The exterior of the Academy of Dover on Saulsbury Road in Dover. According to a state report released last week, “lack of oversight and complete disregard for internal controls” led to issues at the charter school. (Delaware State News/Dave Chambers)[/caption]

DOVER — After the Office of Auditor Accounts released a critical report about the mismanagement of funds at the Academy of Dover, Kimeu Boynton, the president of the board of directors, said the school is ready to get back on track.

According to a state report released Tuesday, “lack of oversight and complete disregard for internal controls” led to issues at the Dover charter school, where former principal Noel Rodriguez spent tens of thousands of dollars in school funds for personal purchases.

The Dover charter school, which opened in 2003, serves students in kindergarten through fifth grade.

For the past year, Mr. Boynton said, the board has worked diligently to put more controls in place, to change its policies and to ensure it never happens again.

The investigation started when the Office of Auditor Accounts received a tip on its fraud hotline about the school in August. Soon after, the board of directors and the Department of Education contacted the office about irregularities in school spending.

Mr. Boynton said that the school’s independent auditors had alerted them about an issue at the beginning of the school year. The news came as a shock.

“When our auditors brought it to our attention that there might be a discrepancy, we immediately alerted the (state) auditor’s office. I would say within 24 hours,” Mr. Boynton said.

He said the board wasn’t close with Mr. Rodriguez, but they were under the assumption that he was doing his job. Mr. Rodriguez stepped down in September at the board’s request.

“I don’t think any organization would have expected to the extent of the things that they found,” Mr. Boynton said.

This year they set up a budget oversight committee, he said, and members will also be going through expenditures “with a fine toothed comb.”

In its investigation, the office looked closely at credit card activity, payroll activity and other school expenditures from July 1, 2011 through Oct. 31, 2014.

It found that Mr. Rodriguez used school funds to make $127,866 in personal purchases; an extra $129,458 in purchases couldn’t be confirmed for school or personal use.

“We weren’t there as a board every day in the school. We were there once a month. We weren’t necessarily looking at every single purchase,” Mr. Boynton said.

That’s all changed now, he added.

“…although the audit point is very clear, the audit point is looking at things…that happened a year ago,” Mr. Boynton said.

Mr. Rodriguez spent the money using a combination of First State Financials voucher payments for vendors such as Verizon Wireless and state-funded credit cards.

He also used school funds to pay legal fees for lawsuits; he reimbursed employees for purchases in violation of state policy, such as alcohol; and he rewarded teachers with stipends and bonuses without adequate justification or equitable distribution.

The report said Mr. Rodriguez “created a control environment with an unapproachable, ‘no questions asked’ tone at the top.” It described him as a “bully” and a “manipulator,” who told one individual that he “had the board in his back pocket,” and he knew the weaknesses in the state’s oversight efforts.

Mr. Rodriguez opened five credit cards, including a State of Delaware Procurement card and Home Depot, Lowes, Sam’s Club and Staples cards.

“We’ve had these problems in the past. Undoubtedly we will have this problem again in the future,” State Auditor R. Thomas Wagner Jr. said.

“It gets back to the simple perspective of the highest risk dollars that we have out there generally involved misuse of a government credit card.”

“Every agency has the responsibility to make sure they have an understanding of who has the responsibility for purchases and who has the responsibility for oversight of the purchases,” he said.

In this case, Mr. Wagner said, it’s a simple fix: “One person does not have complete control over the cards.”

Mr. Rodriguez’s purchases included $43,577.79 in electronics, such as a treadmill, televisions, cameras, laptops and a PlayStation 4. He also used school funds to buy items such as clothes, gas, groceries, entertainment, high end office supplies, furniture and camping supplies.

Mr. Rodriguez was the only authorized purchaser on all five cards, the report said, and he coded and approved all the payments. The board said it only knew about the state card.

The Academy of Dover receives state and local funds through the budget bill, as well as some federal funds, and revenue from local school districts.

The state Department of Education is responsible for oversight and provides charter schools with technical assistance and guidance.

The report said that although charter schools may receive instruction from the state “they may use local funds as they deem appropriate,” That thinking is inconsistent with laws and regulations since the money is held in the state’s account.

The Division of Accounting even flagged some transactions, including Christmas decorations, as questionable, but accepted the school’s response that “non-State monies” were used for payment.

But charter schools still need to follow the state budget and accounting manual for their purchases, Mr. Wagner said.

“…when you’re talking about expenditure of money for items that you need to purchase, you still need to follow the state budget and accounting manual,” Mr. Wagner said.

The report alleged “a groupthink mentality” from the board contributed to the problem, “led by the former principal and undetected by the lax internal controls at the school and statewide levels.” It also said they weren’t trained or involved in day-to-day operations.

In the past year, though, Mr. Boynton said, the board has undergone more training and put policies in place to ensure that there is more oversight. At least three more trainings are scheduled coming up.

“I would not say that we were untrained or we were not familiar, because a lot of us have been state employees and worked in different organizations…but charter school law is very specific and budget laws can be very specific,” Mr. Boynton said.

Nine people sit on the board of directors; the board is required to include a parent of a child in the school, a professional educator and someone with administrative experience.

The board appoints members by majority vote and officers are elected annually. Each member serves a three-year term. The board has also contracted with Innovative Schools for management support.

Moving forward, the report recommended the school follow professional standards for stronger internal controls. It also recommended the state review and revise the process used to establish charter school boards.

“A clear and consistent message is needed form all state agencies about fiscal accountability over all charter school funds including local funds,” it said.

Moving forward, Mr. Boynton said that despite the negative publicity, the board is running the school “in the best possible way” with the help of state agencies.

“I just want to reiterate that we are in good order at the Academy of Dover. I just want to make sure the public knows that our finances are in order,” he said.

“It did not affect us in any way financially. Our enrollment is good and we’re trying to do things not just for the students but for the community.”