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New Beginnings needs stricter policies for using federal dollars, audit says

Capital One-New Beginnings Charter School Network has been out of compliance with several federal laws, according to the findings of a financial audit shared with the board last week.

Among other findings, the report, issued by Bruno & Tervalon certified public accounting firm, says that the organization misdirected $64,000 in federal Title I dollars — money earmarked to help high-poverty schools reach their neediest students.

Board members discussed the audit at a Feb. 27 board meeting, along with some pressing financial issues, including the need to adjust the budget for one of the network’s three elementary schools: Gentilly Terrace, which is projected to be in a deficit.

Besides Gentilly Terrace, New Beginnings oversees Medard Nelson and Pierre Capdau elementary schools as well as Lake Area New Tech Early College High School.

The audit

According to the audit, which covered the organization’s finances through June 30, 2012, New Beginnings needs to establish stricter policies and procedures to correct issues related to complying with federal funding rules.

  • The auditors found one teacher  – out of five whose files they reviewed — was paid with federal Title I funds when she was not certified to teach the grade she was teaching, as is required by the federal program. The audit said the questioned costs, which covered salary and benefits, totalled $64,076.
  • Of a sample of 10 student applications for free and reduced priced lunches that the auditors decided to review, one could not be located. Another was incorrectly approved as qualifying the child for a “reduced-priced lunch” though the application indicated the child was eligible to get a free lunch through the National School Lunch Program. The audit states that this issue has since been resolved.
  • In relation to the Gulf Coast Recovery Grant, the report stated while the foundation did keep payroll records, the records were not detailed enough. Federal regulations require the foundation to maintain personnel activity reports to fund positions through federal grants.
  • The foundation also did not follow federal laws and regulations under the Davis-Bacon Act, a law designed to ensure workers are paid a locally prevailing wage for federally funded projects. New Beginnings spent $991,765 on construction and renovation projects. But the auditors wrote that they found no documentation showing the organization monitored contractors’ compliance by obtaining the contractors’ weekly payroll statements as law requires.

This isn’t the first time. The school was cited for the same problem in 2011. Members said they were frustrated that the Davis-Bacon Act violation appeared again in this year’s audit. Turner said the construction project was completed in 2012.

Auditors also found the network did not test vendors eligibility, which means New Beginnings “may have entered into covered transactions, as defined in federal regulations, with vendors that were suspended, debarred or otherwise excluded parties.”

“This verification process should always be documented, preferably in the procurement files,” the report stated.

The board voted to accept the audit, which was completed Dec. 10.

Gentilly Terrace Charter short of revenue

Members also focused their attention on Gentilly Terrace Charter School’s finances, where officials said revenues are falling more than five percent short of the $3.3 million that was anticipated.

“Gentilly Terrace is projected to be a deficit,” Director of Finance Kendal Turner warned the board, if corrective action isn’t taken.

Turner said the school could carry a loss for one year, and board chairman Tim Ryan agreed.

“We have got to make sure that does not happen again next year,” Ryan said.

Turner said the shortfall is largely due to a dip in enrollment. The school has about 25 fewer students than last year.

“What are we doing regarding the lower enrollment and looking at the expenses of Gentilly Terrace?” asked member Carla Major.

“We have proposed two cuts and some possible transfers of positions,” said Samette Brown, New Beginnings chief executive officer. “As soon as we collect that data we will be making a decision.”

Turner requested a finance committee meeting as the finance committee will have to oversee a budget adjustment for the school.

Policies needed for executive credit card use

Among other financial issues, Turner said the network would like to open a shared credit card account, with a credit card for both Brown and Chief Academic Officer Juaquana Stewart.

Member Mark Boucree asked if the network had established policies and procedures for credit card use. Turner said she was working on a plan.

Board members agreed they would not authorize credit cards until staff provided policies and procedures for credit card use.

The board approved an insurance policy to cover sports activities at the schools. This is an additional policy, on top of the network’s general liability insurance.  The policy will cost the network $21,000 per year said Turner, noting it will cover all four schools for all sports. The high school football team was approved in December contingent on an increased insurance policy.

The board also approved a motion to allow Turner to open a student activity account for Pierre Capdau Elementary and an athletic account for the high school’s sports program.  Turner said the account at Capdau was previously closed, but did not disclose why.

Brown introduced Chad Broussard, the new high school principal who began Feb. 18.  Broussard said he formerly served as a principal in San Antonio. The high school’s former principal, Michael Booker, resigned in December.

Board members Ryan, Boucree, and Carla Major were present. Members April Bedford and Carol Skriloff Starr were absent. The board approved two new members, Jade Russell and Ramsey Green, who arrived about 5:20 p.m. after the board approved their appointments.  The board also brought on Sheila Danzey as a new member. Danzey was not present.

“I think those are very strong additions to the board,” said Ryan, “and rounds out the kind of experience we need.”

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  • nickelndime

    There are too many administrators with 6-figure salaries and too many non-teaching personnel – in New Beginnings and in so many other charter schools (RSD/BESE/OPSB). And now, let’s talk about getting executive credit cards! Shall we? Next, Gentilly Terrace loses 25 students and is projected to be deficit, and this will be carried for 1 year! That’s okay, says Tim Ryan (formerly of UNO). These boards love to recycle administrators (CEOs, CFOs, CAOs, COOs, principals, deans, etc.) and board members. It’s like musical chairs and playing with Monopoly money. If the individual doesn’t mess up too badly, s/he stays in the city and gets on board with another charter nonprofit board. If the individual messes up big time (maybe some jail time, fraud, misappropriation – must be charged, though), s/he leaves the state and gets employed elsewhere (preferably open to charters). These individuals are all around us and feather their nests of public money quite well. Wouldn’t you say? Excellent coverage, Marta!