Columbus – A state audit released today uncovered additional improper spending of more than $62,000 by the Lawrence County Educational Service Center (ESC).

The financial audit of the ESC for fiscal years 2015 and 2016 identifies overpayments to former Treasurer Teresa Lawless and former Superintendent James Payne, in addition to penalties and interest paid to the IRS.

This is the fourth audit in which the state has ordered Lawless to repay money to the ESC or its former charter school, the Lawrence County Academy. Including the amounts reported today, she has yet to repay any of the $424,688 she owes to the organizations. The ESC placed her on paid administrative leave in December 2015 and fired her in May 2017.

The overpayments to Lawless and Payne relate to questionable performance incentive payments that auditors examined previously during a special audit released in May 2017. According to that audit, the ESC’s board-approved contracts permitted the treasurer to base the payments solely on increases to the general fund balance instead of performance. 

Today’s audit found that Lawless miscalculated the general fund balance for 2014, resulting in excessive incentive payments in 2015. Those overpayments to Lawless and Payne totaled $36,338 and $4,458, respectively. 

Auditors issued findings for recovery against the two former administrators, ordering them to return the money to the ESC. This past August, Payne repaid the full $87,794 he received from incentive payments in 2014 and 2015. 

The audit includes an additional finding for recovery against Lawless for $21,720 in IRS penalties and interest paid by the ESC in 2017. The charges stemmed from her failure to pay the ESC’s 2014 taxes on time, and her failure to file W-2 forms and report taxable Medicare wages for ESC employees.

“The penalties and interest incurred by the center served no proper public purpose and could have been avoided had the W-2s and accurate information on returns been remitted as required by law,” auditors wrote.

In addition to the 2015-16 audit, the Auditor of State’s office today released the ESC’s 2017 audit, which contains no findings for recovery. Both reports are 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 6,000 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.

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Beth Gianforcaro
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