April 20, 2014

Medina
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Batchelder seeks limits on school carryover spending

David Knox and Loren Genson

Ohio House Speaker William G. Batchelder is calling for new limits on the way the state’s 55 county educational service centers spend “carryover funds” on behalf of schools districts.

Batchelder, R-Medina, proposed the changes in response to the continuing controversy over Medina Schools Superintendent Randy Stepp’s use of the carryover fund to pay for more than a quarter-million dollars of his education and travel expenses.

William Batchelder

The payments were authorized by Stepp’s contracts with the school board, but because the checks were issued by the Medina County Schools’ Educational Service Center and not the school district, Medina school board members and the district treasurer said they were unaware of the total amounts.

Nor were the payments listed on the Medina district’s financial statements routinely examined by state auditors.

Batchelder’s spokesman, Mike Dittoe, said the amendment “ensures what happened in Medina won’t ever happen again in any area.”

Closing a loophole

The proposed amendment to the omnibus state budget, House Bill 59, would require district treasurers to annually report to their school boards all ESC carryover funds — surplus dollars left over after districts pay for a variety of services provided by the centers, including school nurses, interpreters for the deaf, tutors for special needs students, bus driver training and computer specialists.

The school boards then would decide whether to take the surplus funds back or use them to pay toward the next round of bills for ESC services.

The amendment also would require the districts to include in their “end-of-year financial report that unexpended funds have been retained by the service center and the amount of those funds.”

“The school district must include that carryover as part of their dollars,” said William J. Koran, the superintendent of the Medina County ESC. “It would be a requirement to put it on their books.”

Koran said he was approached by Batchelder, whose 69th District includes the city of Medina and half the county, about the issue on March 18.

“I met with Speaker Batchelder in regard to education funding for the educational service centers and we spoke about the idea behind that legislation,” Koran said. “He then went to Colleen Grady, the education policy adviser to the Republican caucus, and she got together with Craig Burford, the executive director of the Ohio ESC Association, and they put the amendment together.”

Burford said the aim of the legislation was to ensure that the carryover funds can’t be spent “without a local school board having a clear understanding of what those expenditures were.”

He added that the amendment is expected to be modified to close “a loophole that we did not intend to be there.”

As originally written, the legislation would allow the carryover funds to be spent “for a purpose other than services” specifically provided by the service centers.

But Burford said the supporters of the amendment later concluded that allowing spending for non-ESC purposes would be a mistake.

“That’s leaving the window open for the same thing we’re trying to address,” he said.

For services only

A Gazette analysis found Medina Schools spent $2.8 million from the carryover fund in the past five years — nearly $1 million more than any of the other six school districts served by the county ESC.

Much of the additional spending stemmed from Stepp’s education costs, travel expenses and other payments unrelated to ESC services.

Burford said he asked the amendment to be modified to prohibit such payments when he testified Wednesday before the Ohio Senate’s education committee.

“Any of those funds spent at the ESC on behalf of the school district ought to be for services that are tied back to an agreement with the district,” he said.

“We firmly believe that all these transactions between the ESCs and school districts have to be transparent — in the public light, open to public discussion and dialogue — so that not only the local school board but the community at large knows how the dollars are being spent and they’re going for their intended purposes.”

Asked if hey encountered any opposition to the amendment, Burford said, “We have not.”

Burford said service centers in some counties have reporting policies similar to those required by the amendment.

“Summit County ESC already gives a monthly report to the schools on all the district funds,” he said.

Reaction

Medina school board President Karla Robinson said Thursday she was unaware Batchelder had proposed the amendment but welcomed the idea.

“I think this is a good change to the law,” she said. “If our error can help school boards statewide do a better job, that’s a good thing.”

John Leatherman, president of the Medina teacher’s union, which protested the payment of Stepp’s educational costs, said he also hadn’t heard about the amendment.

“I’m glad they did something,” Leatherman said. “I know that a lot of my members — and I think the community — reached out to Batchelder.”

Both the Medina school board and the board of governance of the Medina ESC already are moving to change their policies.

Medina Schools Treasurer Jim Hudson has proposed requiring the school board president to sign off on checks of more than $10,000 from the ESC carryover fund. Smaller checks would need the approval of the treasurer and the human resources director.

The ESC board is considering a much stricter policy — a complete ban on spending “for any purpose that is not a service” contracted by the school district.

Any carryover money would be returned to the school district at the end of the school year.

“Our board feels very strongly that those funds go back to the school treasurers,” Medina County ESC board President Kent Patterson said. “We don’t need to be a banker for the school districts.”

Fallout

The controversy has taken a heavy toll on the Medina district.

Former school board President Charles Freeman resigned on March 26 — three weeks after a public uproar over Stepp’s new contract that provided him with an $83,000 signing bonus.

The furor grew following news reports that the school board had approved contracts for Stepp since 2009 obligating the school board to pay for the cost of his “past college degrees,” “any college coursework completed for the purpose of expanding his professional knowledge” and “any tax liability that may result form such reimbursements.”

So far, the district has paid more than a quarter-million dollars for Stepp’s education, including nearly $172,000 to pay off his federal student loans and nearly $94,000 for an executive master’s in business administration from Case Western Reserve University.

On April 8, the school board placed Stepp on paid leave pending completion of a special state audit of the ESC carryover fund.

On April 16, school board members voted to rescind Stepp’s contract, saying they violated Ohio’s “Sunshine Law”s when they approved it Jan. 7 during a work session.
That same day, the board pulled its 5.9-mill levy from the May ballot, saying there was no hope of passage.

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

  • lookingallaroundme

    Okay, I’m confused. The State comes in and audits all schools. Summit county schools have had a policy and rules to stop this big loop hole from being abused. Why did the state auditors ( Republican or Democrat) not notice a difference in the way significant money was being handled and reported. A best practices bulletin could have been issued long ago. Unless this state audit is and has been a meaningless rubber stamp.

  • Medina retiree

    It’s nice to know, that out of $2.8 millions from the Carryover fund in last 5 years about $266K + tax went to Stepp. And not a word on remaining $2.5 million. Charles Freeman has resigned and the issue got muffled.nThe scapegoat was found and business is back as usual.

  • Jay Harbath

    Absolutely ridiculous waste of legislative time. One bad apple like Stepp and we need a new law? Send an email link to the Outrage page to every superintendent in the state. That can be their reminders to keep in line. nnHow about doing what the Ohio Supreme Court told you to do and address school funding? Spend the time on the big issue that affects every kid in the state. Quit screwing around and wasting time on side issues like this.

  • Jay Harbath

    The entire Treasurer’s department should be fired also. In a district with financial problems, what financial manager leaves that kind of cash laying around. Stepp used it as an undocumented ATM. If the Treasurer had reclaimed the unused funds, Stepp would have had to go to an account the Board monitored more closely. The mismanagement in this district is ridiculous. A good house cleaning is LONG overdue.