October 23, 2014

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Speaker Batchelder seeks to close educational service center loophole

David Knox and Loren Genson, The Chronicle-Telegram

Ohio House Speaker William G. Batchelder is calling for new limits on the way the state’s 55 county educational service centers spend “carryover funds” on behalf of schools districts.

Batchelder, R-Medina, proposed the changes in response to the continuing controversy over Medina Schools Superintendent Randy Stepp’s use of the carryover fund to pay for more than a quarter-million dollars of his education and travel expenses.

The payments were authorized by Stepp’s contracts with the school board, but because the checks were issued by the Medina County Schools’ Educational Service Center and not the school district, Medina school board members and the district treasurer said they were unaware of the total amounts.

Nor were the payments listed on the Medina district’s financial statements routinely examined by state auditors.

Batchelder’s spokesman, Mike Dittoe, said the amendment “ensures what happened in Medina won’t ever happen again in any area.”

The proposed amendment would require district treasurers to annually report to their school boards all service center carryover funds — surplus dollars left over after districts pay for a variety of services provided by the centers, including school nurses, interpreters for the deaf, tutors for special needs students, bus driver training and computer specialists.

The school boards then would decide whether to take the surplus funds back or use them to pay toward the next round of center services.

The amendment also would require the districts to include in their “end-of-year financial report that unexpended funds have been retained by the service center and the amount of those funds.”

“The school district must include that carryover as part of their dollars,” said William J. Koran, the superintendent of the Medina County Educational Service Center. “It would be a requirement to put it on their books.”

Koran said he was approached by Batchelder, whose 69th District includes the city of Medina and half the county, about the issue on March 18.

“I met with Speaker Batchelder in regard to education funding for the educational service centers and we spoke about the idea behind that legislation,” Koran said. “He then went to Colleen Grady, the education policy adviser to the Republican caucus, and she got together with Craig Burford, the executive director of the Ohio Educational Service Center Association, and they put the amendment together.”

Burford said the aim of the legislation was to ensure that the carryover funds can’t be spent “without a local school board having a clear understanding of what those expenditures were.”

He added that the amendment is expected to be modified to close “a loophole that we did not intend to be there.”

As originally written, the legislation would allow the carryover funds to be spent “for a purpose other than services” specifically provided by the service centers.

But Burford said the supporters of the amendment later concluded that allowing spending for non-service center purposes would be a mistake.

“That’s leaving the window open for the same thing we’re trying to address,” he said.

A Medina Gazette analysis found Medina Schools spent $2.8 million from the carryover fund in the past five years — nearly $1 million more than any of the other six school districts served by the county center.

Much of the additional spending stemmed from Stepp’s education costs, travel expenses and other payments unrelated to center services.

Burford said he asked the amendment to be modified to prohibit such payments when he testified Wednesday before the Ohio Senate’s education committee.

“Any of those funds spent at the ESC on behalf of the school district ought to be for services that are tied back to an agreement with the district,” he said.

“We firmly believe that all these transactions between the ESCs and school districts have to be transparent — in the public light, open to public discussion and dialogue — so that not only the local school board but the community at large knows how the dollars are being spent and they’re going for their intended purposes.”

Asked if hey encountered any opposition to the amendment, Burford said, “We have not.”

Burford said service centers in some counties have reporting policies similar to those required by the amendment.

“Summit County ESC already gives a monthly report to the schools on all the district funds,” he said.

The controversy has taken a heavy toll on the Medina district.

Former school board President Charles Freeman resigned on March 26 — three weeks after a public uproar over Stepp’s new contract that provided him with an $83,000 signing bonus.

The furor grew following news reports that the school board had approved contracts for Stepp since 2009 obligating the school board to pay for the cost of his “past college degrees,” “any college coursework completed for the purpose of expanding his professional knowledge” and “any tax liability that may result form such reimbursements.”

So far, the district has paid more than a quarter-million dollars for Stepp’s education, including nearly $172,000 to pay off his federal student loans and nearly $94,000 for an executive master’s in business administration from Case Western Reserve University.

On April 8, the school board placed Stepp on paid leave pending completion of a special state audit of the Educational Service Center carryover fund.

On April 16, school board members voted to rescind Stepp’s contract, saying they violated Ohio’s “Sunshine Law”s when they approved it Jan. 7 during a work session.

That same day, the board pulled its 5.9-mill levy from the May ballot, saying there was no hope of passage.

Contact David Knox at (330) 721-4065 or dknox@medina-gazette.com or Loren Genson at (330) 721-4063 or lgenson@medina-gazette.com.