}

Sunday, April 13, 2014

BREAKING NEWS!! MISS FORTUNE DISCOVERS MILLIONS MORE IN TAXPAYER DOLLARS SIPHONED BY INDICTED "CHARTER CHEATER" STEVEN J. INGERSOLL! Grand Traverse Academy's 2013 Audit Reveals $2.3 Million Dollar Fee Overpayment By Ingersoll To His Smart Schools Management! Money May Never Be Recovered; School Could Face State, Federal Investigations!

-AUDITORS WARNED ACADEMY ABOUT LAX FINANCIAL CONTROLS
-$2,338,980 SWIPED BY STEVEN INGERSOLL, SMART SCHOOLS MANAGEMENT, INC.
-ACADEMY INGERSOLL'S PERSONAL PIGGY BANK!
-POSSIBLE COVER-UP?



Not so fast, Kaye!

Miss Fortune followed the money, and the results are shocking (shocking!).


A close examination by Miss Fortune of the Grand Traverse Academy’s financial report for the year ending June 30, 2013 (issued on November 7, 2013 by Traverse City certified public accounting firm Dennis, Gartland & Niergarth) reveals the Academy was “out of compliance” with the Michigan Uniform Accounting and Budget Act in several critical areas. And even more importantly, the audit revealed Ingersoll overpaid himself $2,338,980—and has so far "withheld repayment".
 
The audit exposed unsound financial practices that drove the school’s General Fund into a “deficit unassigned balance” of $1,378,971, primarily resulting from a “non-spendable fund balance of $2,338,980 for the prepaid balance with Smart Schools Management, Inc.”

And the non-spendable fund balance—meaning it’s not in cash form and not available for use by the school—was just one problem resulting from the Academy’s lack of an objective measure to calculate the annual management fee owed to Steven J. Ingersoll’s Smart Schools Management, Inc. (SSM).
 

MO MONEY, LOTS MO PROBLEMS 

In July 2005, the Academy entered into a five year agreement with SSM. Under the terms of the agreement, Ingersoll’s firm provided a variety of services, including financial management, educational programs and consulting, as well as teacher training. The agreement required the Academy to pay SSM a minimum fee per year of $650,000, maxing out at $1,260,000 through termination of the contract depending on the level of state funding.

According to its 2009 financial report, the Grand Traverse Academy paid Ingersoll’s Smart Schools Management, Inc. $368,549 for the year ending June 30, 2009.

In July 2009, the Academy entered into a seven year agreement with SSM. Under the terms of the new agreeement, SSM provided financial management, leased employees, educational programs and consulting, as well as teacher training.

Total payments to SSM for the year ending June 30, 2013 reached $6,946,462 and refunds received totaled $1,897, 805.

Included among the grand total were these three classifications:

Management: $1,347,234
Leased employees: $4,680,661
Education programs/consulting: $300,000

The Academy ‘s Board of Directors passed a resolution on May 12, 2012 establishing a management fee cap of 12 percent of revenue, and the contract with SSM stated that the management fee should “not exceed $2,000,000 in any fiscal year.”


However, the Grand Traverse Academy 2013 fiscal year audit reveals that the SSM management fee exceeded that 12 percent cap by nearly $300,000.

More importantly, the audit revealed that the Academy was carrying a whopping “prepaid expense/expenditure balance” of $2,338,980 for payments made over the past few years to Ingersoll's Smart Schools Management, Inc.

And in light of Ingersoll’s April 10 federal indictment on multiple counts of fraud, it’s unlikely that the Grand Traverse Academy will ever recover the excessive fees paid over years to Ingersoll's company.

HOW DID IT HAPPEN…AND WHO LET IT CONTINUE? 

The blame can be placed squarely at the feet of the Academy's board of directors.
 
The Traverse City certified public accounting firm Dennis, Gartland & Niergarth raised several troubling internal financial control and compliance issues in its 2013 audit report to the Academy. 

Among its major concerns were the advance by the Academy of prepaid fees to SSM, the possible “abuse” of Smart Schools Management in their “access to public funds” and the negative unassigned balance in the Academy’s General Fund,

The board did nothing—except provide Ingersoll with a method to "work off" his $2.3 million dollar debt by “partially reducing cash transfers for future management fees through June 2016”. Although the audit report was publicly available online, it appears that the board did not report the possible fraud to the Michigan Department of Education.

PREPAID FEES...OR INGERSOLL'S PERSONAL PIGGY BANK?


According to information revealed in the audit, that while the Academy’s contract with SSM set a ceiling for the management fee, it lacked an objective measure to calculate that fee annually. 

In addition to receiving “prepaid management fees”, SSM also had the ability to “transfer funds between the Academy’s and Smart Schools Management, Inc.’s bank accounts” without prior approval.

SSM took cash advances for their management fee each year in the beginning of the school year based on the budgeted figure and “without further Board action”.

Prior to 2013, budgeted amounts “exceeded what the Academy could ultimately afford”.

By the time it finally dawned on the Grand Traverse Academy that it could not afford Ingersoll’s management fee, the fee was adjusted “downward” on the general ledger—but the millions advanced to Steven Ingersoll’s Smart Schools Management, Inc. have never been repaid.

And it’s likely they never will be recovered.
 


The auditor’s report bluntly informed the Grand Traverse Academy that SSM’s ability to “prepay their fee and withhold payment of overpaid fees” enabled SSM to “abuse their access to public funds”.

By allowing Ingersoll to "advance monies" to his private entity, Smart Schools Management, Inc., the Grand Traverse Academy was “out of compliance” with Michigan’s Revised School code.

In the auditor’s report, SSM agreed that it “owed Grand Traverse Academy an amount classified as a prepaid balance” ($2,338,980), and worked out a repayment plan with the Academy. The plan called for SSM to work off the prepayment by “partially reducing cash transfers for future management fees through June 2016”.

The prepaid management fees were to have been received from Steven Ingersoll as follows:


2014: $774,000
2015: $960,000
2016: $604,980


Grand Traverse Academy, which opened in October 2000 under Ingersoll’s Smart Schools Management, Inc. company, dropped him like a hot rock last month. 

The Academy is being operated by Full Spectrum Management, a company hastily formed less than a week before the transition announcement by a longtime Ingersoll associate and Ferris State Optometry School classmate, Dr. Mark Noss.

Noss is a former Grand Traverse Academy board member and president and has been involved with the school since its inception.


WHAT'S NEXT? 

Miss Fortune thought a state investigation may be coming...but then I woke up and remembered who's in charge of this state! 

Get the torches and pitchforks ready! 

(Whew! I should have listened to my mother when she told me to spend more time studying math!)

2 comments:

  1. As a former teacher at GTA, I have some horror stories. I contacted the LSSU overseer with a list of concerns and he blew me off. Terrible working environment.

    ReplyDelete
  2. Betty:
    Please get in touch with me at: tcmissfortune@yahoo.com

    ReplyDelete