Private Nonprofit School Gets a Failing Mark on Governance

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April 10, 2011; Source: Los Angeles Times | Everyone connected with a private nonprofit school in Santa Monica has learned a painful lesson: Don't look the other way when there are only two people on the board, and especially when both are husband and wife.

That lack of – or lax – governance is said to what contributed to Concord International High School's bankruptcy last November, and which was followed by a lawsuit brought last week against its former administrator. The suit, filed in U.S. Bankruptcy Court, claims that former administrator/board members Susan Packer Davis misused more than $1 million by paying herself an exorbitant salary, employing family members, and diverting school funds for personal use. The school’s annual budget was around $1.5 million.

Most of that allegedly misspent money came from tuition, including fees paid in advance for the 2010-2011 academic year. According to the Los Angeles Times, the suit takes aim at Packer Davis for employing her husband, Eric Hille, and son, Alexander Davis, "although it was uncertain what services they provided or the value of those services."

Other allegations are that school funds paid for personal expenses, including credit card charges, and the rent for Alexander's luxury apartment. Tax records list Packer Davis and her husband as the only members of the school's board. They also show that in 2009, she paid herself $308,000 in salary, while her husband earned $45,000 and her son $53,000 for the 2010 school year. More so, tax records reveal that the school spent in excess of $700,000 over three years on "conferences, conventions and meetings."

Staff, teachers, and parents who have been examining the school's records since Packer Davis resigned in November can't find any supporting documents and don't know of any such events that would account for those expenditures. In the wake of Concord's bankruptcy, parents have contributed additional money to keep the school afloat. It now operates as Concord Prep at the Santa Monica Boys & Girls Club. The Los Angles Times reports that the new school received a recommendation from the Western Association of Schools and Colleges that it retain its accreditation at least through the summer.

David Brown, executive director of the group's Accrediting Commission for Schools, described the situation at Concord Prep as "unusual." He acknowledges that everyone involved with keeping the school operating has done "incredible work," but he adds that "it's a question mark" whether it will be around next year.—Bruce Trachtenberg