Arkansas Education Commissioner Johnny Key on Monday exercised his legal authority to assume control of the 560-student Earle School District because of myriad financial issues, including almost $2 million in improper expenditures dating back to 2015.
Key on Monday appointed Richard Wilde as the Earle district's superintendent, and as such, Wilde will report directly to Key. Wilde, who has been a leader in the state Department of Education's School Improvement Unit, replaces seven-year Earle Superintendent Rickey Nicks, who resigned.
Additionally, Key suspended the authority of the Earle School District's five-member elected School Board but has offered the board the opportunity to remain in place "in an advisory capacity to the new superintendent," a state Education Department staff member said Monday.
The takeover of the Earle district -- about 22 miles northwest of West Memphis in Crittenden County -- brings to three the total number of school districts now operating under state supervision.
Both the Little Rock and Dollarway school districts have been state-managed since 2015, Little Rock for the academic distress status of six of its 48 schools at the time and Dollarway for fiscal distress. A handful of other districts have been taken over in the past and eventually returned to local school board control -- Pulaski County Special and Helena-West Helena school districts, among them.
"I want every student and parent to know that buses will continue to run and school will be in session as we work to restore fiscal integrity in the district," Key said in a statement about Monday's action that is authorized by Arkansas Code Annotated 6-20-1901 et seq.
Key emphasized that the state agency's top priority is ensuring that students in the Earle district receive a quality education.
"While we never want to exercise the right to assume authority of a school district, this action is necessary in light of the serious lack of financial stability and academic oversight and ongoing risk of improper spending of taxpayer dollars," he said. "Our immediate objective is to stabilize the finances and management of the district so every student ... has the ability to learn and thrive in a sound educational environment."
The state action Monday follows on the heels of the state Board of Education's Oct. 12 vote to classify the district as being in fiscal distress because of early findings of inadequate documentation on spending of federal funds and other revenue. At that point, the district's leadership remained intact but was required to seek state approval of all anticipated expenditures as well as develop and begin carrying out a financial improvement plan.
Greg Rogers, the Education Department's assistant commissioner for fiscal and administrative services, and Cynthia Smith, the department's coordinator of fiscal services and support, told the Education Board in October that they were continuing to investigate the district's financial transactions and practices and would report new or more detailed findings to Key within days.
Kimberly Friedman, spokesman for the department, on Monday said the district's finances are still undergoing review and that Arkansas Legislative Audit has been called in and will begin its audit of the district today.
"Three independent auditors attempted to audit the district," Friedman said in an email response to questions. "However, due to missing federal fund documentation, they were unable to complete the audit. The district asked Department of Education for assistance in August. The department advised the district on how to address the issues with budget corrections; however, the department learned that the issues have not been addressed, and improper spending has continued."
As it stands, Friedman said, the district in 2015-16 spent some $300,299 in federal Title I money on salaries and benefits that were not an allowable use of the money. The same was done with $300,436 in the past fiscal year and an approximately $100,000 so far this fiscal year. That is money that will have to be repaid.
Similarly, the district improperly spent more than $555,000 in 2015-16, more than $717,000 in 2016-17 and at least $80,000 so far this year on salaries and benefits with money generated by the National School Lunch Aid program, according to state education officials.
That money is awarded to districts based on their percentage of students who qualify for subsidized school meals because of low family income. Both the National School Lunch Aid program and federal Title I funds are to be used for enhancing education programs for students and not paying for basics.
Still another example of problems that have come to light, Friedman said, are athletic gate-receipt discrepancies totaling more than $112,000.
There are also concerns about outstanding district debt, current expenditures that exceed revenue, nonpayment to vendors, inaccurate reporting of fund balances, issues with payroll and employee contracts, and failure to carry out the Education Department's guidance to correct the district's budget and spending practices.
While the district's takeover by the state Monday is tied to fiscal distress that jeopardizes the solvency of the district, Education Department staff members have also identified violations of state standards for school accreditation that, over time, can also put a district in jeopardy of state takeover and ultimately consolidation with one or more other districts if the problems aren't corrected.
Teachers who have not received required Advanced Placement course training, teachers who are assigned to teach special education classes without holding a state license to teach special education and a teacher assigned as a math instructor who does not have a bachelor's degree, have all been identified as accreditation violations in the Earle system, Friedman said.
Reported teacher totals and teaching schedules are incorrect, and some courses are showing no teacher of record, she said. And, even though the Earle district has received waivers from some state laws and rules as allowed by Act 1240 of 2015, there are as many as six teachers in work assignments who are not covered by the waiver or who do not meet waiver requirements.
Telephone calls to the district's two schools and administration office were not answered Monday afternoon, and efforts to reach individual School Board members also were unsuccessful because of land-line phone numbers that are no longer in service.
Friedman said Wilde, 66, has begun work in the east Arkansas district after working at the Education Department since July 2013.
He has previous superintendent experience in Washington state and in Arizona. He also was a federal programs director in Washington and Tennessee, and he has been a school psychologist, high school counselor and high school teacher in Washington.
His salary at the Education Department is listed at $78,314, according to Transparency.Arkansas.gov. Details of his new compensation package are in the works, Friedman said.
Nicks' salary, according to his contract posted on the Earle district's website, was $146,787 for a 219-day work year this school year and would have increased to $152,390 for 240-day work years in 2018-19 and 2019-20. The contract also makes reference to an annual annuity and $10,000 to serve as athletic director.
Friedman said that while Key had the authority to dismiss Nicks from his superintendent's job, Nicks offered to resign and Key accepted that.
Voters in the Earle School District in September voted in support of a 10-mill property tax increase, raising the total tax rate to 54.8 mills, according to The Evening Times newspaper of Crittenden County. Money from the tax increase is intended for the construction of an elementary school in the district that has annual total revenue of about $8 million.
Members of the Earle School School Board, as listed in the August 2017 minutes, are Eric Cox, Sarah Johnson, Charlie Cox, Arthur Berry and April Witherspoon.
A Section on 11/07/2017