Audit: Dallas charters misused state funds; Exclusive: Schools continue to get taxpayers’ money despite problems

By Joshua Benton
Staff Writer

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A state audit has found rampant financial mismanagement at three family-run Dallas charter schools – including fictional renovations, imaginary travel and hundreds of thousands of dollars unaccounted for.

The Texas Education Agency has forwarded its findings to the Dallas County district attorney’s office for possible prosecution. Federal regulators have also been notified.

The schools – A+ Academy in Dallas and two Inspired Visions Academy campuses in Dallas and Mesquite – were founded by Don and Karen Belknap. They have been the target of numerous state audits and investigations into allegations of nepotism, sloppy record-keeping and loose financial controls.

But they continue to receive taxpayer funding: well over $38 million in the last eight years. Charter schools are funded by tax dollars, but they are managed by private organizations and lightly regulated by the state.

“It’s some of the most mismanaged, unorganized, unethical business practices I’ve ever come across,” said Laura Kopec, a teacher at A+ Academy who resigned last week after the school tried to cut her pay midyear.

“I’m 40 years old. I’ve been in schools and in business. I’ve run a nonprofit. And I’ve never seen anything like this.”

Along with the allegations turned up in the audit, the schools face debt of about $500,000. That’s down from the roughly $1 million in debt they faced in November, when a former TEA official stepped in as interim superintendent.

“The records were in disarray when we got here,” said Karen Case, the former TEA official. “I think we’ve accomplished a lot in a few months.”

Messages left at the Belknaps’ home were not returned Thursday night.

Who’s to blame?

Many of the most serious allegations in the new audit involve Tommy Thomas, who was the schools’ superintendent for slightly over a year until last October. The audit raises concerns that he may have abused his position through a fraudulent reimbursement scheme. Among the findings of the audit:

*Mr. Thomas received more than $40,000 in “travel allowances” over a single school year. The allowances were never approved by the charter schools’ board, auditors found, and Mr. Thomas did not provide “adequate documentation” he had actually spent the money.

*Mr. Thomas ordered his business staff to cut him a check for more than $17,000 for “certification stipends.” According to his contract, he was due no such stipends.

*Mr. Thomas’ wife – now ex-wife – is alleged to have received payments from the charter schools totaling $124,000 over a 13-month period. She also was appointed to the schools’ board, in apparent violation of nepotism rules.

*Mr. Thomas was reimbursed more than $2,500 for furniture and the renovation of his office at the El Paso School of Excellence, a sister school run by the Belknaps. But that school’s founder, J.L. Lewis, says there is no such office.

“Mr. Tommy Thomas has never invested even one cent to renovate any office at the El Paso School of Excellence,” Dr. Lewis wrote in a signed affidavit in November.

Mr. Thomas disputed the charges Thursday night. He said the travel and certification allowances were part of his negotiated compensation packages and approved by the Belknaps. The office renovations were real, he said. And his ex-wife was hired by an assistant superintendent without his intervention, he said.

He said he is being made a scapegoat for the sins of the schools’ founders.

“The Belknaps are good people – they have good intentions,” he said. “They’re just not very good at what they do. They have no idea how to run a school.”

The Belknaps had previously run the school more directly – Mr. Belknap was superintendent, Mrs. Belknap was a principal, and numerous other family members and friends were on the payroll. Over time, state officials forced them to take a less formal leadership role. The Belknaps are currently assistant superintendents, and Mr. Belknap’s son is chairman of the board.

“With the Belknaps, even when they tell you you’re in charge, you never really are,” Mr. Thomas said. “Any corrections I would ask them to make, they’d do it up front. But they would never follow through and actually change the policy. They’d work on things in a roundabout way – that’s their way.”

Mr. Thomas said he believed the schools should be permanently closed.

Additional findings

Some of the other findings in the audit:

*One of the two Inspired Visions campuses was moved to a new facility last fall, but apparently without proper permission from state officials. That could force the school to repay most of its state funding for the first few weeks of the school year.

*The organization that officially oversees the charter schools, RFFA Inc., improperly repaid a $200,000 debt of its since-closed charter school, Rylie Faith Family Academy. The money was provided with taxpayer-provided funds from the family’s other charter schools, which the audit found was an “inappropriate use” of those funds.

*The schools regularly commingled funds between accounts and had only limited control of spending – including the use of presigned blank checks to pay bills when they came up.

*The Belknaps’ family church operated out of the schools’ administration building on Military Parkway and did not pay for the space or utilities – despite demands by the TEA in 2004 that the church pay those bills.

Making changes

Dr. Case, the former TEA official, said she and other staffers have been trying to cut into the debt by ending all unnecessary expenses and getting an outside audit of the schools’ finances. “We need electricity, and we buy toilet paper – that’s about it,” she said.

Among the proposed cuts was the midyear elimination of stipends teachers receive for extra work, like coaching a sports team or running the drama program. After teachers reacted negatively last week, however, those cuts were reversed.

The state’s investigative audit requires a number of actions, including paying back some of the funds in question and accepting a state financial overseer.

Despite the schools’ regular trouble, A+ Academy and Inspired Visions have never been seriously threatened with closure. State law places strict limits on TEA’s ability to close even the worst charter schools.

Dr. Case said that the audit’s findings should, again, not limit the schools’ ability to continue operations.

“I’m confident we’ll be open again in the fall,” she said.

COLUMN: Ratings confuse you? Just wait

By Joshua Benton
Staff Writer

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Good news for those of you who think determining the quality of your school is just too darned easy.

It’s probably about to get more complicated.

A state focus group has recommended that the Texas Education Agency add three new school ratings, starting this fall: Exemplary Commended, Recognized Commended, and Academically Acceptable Commended.

Those would join: the four major existing ratings (Exemplary, Recognized, Academically Acceptable, Academically Unacceptable); the Data Integrity Issues rating for schools potentially on the make; the separate-but-equal Alternative Education Accountability system; the Adequate Yearly Progress system the feds require (including its more heavy-duty Needs Improvement tag); the 14 Gold Performance Acknowledgements the state gives out (for things like SAT scores and attendance rates); all the different honor rolls and five-star schools lists promoted by various groups; and a TAKS-taking partridge in a pear tree.

(Deep breath.)

It almost makes you hearken back to the traditional way of evaluating a Texas school’s quality: the record of its football team.

I don’t mean to pick on the new proposed ratings. They’re designed to give schools with middling test scores some credit if they still have a decent number of high-performing students. Say Jones Elementary can only manage an Academically Acceptable rating. Under the new ratings system, if it has 50 really smart kids buried within those mediocre test scores, it might earn the spiffier-sounding Academically Acceptable Commended label.

But they’re part of a troubling trend over the past decade: the ever-growing complexity of how we rate schools.

Back in the 1990s, the school ratings system was blessedly simple. Only two subjects mattered, math and reading. All schools had to do was get as many of its kids to pass the old TAAS test as possible. If a school’s passing rate could exceed certain nice, round numbers, it would get a nice rating. There were certainly ways to game the system, but for the most part, it was easy to understand.

That’s important. The Texas school ratings system is primarily a shaming device. Schools with great test scores (generally) don’t get any more money than schools with mediocre ones. A good rating looks nice on the school letterhead, and it makes parents and staff happy. But it doesn’t have much direct, concrete impact on a campus.

That means the system’s power rests in its ability to get teachers and staff to buy in to it. If people don’t believe in a system, it fails.

First came the federal system created by No Child Left Behind. It uses different standards to separate the good from the bad than the state does. So a school can be rated highly in one system and not in the other.

And over time, the state system has added more tests in more subjects. Special rules have been created for certain grade levels. There are new score-calculation formulas to worry about, and new variables like “required improvement” and “exceptions.” The treatment of special-education students has become downright baroque; folks in Austin are now talking about there being five distinct state tests for them.

Some of the changes are good; all (or nearly all) were certainly well intentioned. But they all make the system more confusing to the people who need to buy into it: parents and educators. Complexity creates tension, anxiety and pressure. And when people are confused by a system, they’re tempted to reject it entirely.

A study of 401(k) plans a few years back found that the more investment options a company’s plan offered, the less likely employees were to actually sign up in the first place. That meant turning down free matching money from employers.

Confronted with a complex system, people freeze.

You’re seeing a similar phenomenon in higher education. U.S. News & World Report ranks the “best colleges” each year, using a complicated, black-box formula to invent pointless distinctions. (As if Yale, Harvard, and Princeton measurably swap positions every few months.) In the last few years, angry colleges have begun to push back, even talking about purposefully sabotaging the data U.S. News uses in its formula.

Confronted with a system they consider confusing and unfair, they’re rebelling.

We haven’t seen a large-scale rebellion yet in Texas. But the current legislative session has featured far more rumbling about the testing system than usual.

It’s looking as if legislators are ready to toss out the current TAKS graduation test and replace it with something more easily understandable – tests in May that cover what high school kids have learned over the past year. If that happens, officials will have to figure out some new way to rate schools.

That process will never be easy, or without controversy. But there’s a reason no management guru advises: “Keep It Complicated, Stupid.”