The state has collected only a small percentage of the $84.6 million in taxpayer money singled out by watchdogs as misspent or mishandled by public agencies since 2001, a Dayton Daily News investigation found.
The findings were made in financial audits of public schools, cities, counties and government agencies. Since the findings about $13.9 million has been collected. Roughly $32.1 million has reached a six-year statute of limitations on collections without being repaid. Another $24.7 million is owed from audits of charter schools and is “virtually uncollectible,” according to the Ohio Attorney General’s Office.
That leaves only about $10.4 million of these so-called “findings for recovery” — orders that the money be repaid — that the Attorney General is actively working to collect.
This concerns people across the political spectrum, including representatives with both the liberal-leaning Progress Ohio and the conservative-leaning Buckeye Institute. Both are in rare agreement on a need for increased oversight of charter schools.
“Obviously that’s concerning and does show all the reasons why we need to be vigorous on the front end (in monitoring charter schools),” said Greg Lawson, policy director for the Buckeye Institute and a supporter of charter schools.
Progress Ohio Executive Director Brian Rothenberg said the state puts too much effort on cracking down on people on food stamps when it should be overseeing individuals getting public contracts.
“Often a lot of elected officials spend an inordinate amount of time picking on the little guy and ignoring or winking at bigger problems that happen with some of these findings for recovery,” he said. “If the government and the elected officials had the will to do it they would probably do much more for the taxpayers by collecting on those.”
The Ohio Auditor’s office examines the books of 5,600 cities, counties, government boards, schools and agencies across the state each year. It issues findings for recovery against specific people when auditors believe money was misspent, misappropriated, stolen or when cash just simply disappeared.
Individuals whose names are on the findings for recovery list — even after the statute of limitations — are barred from getting public contracts, though that doesn’t prohibit them from being public employees or even elected officials. They can be removed from the list by paying the finding or successfully appealing it.
The auditor’s office has issued $84.6 million in findings for recovery in 1,957 audits since the state began tracking them in 2001. This includes recent audits that demanded some area township trustees repay money paid to them to cover some of the costs of their pensions. Other audits found undocumented expenditures at some local governments and evidence of theft in some charter schools.
The largest findings on record include $7.5 million owed by a Cleveland day-care operation that a 2008 audit concluded had padded enrollment figures with phantom children. Another $13.7 million is owed by Toledo businessman Tom Noe and others to the Ohio Bureau of Workers Compensation for a fraudulent investment scandal, detailed in a 2006 audit. Noe is serving an 18-year prison sentence.
So far, only $13.9 million of the total amount of findings statewide has been collected. This is nearly $2 million more than had been collected when this newspaper first reported the low collection rate last year. Since then, the amount of findings has grown by more than $12 million.
State working to improve
Last year, the state had a policy of not even attempting to collect findings under $3,000 because it simply didn’t make economic sense. Both newly-elected Auditor Dave Yost and Attorney General Mike DeWine said the process needed to be improved.
Findings are now handled by the same Attorney General’s office team that handles all state debt collection: 13 attorneys, paralegals and secretaries handling this at least part of their time.
This has allowed the state to begin taking findings out of people’s state income tax refunds and filing for court judgements ordering the money repaid. Those steps also eliminate the statute of limitations.
Since this change was made, the Attorney General’s office has collected $612,899. This is good, they say, though it could be better.
“It’s money that is returned to governments that certainly can use it,” said Attorney General Spokesman Dan Tierney. “If we can improve on that process, we will work to do so.”
This includes seeking more court judgements and working closer with state auditors to build court cases.
None of the funds collected by the attorney general are from charter schools.
“If we receive a charter school finding for recovery, it’s virtually uncollectible,” Tierney said. “These are charter schools that are no longer in operation, they have no income, they have no assets, many times the findings are issued because they spent money they shouldn’t have.”
“By nature the attorney general’s office has the toughest of these to collect,” he said. The public entity that was audited, then each county prosecutor, are first tasked with collecting findings for recovery. The attorney general gets it last.
Some charter school findings have been converted into criminal penalties. Charter school treasurer Carl Shye, who worked with schools here and across the state, agreed to repay much of the $800,000 in findings against him when he pleaded guilty last year to embezzlement in federal court. Area charter school CEO William Peterson agreed to pay $275,000 of the $857,963 in findings against him when he pleaded guilty this month in Cuyahoga County court to unlawful interest in a public contract.
But like the attorney general, officials with the Auditor of State’s office said they are working together to do better.
“Of course we want to see as much as can be collected recovered,” said Carrie Bartunek, spokeswoman for the state auditor’s office.
Some findings issued in 2013:
Miami Twp., Montgomery County
Issued: Nov. 26
Finding amount: $27,912
The audit called for recovery of “pension pickups” made for Trustee Charlie Lewis and his wife, Judy Lewis, the former fiscal officer. Other current and past elected officials, including trustees Mike Nolan and Deborah Preston, have repaid the employee portions of the pension payments, avoiding findings for recovery.
Richard Allen Academy
Issued: Nov. 6 and Feb. 28
Finding amount: $2.2 million
The most recent audits of the chain of charter schools with locations in Dayton and Hamilton have brought the total amount of findings against the group to $2.2 million. The schools are challenging the findings in court, arguing the state auditor is misreading the school’s contract with its management company, which the audits say was over-paid.
General Chappie James Leadership Academy
Released: Aug. 29
Finding amount: $4,335
A finding for recovery was issued for $4,335 against school founder Kecia Williams and Tracy Jarvis for undocumented debit card purchases.
Village of Mechanicsburg
Release date: July 9
Finding amount: $474
The audit revealed numerous errors in Mechanicsburg’s financial records including $474 unaccounted for from the petty cash account in the village’s utility department.
Cincinnati College and Preparatory Academy
Release date: June 18
Finding amount: $520,000
Professional football season tickets, trips to the theater, travel expenses and cocktails are just a few of the nearly $520,000 in items for which taxpayers picked up the tab, according to the special audit of the Cincinnati College Preparatory Academy (CCPA). The findings in this audit led to the indictments of former Superintendent Lisa Hamm and former Treasurer Stephanie Millard.
Cleveland Academy of Scholarship Technology and Leadership Enterprise
Release date: April 23
Finding amount: $1.3 million
Employees’ allegedly illegal relationships with vendors and shoddy bookkeeping led to more than $1.3 million in findings for recovery issued in the special audit of the Cleveland Academy of Scholarship, Technology, and Leadership Enterprise (CASTLE). The school was managed by William Peterson of Dayton, who pleaded guilty last week to having in unlawful interest in a public contract.
St. Clair Twp., Butler County
Release date: Feb. 5
Finding amount: $1,072
Townships officials owe $1,072 in findings for recovery for undocumented credit card purchases. This was one of many sloppy accounting practices uncovered in the audit, including an alcohol purchase with township funds and missed tax payments that cost the township nearly $9,000 in penalties.
By the numbers
Total amount of findings issued since 2001: $84,568,474
Amount uncollected: $70,669,366
Amount uncollectible dut to statute of limitations: $32,059,920
Amount ‘virtually uncollectble’ owed by charter schools: $24,733,164.51
Amount actively being collected by Ohio Attorney General: $10,380,740.02
Source: Ohio Auditor of State, Ohio Attorney General