Auditor General: Early termination of Superintendent broke law, cost Manheim Township Schools $358,000

depasquale

Auditor General Eugene DePasquale

Auditor General DePasquale Says School board’s lack of transparency prompted concern from residents, early audit

HARRISBURG – Auditor General Eugene DePasquale today said that the Manheim Township School District, Lancaster County, broke state law when it failed to publicly vote on the separation agreement with its former superintendent.

Termination of the contract cost the district at least $358,000.

“School boards certainly have a right to terminate a superintendent’s contract. However, the process should be completely transparent and done legally,” DePasquale said.  “The process Manheim Township School District used to terminate the former superintendent’s contract was neither.”

Intense public concern about the contract’s termination and other reported financial issues led to more than 25 people contacting DePasquale’s office and acceleration of the district’s regularly scheduled audit by approximately one year.

The audit of the district covers July 1, 2013, through June 30, 2016. The 15-page audit report includes one finding and three recommendations.

Broken law, lack of transparency

Auditors determined the Manheim Township School Board made two major procedural errors in terminating the former superintendent’s contract.

First, even though the board knew about the former superintendent’s resignation and actually signed the separation agreement, the item was deliberately omitted from the agenda for its Jan. 21, 2016, meeting. During the meeting, the board voted to amend the agenda to include the resignation.

“Details of the former superintendent’s resignation and resulting separation agreement were provided to the public by the news media, not by the board,” DePasquale said.  “Simply making a motion to amend the agenda is inexcusable. Manheim Township School District taxpayers deserve more transparency.”

Second, auditors found, the board never publicly approved the separation agreement, which is a violation of the Public School Code (PSC).

In March 2016, the board voted on an addendum to the agreement, but a review of board meeting minutes showed the separation agreement itself was never voted on publicly.

“Pennsylvania’s Public School Code is very clear,” DePasquale said. “The law requires a public vote, and the Manheim Township School Board didn’t do that.”

Costly, Noncompliant Agreement

The PSC also requires superintendent contracts to specify termination, buyout and severance provisions.

Auditors found that, while the former superintendent’s contract did contain some termination provisions, it did not specify the salary and benefit payments ultimately provided under the separation agreement.

In its response to the audit, district management agreed that all of the separation agreement terms were not specified in the original contract but contended that the agreement was in the best interest of the district.

“While I appreciate that Manheim Township School District officials believed they were acting in the district’s best interest, the Public School Code requires good governance practices for a reason,” DePasquale said. “The fact is that this separation agreement broke the law by providing benefits not included in the original contract.”

The costs associated with the separation agreement were:

  • $172, 000 in salary and retirement contributions for the former superintendent,
  • $63,350 in salary for the acting superintendent,
  • $17,000 for a search firm to find a new superintendent, and
  • $105,590 to investigate a related personnel matter.

The agreement also cost the district an unknown amount for the former superintendent’s health care.   Auditors could not determine this cost since the district is self-insured and costs are based on claims, which cannot be disclosed because of federal confidentiality laws.

“This termination agreement was costly,” DePasquale said. “Every single dollar spent on contract buy-outs is one less dollar going to programs for students. School districts must carefully consider the financial impact of contract negotiations and buy-outs.”

The Manheim Township School District audit report is available online at: www.PaAuditor.gov.

The District issued the following statement:

“We are pleased to announce, and happy to report to our community, that the Manheim Township School District has demonstrated financial stability, applied best practices, and are in compliance with state requirements according to the Pennsylvania Auditor General’s Office.  Our staff worked closely with the auditors over the last several months as they reviewed the district’s daily operations and procedures, school safety, budget management, and overall financial stability,” stated Superintendent Dr. Robin Felty.

“Given that school safety remains a top priority for the District, we are very pleased with the continued findings during the safety review component of the audit. The District’s visitation policies, locked doors and restricted access procedures, and emergency plan promote student safety. With ongoing attention to school safety nationwide, the District continues to enforce safety practices in all schools, particularly relating to school access procedures and monitoring of security systems.”

“This has been a long, but successful road for this District and the current School Board,” stated MT School Board President, Mark Anderson.  “Our community has rallied together to show positive support for the Board and School District that, as this final full performance audit shows, had unwarranted negative reporting by local media. The District Administration worked closely with the PA Auditor Generals Office, providing the information that was needed to show best practices and to conduct the full audit.  I am proud of how thoroughly this District continues to operate in the best interest of Manheim Township students.”

According to the audit, the only area that the district demonstrated lack of compliance was with administrator contract buyouts.  Manheim Township School District failed to publicly post the settlement agreement of a former superintendent who submitted a resignation before the superintendent’s contract end date.  The audit finds that the settlement agreement should have been posted to a School Board Agenda since it was voted on during a public School Board Meeting. The district agrees with the Auditor General’s report that the separation agreement should have been publicly posted on the Board Agenda.  However, school board directors and administrators who were working in the District Office at the time were following legal recommendations pertaining to Board procedures and were unaware that the actual separation agreement needed to be posted on the Board agenda.

In the past year, the Board of School Directors has made significant changes and improvements to the public operations of the School Board, including but not limited to:

  • The physical set-up of the Boardroom was redesigned to be more conducive for audience members to see the School Board directors and view presentations clearly.
  •  “Community Conversations with the School Board” events were held monthly as community drop-in sessions at our District Office on a designated Saturday from 10:00 am-12:00 pm. These sessions are informal, informational, and conversational in nature to provide our community the opportunity to meet with members of the School Board and discuss important topics related to our schools.  The drop-ins are facilitated on the Saturday morning between the School Board Work Session and the School Board Meetings (typically the second Saturday of the month). The “Community Conversations with the School Board” events will continue to occur during the 2017-2018 school year.
  • The Board of School Directors revised Policy #005-Meetings to improve the structure of the School Board agenda. In order to provide a more consistent and concise agenda for the public to follow, changes were made regarding how an item is pulled and openly discussed.

As required, the Manheim Township School District receives an independent annual audit of the financial records each year. For at least the past twenty years, the district has continually received clean audit reports from the local independent auditors. In addition, the Auditor General conducted a Limited Procedures Engagement audit in 2015 and found the District to be in strong financial position through a review of its internal controls, budgeting practices, and compliance with the Right to Know law and the Sunshine Act.

SOURCES: Auditor Genral press release and Manheim Township School District press release