Friday, October 23, 2015

GRAND TRAVERSE ACADEMY BOARD MEMBER AFFIDAVIT: "I Still Do Not Understand How And Why Steven Ingersoll/SSM Was Able To Obtain That Money In The First Place." Seduced, Bamboozled, Manipulated...Or Just Incompetent?

In a stunning affidavit, a former Grand Traverse Academy board member reveals she could not "comprehend some financial aspects" and needed to rely on Tony Henning's professional expertise regarding the Traverse City charter school's finances.

And Tony Henning, Steven Ingersoll's handpicked CPA, told the board he "did not see any problems" with the finances. (However, according to a February 21, 2013 IRS Criminal Investigation memo, Henning admitted during an interview that he felt he looked "like a dumbass" for letting Steven Ingersoll get the drop on him — while he turned his head and earned tens of thousands over nearly six years.) 

In charter schools, the board governs for an owner. But who is the owner? Obviously, the board doesn’t own the school like Robert Kraft owns the Patriots. And it isn’t the management company, even if it owns the building. It is the public who ultimately owns charter schools. 

Thus, charter school boards govern schools in the sense of a trust. This is why board members are sometimes referred to as trustees— people who control something on behalf of the owner. Charter school trustees have the authority to govern the school on behalf of the public.

Except in the case of  a former Grand Traverse Academy board member, a woman in her late 50s who would like us to believe she sat numbly for two years, watching as more and more of the school's money evaporated.

The number one reason why charter schools fail is financial mismanagement, often due to malfeasance and lack of financial sophistication on the board — both evident in this example. Although the woman served on the board for two years, she is no longer a public official. For that reason alone, I will not reveal her name.

As she explained in her affidavit, the former board member has a business background: I have a bachelor’s degree in marketing. I took two years of accounting while in college. I have worked in business most of my 59 years

Kaye Mentley asked me if I would consider becoming a member of the Grand Traverse Academy (GTA) school board. I agreed to become a member, knowing that it was a volunteer position, and I viewed it as an opportunity to do something good for education and the community. After going through the application process and being approved for the position, I was sworn in as a GTA board member in October of 2012. I eventually resigned from the board around the end of the school’s fiscal year 2013 (June or July of 2014), and made my resignation effective August of 2014. 

You may notice, like I did, that there's no mention of forming a strong culture of accountability along with that flowery academic success. 

I listened more than I talked at board meetings, especially at first, because I wanted to get a better understanding of GTA. I eventually became aware of financial concerns involving Steven Ingersoll and his company, Smart Schools Management, which I considered to be essentially a single entity. Ingersoll/SSM was under contract for the management of Grand Traverse Academy.

Ingersoll attended most of the GTA board meetings and brought summaries of the finances. At some point in my tenure on the board, I learned that Ingersoll/SSM owed GTA millions of dollars. I still do not understand how and why Ingersoll/SSM was able to obtain that money from GTA in the first place. I asked those questions of others on the board but did not get answers that made any sense to me.

Did she zombie-shuffle through the numerous resolutions the board passed during her two year tenure? Since she's not one of the walking dead, she should clearly remember the school relied on Michigan's Public School Academy State Aid Note loans to finance its operations.

Every time the GTA borrowed money from the Michigan Treasury (as it did every year), the board voted and explicitly approved an authorizing resolution.
I was reluctant at first to vote on a budget that I was involved with because I did not understand some of the data that was provided. Among the matters that I came to question were the prepaid expenses to Ingersoll/SSM, the lease charges in the financial reports, and the charges for custodial services.

A CPA, Anthony Henning, attended some of the GTA board meetings and did annual audits of the GTA books. Early in my tenure on the board, at a board meeting, I asked Henning if the financial reports looked satisfactory. I could not comprehend some financial aspects and needed to rely on Henning’s professional opinion regarding GTA’s finances. Henning conveyed to the board and me that he did not see any problems.

At some point in time, the board agreed that Doug Bishop (an attorney) should issue a demand letter to Ingersoll for the return of the $3.5 million owed by Ingersoll/SSM to GTA.

At a later board meeting in 2013 the GTA board was provided the conclusions reached in an independent audit done by Dennis, Gartland & Niergarth (the DG&N audit). One of the conclusions that I took away from the DG&N findings was that Ingersoll’s dealings with GTA funds involved questionable items that might not be legal. I do not recall that the GTA board or to my knowledge LSSU ever contacted the Michigan Attorney General, the Michigan Treasurer or the Michigan Department of Education regarding the matter.

As a member of the board, this former member had every right — and a legal responsibility as a sworn public official — to contact the Michigan Attorney General, the Michigan Treasurer or the Michigan Department of Education herself.

But she didn't. 

Instead, she quit.

At some point while I was still on the GTA board, it became known that Ingersoll was likely to be indicted. The management agreement with Ingersoll/SSM was terminated. Mark Noss decided to leave the board and start a management company to replace SSM. The GTA board quickly agreed to a contract with Noss for management services, but I did not vote to approve that contract because I did not have sufficient time to read it. 

I decided to resign from the GTA board because I could not comprehend the school’s financial problems and I decided that the problems would be better addressed by accountants and lawyers working on behalf of the GTA. I felt that the main focus of concern by the GTA board had become more about money instead of education. 

An accountant like Tony Henning and a lawyer like Doug Bishop — both of whom provided their services during the six years Ingersoll racked up a multi-million dollar debt? 

Yeah, that'll work.

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