Taylor: Cincinnati Charter School Owes State $2.6 Million

Missing financial documents plague Harmony Community School

Tuesday, August 5, 2008

Hamilton County -

Auditor of State Mary Taylor today released the 2005 financial audit of Harmony Community School. The audit identifies more than $2.6 million in state aid the school received during fiscal years 2005, 2006 and 2007 that is owed back to the Ohio Department of Education (ODE). The report indicates the funds in question must be returned to the ODE because school officials did not provide the necessary documentation to prove that state educational requirements were met.

“Good record keeping is vital to ensuring that public funds are spent legally and appropriately,” Taylor said. “I encourage Harmony Community School officials to thoroughly review and implement the recommendations outlined in this report to improve management efficiency and financial accountability and oversight.”

Ohio law requires community schools to provide 920 hours of educational curriculum each school year. A large portion of the funds owed back to the state relate to a lack of documentation showing that Harmony met state curriculum requirements. As a result, auditors determined that the school was not entitled to $2,146,516 in state funding that it had previously received.

Additional funds owed back to the state include:

  • $293,517 received for students who were no longer attending the school
  • $180,962 received for students who failed state mandated residency or self supporting requirements

In addition, Harmony’s director is alleged to have spent $6,551 of the school’s money to renovate the deck on his personal residence. Director Deland McCullough has repaid the funds but the issue was referred to the Ohio Department of Taxation since school accounts were used to avoid paying state and county sales taxes.

Separately, the report identifies $158,450 in federal grant funds that were spent improperly. The failure to comply with grant requirements could jeopardize future federal funding.

The Auditor of State declared Harmony Community School “unauditable” for fiscal years 2005 and 2006 on April 3, 2007. An unauditable designation means that records and documents necessary to conduct a routine financial audit were missing, incomplete or inaccurate. This resulted in a significant delay in the audit process.

Additional records outlined in the report as missing or otherwise unavailable, include:

  • Student files providing proof of age for state funding purposes
  • Student transcripts which include hours of instruction, grades and other information
  • Proof that all teachers and aides were properly licensed

As part of the 2005 audit investigation, audit years 2006 and 2007 were tested for ODE compliance. The 2006 and 2007 financial audits are underway and ongoing at this time.

Upon taking office, Taylor committed to improving accountability in the state’s community school system. For the second year in a row, the Auditor of State’s office is sponsoring day-long training seminars to provide charter school officials with the knowledge and resources they need to improve the financial management of public tax dollars. This year’s training sessions will take place on August 15 at the University of Akron’s Student Union in Akron, Ohio and on August 19 at the Kings Island Resort Center in Mason, Ohio.

The Auditor of State’s 2008 Community School Training workshops are specifically designed for charter school board members, fiscal officers, sponsors, coordinators and employees. Representatives from the Auditor of State’s office will present information on several auditing related topics which include outlining basic audit requirements, ways to combat fraud, identifying public records and tips on completing grant applications.

For more information on the Auditor of State’s 2008 Community School Training workshops or to obtain a complete copy of the Harmony Community School audit, please visit www.auditor.state.oh.us.