of which being effective financial oversight. And, yet, when we sought the aid of state agencies to restore reasonably transparency and accountability in our newly unified district, we got no help from Montpelier. Vermont auditor Doug Hoffer even when went so far as to give a voluble thumbs up to all the above red flags for fraud and reprise red flag No. 7: attacking and disparaging those who seek basic transparency and accountability, while violating his own Whistleblower Policy in the process.
Transparency and accountability are not strengths here in Vermont and the fact that Montpelier won’t help us means little other than there are more tax dollars at work – just not for you. In the Center for Public Integrity’s most recent State Integrity Report, Vermont earned a D- overall, with an F in Public Access to Information and an F in Executive Accountability. Of course, lack of both features prominently in the ongoing Jay Peak EB-5 fraud case. So, we have concluded it is really up to the public to get any district issues addressed reasonably promptly. The courts are an option, but not a quick one.
So, do you think we should be concerned about possible misuse of public funds in our district? Do you think we should have access to expenditure data and have robust financial oversight of our $36 million public investment? Do you think our superintendent should be free not to provide access to public records and to attack and disparage those who seek district transparency and accountability? Does anyone not on the current HUUSD Board and without direct interests in avoiding accountability think we don’t need to demand a credible, independent audit immediately? To us it is a clear necessity.
While attacking those who advocate for transparency and oversight is a very effective strategy to avoid both, this is true only until a critical mass of people stand up to insist upon them. We have done what we can. It is time for our communities to insist that our elected representatives actually protect and serve our interests rather than those of the undeniably dishonest and hostile administration which it was elected to oversee.
Spear and Henry live in Fayston.
