The Michigan's Department of Education (MDE) released its latest “Quarterly Report to the Legislature on Deficit Districts” on March 9, including an update on the Madison Avenue fraud factory known as the Bay City Academy, and the result is shocking.
OK, it's not really shocking, but nearly as sickening as a wild chimp sanctuary just before morning cage clean-up.
The MDE is required to report quarterly to the Legislature on school districts incurring year-end deficits and the districts’ progress in reducing those deficits.
The March 9 report states:
“Representatives from Bay City Academy met with MDE staff to discuss the district’s deficit fund balance. This is the first academy that the Department has brought to Lansing for a deficit meeting as a result of going $1.4 million in deficit in one year. The deficit is largely the result of the prior management company’s misuse of academy funds. We needed assurance that the academy has severed all ties with the prior company. The district has submitted a revised DEP that is still under review.”
According to the Bay City Academy's 2014/2015 financial report, the charter school founded and formerly managed by convicted felon Steven Ingersoll incurred a significant operating deficit in 2015, resulting in a cash flow shortage — as of June 30, 2015, the Academy's current liabilities exceeded its current assets by $1,374,477.
Stating that its finding was a result of observation and inquiry with the Academy's administration, the auditors determined the deficit was result of an overreliance on Smart Schools Management for financial oversight. As a result, there was “a lack of appropriate administrative oversight by the Board of Directors over the Academy's finances during the year. The effect of this condition resulted in actual expenditures exceeding budgeted amounts, and a year-end deficit fund balance.”
Former Bay City Academy Superintendent Brian Lynch (a longtime Ingersollette, having spent his entire teaching career working for Smart Schools Management in Traverse City before conquering Bay City) and his new management company, Mitten Educational Management LLC, officially took control of the school on May 1, 2015. (I say officially, because we know Ingersoll still owns the buildings and controls the board through its president, longtime Ingersoll crony Craig Johnston.)
Under the Lynch insta-firm's two-year deal, it's paid roughly $360,000 a year to provide “a variety of services including financial management, leased employees, education programs and consulting as well as teacher training” to the school.
And here comes the chimp stink!
Although it's less than two months before the end of the school year, the Bay City Academy was apparently unable (or unwilling) to project its June 30, 2016 fiscal year-end general deficit, the only school on the list that neglected to include that significant detail.
As you can see from the table below (excerpted from State Superintendent Brian Whiston's official March 9 report), the Bay City Academy's fund balance went from a $31,187 surplus as of June 30, 2014 to a massive $1,359,477 deficit as of June 30, 2015.
The Bay City Academy's deficit elimination plan is still under consideration by the MDE...now about those “severed ties”.