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REBECCA CATALANELLOAn audit of the Language Academy Charter School cites poor recordkeeping and cash flow problems.
NEW PORT RICHEY - One of Pasco County's newest charter schools is barely keeping up with its bills and could face closure if its spending habits don't improve, district finance officials said Friday.
The 2-year-old Language Academy Charter School is under review by the Pasco County School District. The focus is chiefly on the school's poor financial recordkeeping, as detailed in a 45-page audit report submitted to the School Board this week.
"We look at it as, they're not going to have the money to operate," said Olga Swinson, district finance director. "I think part of it is a cash flow problem."
Charter schools are privately run and publicly funded, but local districts are responsible for ensuring charters are in compliance with state and federal law. Another charter school in Pasco, Deerwood Academy, closed last fall amid its own financial difficulties.
Gary Carson, the Language Academy's director and board president, said many of the problems cited by the district are bureaucratic reporting issues that have more to do with meeting paperwork hurdles than mismanagement. Carson said that the 140-student school is expecting to grow by 40 to 60 students next year, expand to a second campus and resolve some of the financial issues with an influx of money from the additional enrollment.
"The key to this whole thing is that, educationally, we are doing a good job," Carson said Friday.
With an overall budget this year of about $823,500, the Language Academy spent $270 in December alone in fees for overdrawing its bank accounts, said Mary Tillman, the district finance manager who oversees internal audits.
Right now, $200,000 in state-supplied start-up money is keeping the school afloat financially. But once that money is expended, the school will have to survive on the roughly $5,000 per year it gets for each student.
But Carson said the money from an anticipated 40-student enrollment increase would compensate for that loss.
"Yes, I think they've got time to grow their way out of their problems," said Max Ramos, the district's charter school liaison. "But it would take better business practices to do it."
Before it closed, Deerwood officials held out hope that additional enrollment would pull in dollars needed to keep the campus afloat.
But district administrators cautioned Friday that they aren't making any parallels between the Language Academy's circumstances and the issues that riddled Deerwood's last two years: a criminal investigation led to the arrest of a former Deerwood employee who was charged with 75 crimes after $100,000 was discovered missing.
"Nothing has come to our attention that would make us think this is like Deerwood," Swinson said.
"We're not seeing phony invoices like we did with Deerwood," Tillman added.
Some of the accounting problems the district did identify were:
The school made purchases without first drafting purchase orders.
Bills were frequently paid after they were past due.
Employees were paid without taxes being withheld, a finding Carson firmly disputes.
Among those payments, the report said, was a $15,000 bonus for Carson and an additional $500 every pay period, both of which were approved by the school's board. Carson's annual salary was $34,996 before the bonus, Tillman said and salary documents showed.
Carson said the salary change was not a true "bonus" but was made after the school lost its administrator in February 2003 and he assumed the additional leadership responsibilities.
The school had loans outstanding of more than $50,000 to Westminster Presbyterian Church and to individuals. The school rents its space from the church, which Carson pastors.
Carson said he plans to step down as director of the school in the fall so that he isn't wearing so many hats in relation to the school's oversight. He will remain president of the school's board of directors.
Tillman and Swinson said that based on the findings of the Dec. 11 audit and subsequent information Carson provided, district administration is poised to recommend Tuesday that the School Board withhold about $19,200 from the school. The money is normally earmarked for such things as instructional materials, technology and teacher recruitment.
The school must provide proof that it is spending that money appropriately.
So far, Tillman and Swinson said, they have not yet seen a board-approved budget for the charter school, which all schools are required to have.