April 18, 2014

Medina
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State to look at Medina Schools spending from county fund

Loren Genson and David Knox

In the last five years, Medina City Schools has spent $2.8 million from a fund maintained by the county Educational Service Center.

The total is nearly $1 million more than that spent by any of the other six school districts served by the county ESC.

While almost all of the spending by the other districts was to pay bills involving ESC programs, much of Medina’s funds went for Superintendent Randy Stepp’s education costs and for professional development for Stepp and the district’s other administrators, according to an analysis of ESC records by The Gazette.

The unusual policy of paying Medina City Schools bills with checks cut by a county agency is at the center of the growing controversy over Stepp’s compensation, which includes more than a quarter of a million dollars spent on his college education in the past three years.

On Friday, Medina school board members acknowledged they didn’t know how big a bill Stepp had run up for his education.

The situation has drawn the attention of Ohio State Auditor Dave Yost.

“The auditor has been briefed about this and he’s concerned,” said Michael Maurer, spokesperson for the auditor’s office.

While no determination has been made whether to take any action, Maurer said regional auditors “have been made aware of this and they are inquiring with the school district.”

Stepp has been using district funds set aside by the ESC since 2007 — the year after he became superintendent.

According to ESC invoices, Stepp has used the carryover funds for everything from tuition to out-of-state training and iPads.

Stepp doesn’t have to clear the spending with the school board and Board President Charles Freeman said records of money paid out of the ESC account are not included with other financial reports regularly given to board members by district Treasurer Jim Hudson.

ESC Superintendent William J. Koran said Stepp had direct control over the funds because the money belonged to the Medina District.

Koran explained that the “carryover” funds contain money left over after districts pay the ESC for a variety of services, including school nurses, interpreters for the deaf, bus driver training and computer specialists.

The surplus funds can be rolled over to pay the next year’s bills or returned to the district, Koran said. But the money also can go to pay bills unrelated to the ESC.

Koran said his agency was willing to write such checks because “we always looked at it as that was district money — that wasn’t our money.”

Often it’s the district superintendent who personally directs how the funds are spent, according to ESC Treasurer Michelle McNeely.

“We used to be an oversight board,” McNeely said. “Now, as long it’s a legal expenditure, approved by his board, we write the check.”

Koran said he favored changing the policy to provide more accountability over the carryover funds.

“After the controversy that has gone on, I probably would suggest that,” he said.

Where the money goes

Checks written on the carryover account were issued as recently as one month ago. Stepp directed McNeely to pay a $59,225 bill for executive leadership training provided by Mike Rao, “The Growth Coach.”

Principals and other building administrators in all Medina schools were required to attend the training, which took place last week.

According to emails between Stepp and Gary Kovach, a union representative with the Ohio Education Association, some teachers and administrators complained that the training took them away from their daily duties at their schools.

“I find it odd that administrators would be participating in professional development during the busiest time of the school year,” Kovach wrote to Stepp. He also asked about the nature of the training and the cost.

In response, Stepp said the $59,000 cost of the program was a bargain because Rao, whom Stepp met while serving on the county United Way Board, gave the district a 37 percent discount.

Stepp praised Rao’s training.

“In this area of expertise there are very few organizations that can deliver the specialized focus in behaviors, motivators, social and emotional intelligence, and leaders as coach,” Stepp wrote in his response.

It wasn’t the first time Stepp hire The Growth Coach. Last August, Stepp used the ESC fund to pay $17,500 for August training for himself, the district treasurer, comunications director Jeanne Hurt and two other employees.

Stepp first used ESC carryover funds to pay for staff development in 2007, when he requested payments for air fare, hotel and meal expenses for a trip to New York for himself and Human Resources director Jim Shields to attend a seminar at Radio City Music Hall.

Stepp and Shields spent a total of $5,932 on the September 2008 trip, including the registration fee of $1,690 each. A year later, they returned to the seminar — this time the bills totaled $5,090.

Also in 2008, the ESC funds were used to pay $4,782 for a five-day stay in Orlando, Fla., for a conference of the National School Boards Association. Records show four others accompanied Stepp, who said the group included at least three school board members.

Stepp had budgeted $1,600 for the trip, according to an email from McNeely directing her staff to increase the purchase order.

“Could you please change the PO we did for Medina City/Randy Stepp for conference from $1,600 to $5,000?” McNeely wrote. “Apparently, the initial amount is not going to be enough to cover the costs associated with his trip/conference.”

Stepp said the increased spending was because the initial purchase order was submitted without the hotel costs included.

More trips for staff development are planned. In December, Stepp directed the ESC to set aside $5,500 for a June workshop on negotiations at Harvard University.

IPads for administrators

The ESC funds also paid for computer equipment for Stepp and other administrators.

In November 2012, Stepp requested the ESC cut a check to Apple for $17,959 for iPads. All the iPads were WiFi enabled and three were top-of-the-line models with Retina displays.

He also requested $626 in a separate invoice labeled, “ipad for Stepp.”

The payments for the executive training and computers are in addition to more than $265,000 the district paid for Stepp’s education between 2010 and 2012:
n In January 2012, Stepp directed McNeely to cut a check for $172,000 to the U.S. Department of Education to pay off all his college loans.

n Since 2010, the ESC fund also has paid out a total of $93,000 to Case Western Reserve University to pay for Stepp’s master’s in business administration.
Included in those bills was a $9,200 payment to cover the cost of a June 2011 trip to China and Vietnam.

Stepp also directed the ESC to pay a total of $1,012 for his passport, immunization and a flight upgrade to “economy plus.”

Stepp told the ESC and The Gazette that the course was required for his MBA program.

Julie DiBiasio, events and communications manager at the Weatherhead School of Management at Case Western Reserve University, could not confirm whether the China trip was required for the MBA program.

Case offers both part-time and full-time MBA programs. The full-time program, which Stepp used, takes two years to complete and includes two spring and two fall semesters.

Stepp only took one summer semester at the university and completed his degree last year.

The district may face more bills for Stepp’s education. Twelve words added to Stepp’s new contract obligates district taxpayers to bear the cost of “any tax liability that may result” from the education payments.

Stepp said he would include the $172,000 payoff of his college loans in his 2012 tax return, which will be filed this year.

“My accountant will determine what portion is taxable as income, if any,” Stepp wrote in his email Saturday.

Stepp indicated he didn’t pay any federal taxes on the 2010 and 2011 payments to Case Western Reserve because the school board required he get the MBA degree.

“Based on my understanding of tax law the Case Western Reserve MBA was a part of the job requirement and therefore should not be considered income,” Stepp wrote Saturday in an email response to a Gazette reporter’s questions. “It is professional development that was supported and directed by the Board.”

Stepp’s contract with the school board, however, does not include a requirement that he get an MBA degree.

When asked to document the requirement, Stepp referred all questions to Medina City Schools communications director Jeanne Hurt.

School board members also said all questions should be routed through Hurt.

In an email Sunday evening, Hurt said no further response from either Stepp or board members would be available until today.

Several Medina City teachers said the money spent from the ESC funds could be better used.

Lori Berger, an intensive needs intervention teacher at Heritage Elementary, said she would like to use more ESC-provided services in her classroom.

Some of Berger’s students are nonverbal, and often act out physically. Berger said she has used Rachel Krauss, a behavioral specialist employed by the ESC, to help her students. This year, the hours the district purchased from the ESC for Krauss’ services were kept to a minimum, Berger said.

“The whole special education department got an email asking us to handle problems with our school psychologist because we only get Rachel for 30 days,” Berger said. She added that the 30 days was for the entire district to share.

“I have high respect for our school psychologist, but she’s not a behavior specialist,” Berger said.

Berger said she was upset last week when she learned about the $60,000 spent on staff development for administrators.

“There’s a time and a place, and now’s not the time, there’s other bigger things the staff is concerned about,” she said. “Is this training what’s best for the kids? Not when there are other things we need.”

Not all districts run their carryover funds the way Medina does. Some districts apply carryover funds to the following year’s bill, and others bring the money back into their district.

In 2011, Brunswick Superintendent Mike Mayell said Brunswick’s school district decided to bring $600,000 in ESC carryover funds back to Brunswick’s general fund to be used for construction and renovations at the football field.

Mayell said the district has also left carryover funds at the ESC to be applied toward the bill to come in the following year. But in 2011, he said the district chose to spend the money because the $600,000 carryover was large enough to be put to a capital use.

He said transferring the money back into the school district makes it easier for his district to account for where the money goes.

By putting the money in the permanent improvement fund, the district was obligated to spend it on items that would remain in the district for at least five years.

“We didn’t want to use it for any other purpose,” he said.

Contact Loren Genson at (330) 721-4063 or lgenson@medina-gazette.com and David Knox at (330) 721-4065 or dknox@medina-gazette.com.

  • Normal Joe

    Lets vote yes next levy gang. Our tax dollars are put to good use. What a freaking joke.

  • UNCFan

    It’s becoming more and more apparent that Stepp is a real “operator.” He’s out for himself and is arrogant enough to think that he can dance around any controversy. The extent to which he’s been Living Large on the district’s ticket makes me think that he’s best friends with Shaq. No disrespect to Shaq intended.

  • Willie

    When you see it all together like this in one newspaper article, it takes your breath away!

  • BereaBrave

    Are the “Stepp”ford wives ready to pull the plug on supporting this sociopath?

  • http://www.facebook.com/profile.php?id=1540908930 Cliff Donoughe

    Taking money from special needs and rerouting it to travel and education for Stepp is boarderline criminal. I pray that each of us remembers this come the next BOE elections. The ENTIRE board must go and be replaced by true business men and women of this community.

  • yep!

    Wow. Makes some previous youth football issues seem like small potatoes, doesn’t it?

  • Stepp and board must go

    I will enjoy seeing Stepp and the entire board on the next episode of Cops, when they slap the silver bracelets on them all. They are a joke and a disgrace to this community.

  • Fedup

    This really makes one think, sounds just like our federal government!

  • Uneelle

    STEPP DOWN NOW!!!!!!

  • Fedup

    Any body address the money paid to the state for Dr Stepp’s 100% paid retirement fund at 25% of contract.

  • knewbetter

    Misfeasance and malfeasance in living color.

  • OhioGuy10

    This is so embarrassing for Medina. First Stepp, then thenboard, ESC, United Way and the list goes on! How about the Chamber of Commerce?nI remember them standing by Stepp telling us that they researched all thennumbers and stood behind Medina Schools and how responsible they had been withnthe communityu2019s money. The Good Old Boy Network goes very deep in this town. Apparently all you need to do is know someone to get a deal done. How about staff development? Get the Growth Coach! We cannhide it under ESC money. Everyone is happy except the tax payers. What evernhappen to getting blind bids or multiple bids? Did we even look or just because he was a pal he got the contract? And our organization of businesses recommends this as good, sound practices? Must be a connection therensomehow. Time to clean house!

  • rstepp

    Please Vote Yes for the Levy, do it for the kids, Uncle Randy went over seas to help further his education and to help better the children in Medina. He really is for you………………There you go uncle Randy, can I have my kick back now?

  • http://www.facebook.com/michael.bechen.3 Michael Bechen

    I came here becasue of the Quality of the Schools and the city itself. I read all of these things and feel that I may have made a terrible mistake. My children’s future is at stake and these facts are troubling. It would appear that Mr. Stepp (I refuse to call him Doctor..he hasn’t earned it.) has done very well for himself. Even treated some of his administrators to a lot of these perks to sort of circle the wagons of support. You certainly don’t pay 60,000 for a Growth Coach. I want teachers in their classrooms, teaching my children, learning how to be better leaders in the classroom. If they had to have this leaderhship training, when will we see the benefits of it. This money has simply gone to improve the resumes of these people. You don’t have to get an MBA from CASE or go to overseas to get one to begin with. (Does look nice on the resume though) You should be here running your district with a tight rein on the purse strings of your taxpayers. You want an MBA? Then go get one on your own. You’re not 18 and heading off to OSU and have to depend on your parents do you? You don’t need i pads with and the retina function. You use a laptop at your office and if needed use an insertable wi- fi drive. These additional administrators went along for the ride because Stepp wanted support and he bought them with our money. I’m a firm believer that If you feel you are right and just, you will open this whole thing up and let anyone poke around. After all everything is above board, right? Thus far, that has not been Mr. Stepp’s not the boards approach. How any of these people can even believe that they will get this Levy passed is just insane.

  • J Stuart

    All criminals!!!

  • p a sloan

    It seems that Dr. Stepp is too busy getting degrees and finding ways for others to pay for it to use any of his free education for the good of Medina City Schools. The residents of Medina are regularly being asked to pass school levies, while Dr. Stepp seems to be figuring out a way to get more of personal expenditure, for only his benefit, paid by someone else. Dr. Stepp certainly does not appear to have much regard for the education system, the public school children of Medina, or the residents’ budget. The schoold board should have removed that silver spoon from Dr. Stepp’s mouth and demanded that he work for his paycheck and benefits, instead of handing him his heart’s desire on a silver platter. It is now too late for that. The public, including students have lost faith in the Medina Board of Education and Dr. Stepp. It is time for all of them to step down. There were recently 17 applicants for one vacant board position. That leaves 16 Medina Residents, who all have interest and seemingly good qualifications to replace the remaining board members; perhaps it time total clean house and start fresh with a new school board and new leadership.

  • Gary Hooker

    I wonder if Stepp asked “The Growth Coach” for references and checked those references to see if those organizations recognized any tangible benefits from the training? A 37% discount! Sound’s like shopping at a Kohl’s or Levin’s where there is always a sale and everything is marked with a discount off some suggested price that no one actually pays!

  • Tiredofboard

    No it is not, The board was aware and aproved how Stepp was going to be reimbursed, just because he got a fat bonus and you didn’t doesn’t make him criminal. If your boss offered you this type of bonus who wouldn’t take it. I sure would. Stop blaming Stepp.. The board is the ones we elected to spend our money and they have failed us. You can’t blame Stepp for working within his contract.