Financial concerns uncovered following arrest of school finance officer leaves Carolina International School’s future in question
By Josh Lanier
Several teachers at Harrisburg’s Carolina International School say they are searching for new jobs as looming debt threatens to close the school by April 30.
The possible closure of the 445-student school comes after a financial company hired by the school found that a former employee, who was arrested and charged with embezzlement, mismanaged nearly $500,000 in funds over the course of almost two years.
Teachers first learned of the financial woes of the school at a Feb. 14 board meeting. The school needs to raise $390,000 to cover operating expenses, including payroll for the rest of the year. They were told if $170,000 wasn’t raised by April 30, May’s payroll would not be met. Another $220,000 would need to be raised by the end of May to cover the June payroll.
The problems shocked some parents and teachers. While others said they believed the closure was a foregone conclusion after complaining about the school’s financial woes for years.
School Director Richard Beall said Friday that he believes some of the responsibility for the school’s financial problems rests with him.
“We didn’t take adequate enough measures to address the problems when they arose,” he said. “I take a full measure of responsibility in this.”
Beall talked about the school’s former financial officer, Sandra Vielbaum, who was arrested and charged by Cabarrus County police on Dec. 19 with embezzlement. Her next court appearance is scheduled for March 3.
Acadia Northstar, a Rutherfordton based accounting firm hired to evaluate the school’s finances, believes Vielbaum embezzled nearly $200,000 in funds and caused another $300,000 in damage with late or default payments, Beall said.
The fraud allegedly began on March 10, 2006 with an illegally deposited check, Beall said, and school officials were unaware of any impropriety until shortly before Vielbaum’s arrest. But e-mails sent to Beall dated March 2006, complained about possible mismanaged funds and asked for a board investigation.
“I don’t care what we’re told now, there’s nothing that they can really say or do that will make me change my mind about that school,” said Heather Estey, a parent of CIS students. “We’ve been trying to get the board’s attention about issues with the budget for nearly two years and they ignored us. I, and a lot of other parents, can’t trust that school anymore.”
Beall said investigations were conducted into the school’s finances as complaints came in from parents, but, he admits, he and other school officials weren’t thorough enough.
“We tried to follow up on specific complaints that were filed on a case by case basis,” he said. “Looking back, we didn’t require enough to disprove any wrongdoings.”
Estey, and several other parents, said they would remove their children from the school even if it remains open next school year.
Beall said he has considered resigning as director, but hasn’t put a great deal of thought into a decision.
“Each day is filled with a little bit of disappointment and a lot of determination,” he said. “We are determined to find ways to get that money and keep this school open. That’s what I really am focused on right now.”
Can the school stay open?
Other than the $390,000 needed to cover operating costs for May and June, the school is in debt.
More than $300,000 is needed to pay back, state, federal and county taxes and Perkins + Will, a Charlotte based architectural firm, is owed $425,000 for a master plan design.
Beall said as part of a stop-loss program created by Acadia Northstar, school officials are working out deals with vendors and debt collectors that would spread out debt payments out over the course of several years.
“We’re working with Acadia (Northstar) and trying to find ways to keep this school open,” he said. “We are determined to keep this school open and we’ll do what it takes.”
The school is operating with an independently created budget and is looking for ways to recoup lost money. An insurance policy will cover most of the money embezzled, said Dave Faunce a partner with Acadia Northstar, and that insurance money has already been written into the newly formed budget.
A full financial report will be completed by the end of next week and avenues to raise funds will be considered.
Some ideas for recouping that money are bridge loans, grants and private donations, Faunce said.
“They’re going to need to borrow that money or raise it,” Faunce, “I think they have a good chance of surviving, there are a number positives characteristics that this school shows that gives us hope.”
E-mails are currently being circulated by parents looking at ways get other parents and community members interested in donating to the school. The goal, according to the e-mail, is to raise $100,000 in 10 days.
Jack Moyer, director of charter schools for the N.C. Department of Public Instruction thinks the school has hit hard times, but believes it will be able to make it through.
“I understand everyone is concerned and we’re concerned as well, but until this is done there’s not a whole lot you can say right now,” he said. “But I can say I feel very certain they can work through this process.”
The next operating fund allotment from the state is scheduled to be delivered at the beginning of July, Faunce said, but cannot be used to pay debts.
“Money is going to have to be tight to get them through the next few months, but it is very possible that this school will be able to make it,” he said.
Teachers tired of working under tight budgets
If the money is raised and the school remains open, operating budgets would be stretched thin for years to come, said Faunce, as the school repays debts and reallocates funds that were mismanaged.
Teachers at Carolina’s International School said they’ve always worked under tight budgets because of financial problems.
Teachers tell stories about parents donating hand soap and paper towels for bathrooms because vendors weren’t paid and deliveries didn’t come. Some teachers needed to purchase markers for whiteboards and other supplies that didn’t arrive.
“I’ve worked in public schools for about eight years and teachers always have to purchase some of their own supplies,” CIS third-grade teacher Cindy Barnes said, “but never like this. We always seemed to be low on funds.”
Many teachers said they chose to work at the school because of its dedication to education and focus on international studies and understanding.
The school’s 2006 through 2007 N.C. Schools Report Card shows it ranked higher than the state average in every subject. The school was labeled a “School of Distinction” last academic year.
But with the advantages and accolades, many teachers are ready to move on.
“We love our students,” Vinten said. “That’s why we do this, but the stress on not knowing if you’ll be paid in a couple of months or have a place to work is just too much to take.”
Parents said they understood the teachers’ dilemma.
“We have some of the best teachers in the world,” Kristen Basilice, a CIS student’s parent said. “They’re phenomenal but it’s so much on them. I don’t see how they are still able to work with a smile on their faces.”
Principal Deeanna Duncan said she’s seen a large drop in teacher morale in recent days.
“It’s been really hard on them as well as us,” Duncan said. “But they’ve done a really great job at continuing to work throughout the day not showing their struggles to their students.”
The financial strains will also stop expansion of the school next year as plans to add 11th grade classes in the K-10 school were put on hold until the school is on firmer financial ground, director Beall said.
“No matter what happens, I’m going to take my children out of that school,” Basilice said. “I hope they get teachers as good as they have now, although, I doubt that. These teachers are a special group.”
Lack of oversight probably main culprit
North Carolina began its charter school system in 1996. Called a “half-way comprise between public school and private voucher advocates,” by Executive Director of the League of Charter Schools, Roger Gerber, the system was capped at no more than 100 schools, mostly made of smaller classrooms focused on individual instruction.
Charter schools are public schools, but an executive board, which operates as a nonprofit, controls funds. But state officials don’t allocate the same amount of funds to charter schools as other traditional public schools. Charter schools aren’t allocated money for a Capital Fund, which is used to purchase buildings and land.
“Charter schools can run into trouble because they’re not getting as much money as traditional public schools,” Gerber said. “The boards have to come up with ways to raise money for land and buildings and that’s why you sometimes end up with schools in strip malls or in churches.”
Paul Pigue, a landowner from Texas, owns the land and building Carolina International School uses, and leases it to the school for $15,200 a month, Director Beall said. That money is taken from the general operating budget the state allocates to the school, which is dispersed over three payments a year, Beall said.
“Having a way to pay for that land can cut into funds or you have to ask your teachers and parents to donate money to help retrieve that money,” Gerber said.
A Capital Campaign Fund, which began at CIS last year, raised $25,000 from parents, teachers and community members, for the purchase of a new building. But because of the financial mismanagement, that money was either fraudulently removed or spent to cover operating expenses, Beall said.
If the school does remain open money later raised will be allocated to replace those depleted funds, Acadia Northstar partner Dave Faunce said.
But if the school can’t recoup the $390,000 needed to remain open, assets would be liquidated and the nonprofit board would adsorb the remaining debt, Gerber said.
If the school were to close, Gerber said it could be due to a lack of oversight.
“It’s important to have someone looking over your shoulder and checking your books to make sure everything is done right,” Gerber said. “I’m sure the school is wishing they had heeded the warnings sooner, and it’s good they have someone in there who can really set them up with what exactly needs to be done. But it may be too late.”
• Contact Josh Lanier at [email protected] or 704-789-9144.