By DAVID SKOLNICK
“Extensive fiscal mismanagement” at Eagle Heights Academy led to more than $1 million in illegal and improper financial transactions at the city’s largest charter school, according to a state audit.
The audit, issued Tuesday, is for the fiscal year between July 1, 2006, and June 30, 2007. The auditor’s office at first declared Eagle Heights “unauditable” in August 2008 because the school’s financial records for the 2006-2007 fiscal year were incomplete. The records were later updated.
The state is now auditing Eagle Height’s finances for 2007-2008 and 2008-2009 fiscal years, said Julia Debes, an auditor spokeswoman.
The problems uncovered at the school in the 2006-2007 audit include:
Collecting $454,381 in federal income tax and Medicare withholding from its employees but never giving the money to the IRS. That federal agency received a copy of the audit, Debes said.
Improperly spending $707,507 in questionable costs, or errors that caused costs to be overstated or understated on federal reports.
Illegally spending $33,500 on one-time payments to 29 of its employees from a federal grant. The payments weren’t approved by the school’s governing board, but were authorized by Linda Mansfield, the school’s lead administrator, and Ronald King, then the school’s business manager. The biggest payments, $5,000 each, went to Mansfield and King.
“The lack of proper financial oversight at this school allowed for the misspending of tax dollars intended to educate Ohio’s schoolchildren,” said Auditor Mary Taylor.
The state Department of Education ordered the school at 1833 Market St. on the city’s South Side to close by June because it received a rating of academic emergency on each of its last two annual state report cards.
Approval for a new charter school at the same location — the former South High School — is expected shortly, said Barry E. Savage, a Toledo attorney.
Savage represents the Ohio Council of Community Schools, which sponsors Eagle Heights and is helping to create the new charter school, South Side Academy, that is expected to open in the fall, serving the same kindergarten through grade 8 students as Eagle Heights.
On Tuesday, King couldn’t be reached by The Vindicator to comment, and Mansfield referred comment on the audit to Savage.
The Rev. Kenneth Simon, president of the Eagle Heights board, also referred comment to Savage.
But he said: “The board has some issues with the audit. We’re contesting some of the findings.”
Savage said he has documentation showing time records of employees who were paid with federal funds. He declined to discuss specifics.
Besides the Internal Revenue Service, the auditor’s office gave copies of the Eagle Heights report to the Ohio attorney general’s office and the Mahoning County prosecutor’s office, something the auditor routinely does with reports that include findings for recovery, Debes said.
The Ohio Council of Community Schools and Eagle Heights officials are working with the IRS, Savage said.
Also, failure to pay income taxes to the IRS could go back to the 2004-2005 fiscal year, he said.
“It appears to have happened in previous years,” Savage said.
EAGLE HEIGHTS ACADEMY
The Ohio auditor’s office issued a report of Eagle Heights Academy listing several financial problems at the Youngstown charter school that is going out of business next month. Here are some of the biggest problems listed in the audit:
• $33,500 in public money illegally spent that must be repaid. School personnel received one-time payments from a federal grant without receiving approval by the school’s governing board.
• The school failed to turn over to the government $333,722.34 in federal income tax withholdings and $120,658.93 in Medicare withholdings.
• $707,507 in questioned costs, or errors that caused costs to be overstated or understated on federal reports. These included undocumented payrolls, overstated expenditures and double reimbursement of federal funds.
Source: Ohio auditor’s office.