Edgar P. Harney Spirit of Excellence Academy leaders said they have paid 50 employees back for potential lost earnings on improperly delayed retirement contributions.
The Central City charter school’s board president, the Rev. Charles Southall III, said the payout was less than $600 in total.
“All of them were made whole,” Southall said.
It’s not clear if the Orleans Parish school district — which has been investigating the matter — agrees. School district officials did not respond to repeated questions from The Lens about the status of a forensic audit, the school’s repayment plan and what the district’s role was in formulating or approving that plan.
The charter school withheld employee retirement contributions for weeks, sometimes months. When the school finally made up last year’s late October, November and December payments in February 2018, it did not account for any interest employees could have been earning over that time period.
Two days after The Lens reported the late payments in June, the Orleans Parish school district requested a trove of financial records from the school. The district confirmed the Lens’ reporting in July. Fifty employees were affected, according to a document Harney provided to the district.
After the revelation and following two years of official warnings for financial problems, the charter school fired its Chief Financial Officer Brent Washington Sr. But Washington says the board is making him a scapegoat.
There were two main bank accounts associated with the school. One was under the board’s direct control. It took in per-pupil funding from the state, then disbursed it to another account that was used to pay for the school’s operations. Records show the charter school’s board bank account sat flush, while its operating account ran dry.
Washington said Southall controlled the board account. The bank statements went to Southall’s church. (A new account set up in July has more signatories and bank statements go to the school’s address, according to documents.)
“Well the way that’s set up and has always been set up,” Washington said. “Pastor Southall manages all of the bank accounts.”
He said Southall was often late in providing money for school operations. The school needed to pay its bills, so Washington had to hold onto the retirement money.
“I would have to email him, call him on the phone or either text him just to tell him I need him to transfer the money,” Washington said. “Sometimes he would promptly call me back and sometimes I might not hear from him for a whole week.”
In an interview, Southall said he transferred money whenever Washington requested.
A letter from the school to the district also placed the blame on the school’s finance department.
Repayment
The Orleans Parish school district hired a forensic accountant to investigate Harney. The district did not respond to an inquiry about the status of the investigation.
On August 9, the school sent the majority of its affect employees letters informing them retirement contributions had been late last fall.
“We are currently working with our financial advisors at Mass Mutual and Morgan Stanley to calculate any potential lost earnings that you are due because of the delay in submitting the retirement contributions,” the unsigned letters stated. “No later than 30 days from the date of this communication, we will inform you of any lost earnings that you are due and our plan to make you whole.”
But the school didn’t provide calculations of potential lost earnings to the district. The district responded with a demand for clarification.
The school district did not respond to The Lens’ questions about the school’s repayment plan.
The district sent the school a warning letter about the delayed payments in July. The letter cited only the October, November and December 2017 payments. But some of the delayed payments occurred outside of those months — in September 2017 and January 2018 — the school’s financial records show.
Asked whether the makeup payments extended beyond the months the district warned the school about, Southall said they covered everything.
“It was all late payments period,” he said.
Meanwhile, Harney has ongoing financial problems. Its board was forced to amend its budget this week because the school’s student enrollment is smaller than leaders anticipated. That is likely in part due to the district’s decision to halt enrollment at the school, a move partially based on the district’s concerns about the school’s financial management.
Harney is one of four charter schools the district has forbidden from accepting new students. The other three schools have F ratings from the state. Harney has a C.
“The Orleans Parish School Board will not allow additional seats to be filled at schools that are in danger of losing their charter due to poor academic performance or that have several issues of non-compliance,” district spokeswoman Dominique Ellis explained.
Harney’s charter is up for renewal this winter. If the district and school board decide not to renew the charter, it would close or be taken over at the end of the school year.
