Portsmouth schools keep stashing cash after warning
By Tim Eberly, The Virginian-Pilot | |
McClatchy-Tribune Information Services |
While the violations carry no criminal punishment and all money was used for school division expenses, grand jury members urged tighter controls on school funds. Superintendent
Yet six times since the financial maneuvers were first challenged by city officials, school officials have handled money -- or attempted to -- in ways that two experts on government accounting, interviewed by
The division's actions skirted state law, padded the division's budget and failed to give the public a clear idea of its financial picture -- or the opportunity to weigh in on what's done with excess taxpayer dollars, the experts said.
The money disputes have further poisoned relations between city and school leaders. The two are sparring over the last of those six cases --
"If I had been called on the carpet with a grand jury report, I would be cleaning up my mess pretty quickly," said
"The city of
Commonwealth's Attorney
"I have serious questions about how the school administration is conducting its business," Mobley said. "The fact that we're having this recurring problem right after the grand jury is troubling."
As The Pilot concluded its reporting for this story, Stuckwisch began distancing himself from some of the financial missteps, saying that Meera Phaltankar, the director of budget and finance, gave him inaccurate information. He placed Phaltankar on administrative leave Monday, and the
In a series of interviews, Stuckwisch acknowledged that some financial moves were sloppy, inaccurate or could have been done differently. He said the past year has been a period of transition for the division as it tightens its financial practices and faces closer scrutiny from the city.
"I'm not corrupt, and I'm not a cheat," he said. "I try to do what's right for these kids, and I've put 11 years of my life into the school system. And now I'm being treated like I'm some kind of a criminal that's done something evil to this city."
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The controversy over the division's financial practices began a few weeks after the city's finance director,
She noticed that the division had been stockpiling leftover money. Some city officials -- since departed -- had known about the practice for at least two years but did little about it.
Swindell brought up the issue at a
One council member called for Stuckwisch's resignation; some residents clamored for a criminal investigation.
Two months later, though, the division moved
The division had already transferred
The
"They're looking for a parking space for their excess money -- that's what it appears to me," Ziegenfuss said.
Stuckwisch concedes that the
"It was not a surplus -- surplus is after you get beyond
"Whether I was being slick and all that, that's what the public will have to make a decision on," Stuckwisch said.
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On
It castigated school officials for what reportedly was known as the "Stuckwisch Initiative," a plan to carve out money from the division's general fund. It also criticized the city for failing to prevent or stop the scheme.
Stuckwisch said he doesn't dispute the findings of the grand jury and takes full responsibility.
"I got slapped real hard for that. And I take that," he said. "I take that guilt with me. It's the most embarrassing thing that's ever happened to me in my life."
Four months later, days before the end of the 2013 fiscal year in June, school officials moved
Swindell spotted the money in the city's end-of-year finance documents.
"Are you trying to shield this money?" City Manager
Stuckwisch acknowledged the money was surplus cash from 2013, and he returned it to the city. He said the division needed the money to buy textbooks this year, which will cost up to
Asked why the division didn't return the money and request that it be reallocated for the following year, Stuckwisch said the grand jury investigation focused on the construction fund, not other funds such as the one for textbooks.
"The grand jury spoke to capital projects," Stuckwisch said. "I think some people are taking the grand jury and expanding it."
In fact, the grand jury report states that any unspent local money -- not just construction money -- should revert to the city at fiscal year's end. The surplus money at issue in the grand jury report originated in the school division's general fund, the same source of the
How Stuckwisch reached his conclusion "doesn't make a lot of sense to me," Mobley said.
In a later interview, Stuckwisch said he might have misinterpreted the grand jury findings.
"I was not trying to buck the grand jury," he said. "Maybe I understood that wrong."
In three more cases, the division continued to push the boundaries on its financial practices:
-
- With about
- Around the start of the 2014 fiscal year, the division moved
During the time that the division has put surplus cash in various places, it has been slow to act on fixing some problems in schools, said
For example, she said,
An insurance company representative documented the problem in
"Since 2010 we have known about the seriousness of the issue from our [insurance] carrier and have taken no action," Mensia-Joseph wrote in a
Stuckwisch said the school division is continually prioritizing its needs and projects. He also said he was not aware of the fire alarm situation until 2012 and questioned whether Mensia-Joseph tried to get the project financed before then.
"We can't fund everything," he said. "There are always needs that we can't address."
Stuckwisch said he mostly delegated that work to an assistant superintendent who consulted with Mensia-Joseph. The assistant superintendent died in 2012.
"I didn't work with it directly," he said. "I have to delegate that out."
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Since the city went public with its allegations of the division's financial mismanagement in 2012, the relationship between them -- and their elected officials -- has gone from bad to worse.
There's a natural tension between the two agencies. Though
But the acrimony has reached new heights of late, and parties on both sides do little to hide their contempt. They point fingers, trade terse emails and exchange bitter remarks in public meetings.
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"It's very testy," City Councilwoman
The
As the city and school division close out the 2014 fiscal year, one main point of contention from the end of the 2013 fiscal year remains.
It revolves around
Rowe questioned whether the encumbrances were legitimate.
Stuckwisch told The Pilot they were.
"We feel we're absolutely correct on that," Stuckwisch said, adding that the encumbrances were "concrete items" the division had ordered. "And he is absolutely wrong."
However, The Pilot determined Stuckwisch's claim is inaccurate. Numerous purchase orders on the list are not for specific goods or services ordered in 2013. For some, the division created purchase orders internally but did not send them to vendors, then used that money to pay bills in the next year, records show.
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"Those are not legitimate encumbrances," Ziegenfuss said.
Stuckwisch eventually acknowledged that numerous purchase orders were not, in his opinion, legitimate. He said Phaltankar had told him and the
Though most of the contested money has been returned to the division, the two sides are in a standoff. The division is asking for money to pay for textbooks and school activities, among other expenses. The city won't consider the requests until the
Rowe has a plan to resolve the broader conflict, though. He has advocated for consolidating the city's and school division's finance departments. Not only would it save money, he said, but "all of this mystery goes away."
Stuckwisch called the proposal a power grab.
Mobley said he believes the division's actions after the grand jury run contrary to the law, but they aren't criminal.
"It should be played out in the civil realm -- not the criminal realm," Mobley said. "They need to be statesmen and come forward and resolve this."
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