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State audit finds Hazelwood’s weak financial practices set stage for theft

Hazelwood parents read through an audit of the school district's finances done by Missouri State Auditor Nicole Galloway during a community meeting to release the results of the report Wednesday, May 2, 2018.
Ryan Delaney | St. Louis Public Radio
Hazelwood parents read through an audit of the school district's finances done by Missouri State Auditor Nicole Galloway during a community meeting to release the results of the report Wednesday night.

Lax handling of cash created an environment that allowed a former Hazelwood high school principal to embezzle thousands of dollars, according to a state audit of the school district. It also found the district took in $95,000 more in state funding than it should have.

Missouri State Auditor Nicole Galloway released the results of a year-long review of the north St. Louis County school district’s finances Wednesday evening. A few dozen parents attended a presentation by Galloway in the gymnasium of Central High School.

The auditor gave the district an overall grade of “fair,” which is one level above the lowest score of “poor” in the four-category rubric.

Galloway began the audit last April after parents collected more than 5,000 signatures. It cost the district about $100,000, which Superintendent Nettie Collins-Hart said will come “out of the money that would have gone to students for schools.”

Hazelwood educates roughly 18,000 children in 29 schools covering several far northern St. Louis County communities.

Hazelwood laid off band and physical education teachers in recent years. There also have been cuts to extracurricular activities and field trips. District officials say the cuts were needed to correct a budget deficit.

But parents complained that while cuts were being made to academic programs, administrators received high salaries and spent lavishly on themselves.

During the 2016-17 school year, the audit said Hazelwood collected $1.3 million in cash from student activity fees and transactions such as snack bar sales and class fundraisers. Money was not always properly counted and stored, according to auditors.

“This was the biggest area of concern we had in the audit,” Galloway told St. Louis Public Radio in an interview.

Those practices allowed a former Central High School principal to steal $8,175 from the district, Galloway said. That principal, Audrey Lee, later resigned and repaid the district only $3,080. The district said it did not have enough proof to demand the remaining balance be repaid. Litigation over the theft is pending, Superintendent Collins-Hart said.

“The reason that it was allowed to go on for how long and was not detected sooner was because the school district did not have the proper checks and balances in place to prevent the opportunity to occur,” Galloway said.

According to the audit, administrators and school board members at times overspent on travel upgrades, staff parties and employee gifts.

Board members spent $336,850 on meetings and work travel during the 2015-16 and 2016-17 school years. The superintendent’s office spent $50,577 on travel, meetings and supplies over that same time. Some of the expenses were appropriate, Galloway said, “but when there’s cuts to programs for kids, every single one of those dollars and every single one of those expenses on meals and gifts and travels and flowers and t-shirts, needs to be scrutinized.”

Galloway did not find any major issues with administrator salaries.

Other areas of concern raised in the audit include:

  • The district purchased 16,000 Chromebook computers for $4.7 million without going through a rigorous bidding process to find the lowest price.
  • The district received an extra $95,000 in state per-student funding over the past two school years because of inaccurate attendance keeping that inflated its enrollment.
  • A lack of transparency in abiding by Sunshine and open meetings laws by not properly posting public school board meetings and discussing things in closed sessions that the school board should have done in public.

Parents said they were not surprised by the audit findings because many of the issues were things parents brought to the auditor.
“Now the district has a path forward and another set of eyes that came in and said ‘look what you’re doing and fix it,’” said parent Carey Lohman.

The district and school board were cooperative during the yearlong audit, Galloway said. Hazelwood has put new policies in place for handling cash, including more training for building staff and assigning a finance department employee to oversee cash.

“We will, as we already have, implement changes. Some of them may be liked in the district, some of them may not be liked,” said Board of Education President Mark Behlmann.

In comparison to the district's $216.4 million budget, the district did not mishandle or misspend "a lot of money," Behlmann said.

Hazelwood has had to navigate several public scandals in recent years. It received parent blowback over the demotion of former athletics director John Pukala. He argued it was punishment for reporting the theft by Lee. Pukala later resigned and sued the school district in January.

Last May, the district suspended nearly 200 students and barred seniors from participating in graduation because they walked out of class in a protest supporting teacher contract negotiations. The district was heavily criticized for the suspensions and later walked the disciplinary actions back.

A parent who led the audit petition drive has since become a member of the school board. Parent Betsy Rachel along with former Hazelwood NEA teachers union President Diane Livingston won seats in April, ousting two sitting members, including board President Desiree Whitlock.

“In some respects, I suppose I feel validated,” said Rachel. “I certainly feel like it was time and effort well spent.”


Follow Ryan on Twitter: @rpatrickdelaney

Ryan was an education reporter at St. Louis Public Radio.