What Is and Isn’t Board Micromanagement: A Charter School Story

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June 3, 2016; Atlanta Journal-Constitution

We at NPQ are tired of doing these stories. You know them: stories about a board that did not make the finances their business, and a CEO who eventually made the finances his own. We print them not because we think the nonprofit world is rife with fraud but because we want more boards to step up in terms of monitoring the financial state of their organizations.

Christopher Clemons, the founder and former head of Atlanta’s Latin Academy Charter School, has been accused of stealing more than $600,000 from the school over several years. Clemons left Georgia after the school’s board discovered the losses, which was shortly after he left his position with Latin Academy last year. He was arrested in Colorado and awaits extradition to Georgia to face charges of fraud and theft.

The Atlanta Journal-Constitution describes Clemons’ theft as “massive” and “the largest such case in Georgia charter school history.” Bizarre expenditures for a charter school included $12,000 at a strip club, “thousands of dollars” spent at a Mercedes dealership, and ATM withdrawals of up to $1,000 in a single day. The school was forced to close, and its website is no longer active.

The school’s “all-star” board has been accused of focusing too closely on Latin Academy’s academic performance (ranked in the top 25 percent of all Atlanta middle schools) and being lax in financial oversight. The state has passed legislation requiring more financial training for charter school leaders and mandated the separation of the senior management and senior finance positions at charters.

Writing for the Huffington Post, Mercedes Schneider says Latin Academy’s academic successes were significant and real, but that Clemons’ actions have caused the school to become “a scandalized memory tossed atop the growing heap of America’s under-regulated, charter school casualties.”

There’s another side to the story, as anyone familiar with volunteer boards working with charismatic founders can attest. As the board’s chair, Kaseem Ladipo, said, “Should we have done a little more? Yeah, we could have. But the reality is that I would never ever expect a board to micromanage a school leader because of the assumption that they would steal from the school.”

One can dispute Ladipo’s definition of “micromanage” in this context because board minutes do not include regular financial reports. This is because they were “too routine to be mentioned,” according to Lapido. However, in the board’s defense, it reported the financial irregularities to authorities as soon as they were found and immediately proceeded to hire a finance officer to separate the management and financial duties that had been merged under Clemons.

It was easy to trust Clemons because he is Ivy League-educated with an MBA and a self-described history of having started 30 charter schools. The “all-star board” at Latin Academy included two former Georgia state education officials and high profile executives from Coca-Cola and other corporations. No irregularities were found in independent audits or in oversight by state regulators, which strengthened the board’s presumption of good management practice. Of course, it also emphasizes the important purposes and limitations of financial audits: audits are not designed to uncover theft or fraud.

There is ample evidence that the board was active and engaged. “The board scrutinized test results, homework scores, and student discipline data,” according to the paper. “Academically, Latin Academy was one of the top-performing middle schools in Atlanta.” The board monitored Clemons’s performance and asked for his resignation last year. They hired a new leader in the spring of 2015 because Clemons “hadn’t followed through on requests for fundraising plans, marketing materials or staff development, Ladipo said.”

The theft of hundreds of thousands of dollars is a crime, and perceptions of this theft’s immorality are magnified by Clemons’s indulgent uses of the funds, the fact that the money was meant to educate children, and that the stolen money was provided by taxpayers. Latin Academy’s situation presents several intriguing questions: What are the limits of a board’s accountability for finance as well as for mission fulfillment? Could imposing government levels of regulation on charter schools burden them with precisely the bureaucracy and costs that charters were, in part, designed to be liberated from in the name of focusing on student achievement?—Michael Wyland