Audit: BR charter school group ran up debt at Crestworth

The charter school group that ran Crestworth Middle School owed almost $79,000 more than it had in assets when the group handed the school back to the state Department of Education a year ago, according to an audit made public this week.

The finding is contained in the final audit, covering the 2011-12 fiscal year, for Crestworth Learning Academy Inc., a nonprofit group that held the charter for the public school from 2009 to 2012.

The school’s finances declined substantially during its last year in operation as a charter school. That year it took in more than $3.7 million, but spent almost $4.1 million. Its revenues were over $1 million less than they were in 2010-11, but its spending declined only by about $800,000 compared to the prior year.

The audit, commissioned by the Legislative Auditor’s Office, was completed in late May by Roslyn Johnson, a CPA in Baton Rouge. The state auditor’s office posted it online Monday.

The audit cited “substantial deficiencies” in the charter school’s internal financial controls, specifically in how it handled the money for student activities and payroll.

Johnson wrote that the school’s former management “is developing a plan to reduce its liabilities through fundraising activities.”

The Legislative Auditor’s Office referred news media calls about the audit findings to the state-run Recovery School District, or RSD, which inherited the middle school last July.

Nash Crews, chief of staff at RSD, said she hadn’t seen the audit. However, she said, the charter school’s debts are its own. She said the RSD relies on charter schools to handle their own financial affairs.

The academy’s board of directors included several members of Mt. Pilgrim Baptist Church, located a mile south of the school along Scenic Highway in Scotlandville.

The school’s financial problems were no secret. Some teachers protested at the end of 2011-12 school year when they ceased getting paid.

The state-run Recovery School District, after it took over Crestworth, was forced to temporarily relocate the school from its campus at 10650 Avenue F, because the building failed an inspection by the state Fire Marshal.

Meanwhile, repairs were delayed by unpaid utility bills left behind.

Students moved back to Avenue F in October, after two months and $75,000 worth of repairs.

As of June 30, 2012, the charter school had $175,000 in assets, but $254,000 in liabilities. More than half the liabilities, almost $139,000, stemmed from unpaid salaries and benefits and unpaid payroll taxes.

The audit notes that the charter school’s board received a $60,000 unsecured, no-interest loan on Aug. 2 that it used to pay off some of the payroll debt.

“In addition, the school continues to owe additional amounts for vacation leave and salaries and related benefits to teachers and other staff with an estimated amount of $57,000,” Johnson wrote.

In a phone interview, Tommy Cain, the charter school’s business manager, said the $60,000 loan came from Mt. Pilgrim and hasn’t as yet been paid back. He said the board is still developing a fundraising plan to pay off its remaining debts.

Crestworth Middle School was renamed Crestworth Learning Academy in 2009 when it became a charter school.

RSD has retained that name, but is looking for a new charter management organization to take over the school, as early as fall 2014.

Prior to summer 2009, the chronically low-performing middle school was operated by the East Baton Rouge Parish school system.