Columbus – A special audit released today by Auditor of State Dave Yost cites more than $300,000 in findings for misuse of public funds at the Lawrence County Educational Service Center (ESC).

The bulk of the amount stems from an abuse finding auditors issued against Treasurer Teresa Lawless and former Superintendent James Payne for accepting questionable performance incentive payments amounting to $169,674 and $87,793, respectively. 

The two administrators’ board-approved contracts allowed the incentives to be paid without any regard to actual performance. Instead, their contracts authorized the treasurer to base the incentive amounts solely on increases to the ESC’s general fund balance.

The wording of the contracts “could be perceived as creating an incentive for the Treasurer to not perform duties in the best interest of the ESC … in an effort to keep a larger general fund balance intact, and thus supporting a higher performance incentive to be paid,” auditors wrote.

Lawless, who was placed on paid administrative leave in December 2015, did not spend $380,872 earmarked for special education services that the ESC received from member school districts over four years. The unused funds remained in the ESC’s general fund, increasing both the balance of the fund and the incentive payments to Lawless and Payne.

“The facts are clear: Questionable contracts created an incentive for the treasurer to withhold valuable resources from students,” Auditor Yost said. “That alone should serve as a catalyst for the ESC to take a serious look at the vulnerabilities in its contracts.”

The audit also found Lawless made numerous improper calculations beginning in 2013 that inflated her paychecks. She overpaid herself by $22,139 over a three-year period by calculating her salary at a higher rate than what was authorized. 

An additional $9,301 in overpayments resulted from Lawless cashing out 20 more days of unused vacation leave than her contract permitted and from calculating two other leave payouts using incorrect rates.

More miscalculations caused Lawless and Payne to receive excess bonuses amounting to $6,347 and $6,109, respectively, including 5 percent bonuses that were never authorized.

Among the other special audit findings, auditors determined:

• The ESC paid Payne duplicate mileage reimbursements of $555 for travel in 2012; 
• Lawless received $552 in unapproved mileage reimbursements for evening travel from her home to the ESC;
• Lawless charged $154 to the ESC’s credit card for candles and fragrance products;
• Lawless did not properly request or deduct vacation leave for 16 days spent out of the office from August 2013 through September 2015.

Auditors issued five findings for recovery totaling $38,493 against Lawless. Two additional findings for recovery adding up to $6,664 were issued against Payne, which he repaid to the ESC during the audit. 

A full copy of the special audit report is available online. 

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The Auditor of State’s office, one of five independently elected statewide offices in Ohio, is responsible for auditing more than 5,900 state and local government agencies.  Under the direction of Auditor Dave Yost, the office also provides financial services to local governments, investigates and prevents fraud in public agencies and promotes transparency in government.

Contact:
Beth Gianforcaro
Press Secretary
614-644-1111