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December report on Upshur County Schools takeover reveals more than $800,000 in improper payments

CHARLESTON — The Upshur County school system has repaid more than $800,000 in funds that were allegedly used inappropriately during the COVID-19 pandemic, according to a Special Circumstance Review Update provided to the West Virginia Board of Education on Wednesday.

Most of the funds in question involved child nutrition programs, while others were used for improper travel and to pay employees for out-of-calendar days. The report also identified deficiencies involving local policies, personnel, levy funds and bidding processes.

A federal investigation remains ongoing.

The West Virginia Department of Education seized control of Upshur County Schools in June after a routine report that questioned whether summer pool passes were a valid use of federal funding grew into a larger investigation into the finances of Upshur County Schools. In the wake of the takeover, state superintendent David Roach and deputy superintendent Dr. Sara Stankus – who was the Upshur County Schools superintendent during much of the period in question – both left their positions with the WVDE.

Jeff Kelley, the state Officer of Educational Accountability, told board members Wednesday that Upshur County has already repaid all of the money requested and is making good progress in updating its policies.

“Upshur County Schools has been proactive in seeking professional development opportunities in the areas of noncompliance,” Kelley told the board Wednesday. “They have replaced and returned the money that’s been requested … Upshur County Schools has begun developing the process for reviewing and updating county policy, bringing it all up to speed. They worked in conjunction with the offices here to assess the certification and licensure of staff. They’ve also worked with the Office of Finance to get the technical systems they need to work through these noncompliance items.”

Christy Miller, who was appointed superintendent of Upshur County Schools by the state board over the summer, said that repaying the funds has cut into the money the county has for emergencies.

“It’s $816,754.13 to be exact,” Miller said. “That figure has been on my mind since I’ve received the letters. When we were looking at the payback of that and what impact that was going to have on the budget, it does put us back into the range of thinking about perhaps being on the [financial] watchlist again because it will put us below the recommended amount of dollars to have set aside for emergency situations.”

Miller told the board that the levy call, which will appear on the May 2023 Primary ballot, will be focused on student needs. She is currently working with Bowles Rice on the precise language for the levy.

“The focus of this levy will be on students and their needs,” Miller told the state board. “In the past, I believe that some of the things that have been on the excess levy, which failed back in November 2022, perhaps did not have the necessary focus on students.”

With the bulk of the financial investigation behind them, Kelley said the focus moving forward will be on academic achievement.

“When the conversation starts to move from operations to academic achievement, that means we’re getting traction,” he said. “And it’s right here, right now… I expect the conversation to be much more about kids and teaching and learning and less about all this other stuff.”

Some focus areas will be staffing, attendance and transportation.

“The next steps are obviously to continue to address the noncompliance items listed,” he said. “[But also] looking at busing routes for efficiency. Looking at measures to positively impact staff and student attendance. Looking at complaint procedures. And, unfortunately, it’s about to be staffing season, so to look at efficiency in the areas of overages and how school staff were used, and are they being used in the most proficient manner?”

The 20-page report itself identified six primary areas of noncompliance. A link to the full report can be found at the bottom of this story.

Federal Programs

Food and beverage expenses for conferences and overnight travel for nearby stays are not allowed under federal funding rules, according to the document. The review team found expenses at Stonewall Resort, CJ Maggies and a local bed and breakfast that must be repaid.

The report also identified issues related to the purchase order for the 2021 Model Schools Conference.

“The registration list included an individual that does not appear to be an Upshur County Schools employee,” the report states. “Additionally, the registration list included individuals who, based upon their job titles, should not have attended a Model Schools conference being paid for with Title II funds. A charter bus appears to have been reserved for travel to the Model Schools Conference but was later cancelled. As a result, the district paid a $250 cancellation fee, which is a violation of WVBE Policy 8200.”

Another issue involved a “significant amount of federal funding” that was used to pay out-of-calendar days for employees.

“These payments were paid at rates substantially higher than the individual’s normal daily rates,” the report notes. “These payments were not board approved and were not supported by records showing actual time worked. In the case of the three 261-day employees, they were already being paid under their normal contract to work those days and received additional federal compensation totaling $75,100.”

To correct the issues noted under federal programs, the county will have to refund $221,394 in unallowable expenditures related to federal programs and move $122,485 to local funds.

“The WVDE has requested a refund of all payments made by Upshur County Schools for unallowable expenditures,” the report states. “This will require a check to be remitted in the amount of $221,394.12 made payable to the WVDE. These funds will be returned to the U.S. Treasury as the grant awards they are associated with have expired. Unallowable expenditures on non-expired funds will require $122,485.33 to be moved to non-federal funds.”

Child Nutrition

Meal counts that could not be confirmed over the summer of 2020 totaled $348,340, which must be repaid, according to the report.

“Records received and reviewed by the WVDE on August 22, 2023, included meal count claims – such as bubble sheets used for point-of-service documentation,” the report states. “The WVDE had received reports regarding concerns of meal boxes made available during Summer 2020. Reports ranged from adults being given meals to extra meal boxes being disposed of in bulk. While there were several bubble sheets and other attempts to track meal boxes that were made available through bus routes and pick-ups at the county warehouse, records were incomplete for Summer 2020.”

The report also identified improper child nutrition expenses related to the purchase of iPads and Macbooks, food from Fish Hawk Acres and Aladdin Food Services, and overclaiming at-risk snack and supper programs.

The school system must repay $429,313 in federal funds related to child nutrition and replace an additional $43,080, according to the report.

Policies and Procedures

The report identified several areas where policies were lacking, including the use of P-Cards, travel, purchasing/procurement, leave, internal controls, conflicts of interest and others. The county has already begun updating the necessary policies, according to the report.

Personnel and Payroll

Upshur County employed two unlicensed or uncertified staff — the treasurer and a summer learning academy teacher, the latter of whom was an immediate family member of the superintendent — the report notes.

The investigating team also found numerous instances where employees were paid more than had been approved by the school board, including additional wages related to the 2021 Summer Learning Academy and improper payment for out-of-calendar days.

WVBE Policy 3234, School Calendar, defines an out-of-calendar day as ‘a nonpaid day that is not included as a part of the minimum employment term,’” according to the report. “Therefore, no county employee has a right to payment for such days. Such payments effectively increase employee contract lengths without the approval of the board. During interviews, district staff communicated that this compensation was for days worked during the summer because of the COVID-19 pandemic. However, no payroll logs, supervisor approvals, or timesheets were provided by the district to support that claim.”

The report also documented numerous issues related to the superintendent’s compensation.

“At various points throughout the superintendent’s tenure, the district paid the superintendent amounts which were not authorized by the board within the superintendent’s contract or by amendment to the contract,” the report states.

Those payments included $3,100 in attendance incentive bonuses, a $70 stipend to attend a book study and payment of unused leave days. The report says the superintendent was paid $11,365 for unused vacation days in fiscal year 2021 and $17,379 in fiscal year 2022, both of which were found to be unauthorized due to the language in her contract.

The report also claims the superintendent was paid $2,045 for additional summer school wages that were not approved by the board and $13,410 for out-of-calendar days.

“The superintendent is contracted for the full fiscal year covered by the board-approved contract,” the report states. “Therefore, there are no available days in the superintendent’s employment calendar which can be designated as unpaid. Furthermore, the rate used to payout these unauthorized ‘OC days’ is significantly higher than the superintendent’s FY2022 daily rate of $429.12.”

Finally, the report found the superintendent’s salary was “arbitrarily increased” in 2022.

“In June 2022, the superintendent’s FY2022 contracted salary was arbitrarily increased by $4,000,” the report claims. “The superintendent’s contracted salary for FY2022 was $112,000. However, the district increased it to $116,000, resulting in an overpayment of $4,000 during the month of June 2022.”

The school system then misrepresented the superintendent’s salary in their publications of financial statements.

The review team requested copies of the district’s financial statement publication, which is required under W. Va. Code §18-9-3a,” according to the report. “For FY2020, FY2021, and FY2022, the district underreported the superintendent’s compensation in those publications by $899.99; $12,335; and $37,763.40.”

The investigation also found that unused leave days were paid to employees, including the superintendent, without appropriately reducing the employee’s leave balance.

During the review of payroll records, the review team discovered multiple instances of the district paying out unused leave days without making appropriate reductions to employee leave balances,” the report states. “As a result, some employees may have overstated leave balances. Specifically, it was noted that at least 52 days of vacation leave payout to the superintendent were not removed from the superintendent’s available balance. Additional procedures are needed to determine the full scope of this issue.”

Finally, the investigation revealed numerous issues with supplemental pay for employees, including poor recordkeeping, a lack of board-approved contracts, and a failure to follow state policies.

To correct the payroll and personnel issues, the report advises the county to consult legal counsel when making decisions involving contracts, implement procedures to track and document all payments and ensure all employees have board-approved contracts, among other suggestions.

WVBE Policy 8200 and the Excess Levy Call

The review also found issues with the county’s bid and purchase order procedures, including a lack of competitive bid documentation and purchase orders that were initiated after receiving an invoice from the vendor.

Finally, the investigation examined the excess levy call and found that some purchases were either not made in accordance with the levy call, without prior board approval or without competitive bid documentation.

Areas of Progress

The school system has already made ‘notable’ progress toward addressing the concerns raised by the report. Those steps include the formation of a Superintendent’s Advisory Council with professional and service employees, revamping county policies, a weekly meeting with directors, meeting with local business leaders and gathering community feedback, revamping the program for alternative learning, and reducing the number of suspensions of students who come from lower socioeconomic status homes and students with disabilities.

Moving forward, the report says the Upshur County school system plans to:

  • Assess existing bus routes for efficiency.
  • Identify measures to positively impact staff and student attendance.
  • Monitor disciplinary responses to ensure consistency and fairness.
  • Review complaint procedures and processes.
  • Review staffing with a particular focus on overages, improvement specialists and special education.

The report also notes that Miller requested an audit of Special Education in Upshur County Schools, which was conducted by the WVDE in November. Recommendations from that audit are forthcoming.

Read the full report here and listen to the Upshur County discussion during Wednesday’s state board of education meeting below.

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