Bibb schools bet big on Promise Neighborhood -- with little oversight

Telegraph staffJanuary 13, 2013 

In 2009, the Bibb County school system sold a middle school building off Pio Nono Avenue for $220,000 because it had no use for the school any more.

Now, four years later, the school system -- and Bibb County taxpayers -- are on the hook for millions of dollars as part of a plan to refurbish that same building and lease it from the new owner in hopes of launching an ambitious neighborhood improvement program, records show.

But that’s not all of the costs the school system has incurred -- or obligated taxpayers for -- in a bid to help Macon win a federal Promise Neighborhoods grant. Much of the commitment -- both financially and for in-kind services -- was made by school Superintendent Romain Dallemand and former school board President Tommy Barnes without the prior review of the Bibb County school board.

After an initial commitment from the school system of up to $1 million annually for the project for 10 years, Dallemand signed off on a much higher obligation a month later, committing $19.3 million in cash and in-kind services from the system, records show.

Those commitments are also at the heart of a lawsuit filed against the school system by Ron Collier, the system’s former chief financial officer, who was removed from that post last month.

In 2011, the federal government awarded Macon Promise Neighborhood a $500,000 planning grant in that group’s effort to help revive the Unionville and Tindall Heights areas of Macon. Later, representatives of dozens of Macon nonprofit agencies worked together to apply for what’s known as an “implementation grant” of more than $28 million that, if approved, would carry out the proposal.

Under the plan, a “Macon Promise Center” would be located in the former Ballard-Hudson Middle School on Anthony Road, where students from schools in the area could get a wide range of services intended to help them become healthier, better and higher-achieving students.

But as the deadline to apply for the new grant drew near this past summer and the Bibb County school system readied its part of the deal, there were serious gaps between what school system leaders were doing, and what most school board members knew.

A Telegraph investigation shows that school officials sometimes bypassed school board oversight to obligate the system with problematic contracts, taking the money from funding sources that the school board never budgeted -- or approved.

Much of that money will pay rent to use just a portion of the long-abandoned middle school building, a deal that’s millions of dollars more expensive than the landlord’s share of the building. And there are no conditions in the school system’s lease for its portion of the building that give the system a chance to back out of the contract if the grant never comes. The system is obligated to pay.

Big commitment

The goals of Macon Promise Neighborhood are undeniably laudable: trying to turn around a large section of Macon so its students will do better in school.

The work would focus on an area that includes Ingram-Pye Elementary, Hartley Elementary, the new Ballard-Hudson Middle and Southwest High schools, which are among the lowest-performing schools in Bibb County.

Several dozen community organizations banded together to support Macon Promise Neighborhood, which received a $500,000 planning grant on its second try in December 2011. The goal was to land a five-year, $28.5 million implementation grant that would fund “wrap-around services” for children, such as tutoring, psychological counseling, and health and safety services.

Much of that work was planned for the Macon Promise Center in the hulking former Ballard-Hudson Middle School at the top of a hill at 1780 Anthony Road, not far from Pio Nono Avenue.

Cliffard Whitby, executive director of the Macon Promise Neighborhood program, said he expects to get the federal grant money this year. The program is about far more than getting the $28.5 million in federal grant money, he said. It’s about finding a way to transform the public school system, which spends more than $200 million each year but doesn’t get good results.

Whitby grew up in the Unionville neighborhood and attended middle school in the building that’s becoming the Promise Center. Whitby said he was acting as an agent for the nonprofit Central Georgia Partnership for Individual and Community Development when he bid on the property in April 2009. The partnership, aimed at providing work force training, was incorporated in May 2009 and took possession of the school in June 2009.

The organization’s president is Jimmie Samuel, who also leads the Macon-Bibb County Economic Opportunity Council. The council pledged $8.9 million in resources that already serve the community (through programs that include Head Start and other assistance measures), as well as staff time, toward the Macon Promise Neighborhood program, Samuel said.

Samuel said the Central Georgia Partnership for Individual and Community Development had already been working on addressing some of the same issues that Promise Neighborhood would tackle, years before the community received the initial $500,000 planning grant from the federal government.

“The vision was and is multipurpose,” he said. “It’s a one-stop shop (for people) to begin to help themselves.”

Whitby also graduated from Southwest High School, which has what he called an unacceptable graduation rate of just 38 percent. The Promise Neighborhood program, he says, could change that.

“It’s historic stuff. I’ve been here all my life. This is a new way of doing business, and it’s there for everybody to see how we assist families,” he said. “Yes, it is a 10-year commitment. It’s a 10-year promise. And the reason we got to that point is we wanted to demonstrate to the feds, this is not about getting a grant, this is about a community to show it has the capacity to make the changes we say we want.”

School system pledges support

On June 27, Bibb County’s school board pledged to take up to $250,000 each year from each of the four schools to support the Macon Promise Neighborhood program, with support continuing through the end of 2023. That’s potentially a $1 million annual commitment running for more than 11 years.

The resolution authorized the superintendent and the board president -- or the vice president in the president’s absence -- to identify the resources to be reallocated toward the program and “execute such letters, commitments, applications, leases, contracts, or agreements” on behalf of the school board.

The agreement said no documents could bind the board beyond its $1 million maximum annual commitment. The board voted unanimously to support the resolution.

Less than a month later, however, Dallemand signed off on a bigger commitment for the Bibb County school district.

“The BCSD commits $19,364,499 in ‘match’ resources to implement solutions in the project,” reads an agreement signed by Dallemand and two dozen other people representing Macon Promise Neighborhood partners.

Peter Brown, a Mercer University philosophy professor who was one of the top two people putting together the grant application, said the school system increased its commitment because the partners needed to show more matching funds for the grant application.

“We needed the match, and they went back in and went very carefully and looked at budgets and Title I (education funding) and other budgets that they had,” Brown said.

With at least some of the partners, the committed matching funds came from programs and services already being offered in the Unionville and Tindall Heights areas that the Macon Promise Neighborhood program is to serve, Brown said.

Board member Lynn Farmer takes issue with the increase in the school system’s commitment without approval by the school board first.

“I feel deceived,” she said. “Nobody came back before this full board.”

On July 27, the application deadline for the Macon Promise Neighborhood implementation grant, then-school board President Barnes signed a lease agreement for the Macon Promise Center that called for $575,000 in annual rent payments for about half the building, said to be a 50,000-square-foot “white box shell” with walls and wiring, but not much else.

The lease is scheduled to start July 1, 2013, regardless of whether there’s a Macon Promise Neighborhood implementation grant to launch the Macon Promise Center or not. In all, the lease obligates the school system -- and its taxpayers -- for $5.75 million in rent on a building that the system sold as surplus about four years ago for just $220,000.

Big difference in values

What’s the space worth? The current landlord, the Central Georgia Partnership for Individual and Community Development, declared in the multi-partner agreement that it pledged to Macon Promise Neighborhood the half of the building it wasn’t leasing to the school system. The organization valued its half of the Promise Center at $2.3 million over 10 years, but it got the school system to agree to $5.75 million in rent for the other half for the same period.

G. Boone Smith IV, the partnership’s attorney, said the values are proportionate to the amount of renovation being done. The school system is leasing office space, while the partnership’s share of the building includes cheaper areas, such as a gym, he said.

Former school board member Gary Bechtel, now a Bibb County commissioner, said the school board never saw the lease and never discussed it or voted on it.

Among his objections: The school system is now leasing property from an organization, the Central Georgia Partnership for Individual and Community Development, that took ownership of the property from the school system.

“If given a chance to vote on it, I wouldn’t have approved it,” Bechtel said.

After the lease ends, the district has an option to buy back its former school building -- at two-thirds of its assessed value at that time.

“It doesn’t make any economic sense,” Bechtel said.

Since late December, The Telegraph has left phone and e-mail messages for Dallemand and school system attorneys Randy Howard and Patrick Millsaps about the system’s involvement with the Macon Promise Neighborhood program and subsequent agreements related to it, but the paper has been unable to reach them.

On Monday, The Telegraph e-mailed questions to school system officials and attorneys. On Thursday, Howard called a Telegraph reporter, saying that he and other attorneys could not respond to the questions because the district’s involvement in the federal grant is part of Collier’s pending lawsuit.

“Because this Macon Promise Neighborhood has been brought up in the recent lawsuit, we can’t answer these questions,” Howard said. Barnes, the former board president, said he would call back a Telegraph reporter Jan. 4, but he did not return the call. Board member Tom Hudson said he did not want to comment on the matter. Wanda West, Ella Carter and former board member Susan Middleton did not return calls from The Telegraph.

CFO balks

On July 13, Collier, then the system’s chief financial officer, received an invoice from the Central Georgia Partnership for Individual and Community Development. His lawsuit contends that Dallemand pressured him to pay the bill.

The invoice -- for $1 million -- came weeks before there was a lease or anything else for the property. The bill was for the “2012 Macon Children’s Promise Neighborhood contribution for PICD.” The invoice was later changed to cover the “school system 2012 contribution for Macon Children’s Promise Neighborhood match commitment.”

The invoices were signed by Samuel, the partnership’s president. While Samuel talked to a Telegraph reporter about the partnership’s beginnings, he referred subsequent questions about renovations to the Ballard-Hudson building and the school system’s lease agreement to Smith, the partnership’s attorney.

On July 25, Dallemand wrote a letter to Collier directing him to pay the $1 million bill with money from the four schools before the July 27 grant application deadline, “together with evidence of receipt of all demonstrated local match funds.”

Collier wrote a letter to Dallemand on July 27, the day Barnes signed the lease, saying he couldn’t pay the invoice without doing due diligence, an effort to ensure that the bill was appropriate. Collier said he felt his job was being threatened by Dallemand’s pressure, and he wrote in the letter, “I cannot in good conscience write the check to a Partner of the Macon Promise Neighborhood ... as I believe that it violates Georgia Laws, Rules and Regulations as well as The State Board of Education Rules and Regulation.”

The resolution commits the school system for up to $250,000 in “programs, resources, current-budgeted funds, and related in-kind contributions” from each of the four schools per year toward the implementation grant.

After a discussion about the matter during a board meeting in June, Farmer said she understood that the board was committing that amount from in-kind donations or money that had already been allocated to those schools.

“I don’t believe the board gave permission for $1 million in cash to be written,” she said.

Collier’s attorney, Jerry Lumley, told The Telegraph that Collier had no documentation showing what the $1 million would be used for -- or whether it was allowed under state rules for funding educational purposes.

In reality, Dallemand’s claim that he needed to have a receipt of funds for the Macon Promise Neighborhood application conflicts with official federal guidelines, which say that a check need not be cut. As Collier noted in his letter to Dallemand, the instructions say applicants simply need to say where the matching money would come from, not actually show that they have it in hand. The federal officials wanted commitment, not cash.

“An applicant need not have secured matching funds or in-kind donations in order to show those funds or donations,” the application instructions read.

The issue even appears in the U.S. Department of Education’s “frequently asked questions” file for the Promise Neighborhood program.

“An applicant must provide evidence that funds or in-kind contributions have been committed at the time it submits its application,” the guidelines say.

In his July 27 response to Dallemand, Collier also advised the superintendent to write a letter demonstrating the district’s commitment to the grant while school officials made sure they would be spending the money within the bounds of the law.

“If it is determined that we’ve handled this match incorrectly, it would not only be a questioned cost in the District’s audit, it would also be an unallowable match for the Promise Neighborhood Initiative,” Collier wrote.

Auditors have issues too

And Collier wasn’t the only one with concerns. The school system’s auditors at Mauldin & Jenkins also raised questions about the district’s handling of the grant, as well as the lack of communication with board members.

In a draft audit distributed last month, the auditors faulted the school system’s management for failing to keep board members in the loop and not properly documenting all the resources the school district would commit to the grant.

“We recommend the Board of Education be the responsible party to provide specific approvals for each specific significant action prior to their execution, and the role of governance relative to approvals of such significant matters should not be delegated to single individuals or any members of management,” auditors wrote. They put one phrase in bold: “prior to their execution.”

The auditors reported that the fair value of the leased property had not been determined, information that would be needed to pass a budget amendment reflecting the change in the district’s spending. Auditors found no evidence that a budget amendment had been presented.

The auditors’ draft report also indicated that board minutes did not show that the board approved any amendments to the fiscal 2013 budget showing where resources would be “realigned and reallocated” to support the Promise Neighborhoods program. The board’s June 27 resolution, however, directs the superintendent and board president -- or vice president in the president’s absence -- to identify those resources.

The audit report recommends that district officials amend the budget as soon as possible and document the finances of the grant every year.

The audit report chides school system management for not communicating with the school board about the July 20 agreement between Dallemand and the other Macon Promise Neighborhood partners, or about the lease agreement that Barnes signed July 27. Auditors said no money should be spent until the school system documented how the Macon Promise Neighborhood funds would be used and where the money came from -- and then only after the school board signed off.

“We recommend such funds not be disbursed until all appropriate documentation of approval by the Board of Education is obtained and completed,” auditors wrote.

Another twist

Another government organization has already secured millions of dollars for the project.

The Macon-Bibb County Urban Development Authority agreed to sell $4.61 million in bonds, a kind of loan, to support the Central Georgia Partnership for Individual and Community Development in its efforts to become landlord to a remodeled Promise Center.

The Promise Center is supposed to get a dental clinic and places for tutoring, job coaching and family counseling, according to a Promise Neighborhoods newsletter.

The bond payments are supposed to be covered by the rent money coming from the Bibb County school system. The Urban Development Authority voted to issue the bonds the day before Barnes signed the lease.

But the deals took another twist because the school system, without a vote from the school board, enmeshed itself into the deals.

When the Urban Development Authority went to sell the bonds through a broker, the school system agreed to cover legal costs of any lawsuits or claims if something went wrong. The school system -- but not the school board -- agreed to be put on the hook for some of the costs of attorneys, investigations, losses, claims and expenses if the deals were challenged. The school system and the Central Georgia Partnership for Individual and Community Development accepted the liability.

The transaction was much like a landlord going to a mortgage broker for a loan, and the renter stepping up and volunteering to pay some of the costs if anything went wrong.

In a three-page letter supporting the bond process, Howard, the school system’s in-house attorney, wrote that the school system’s June resolution, the July lease agreement for the Promise Center and the placement agreement with the bond broker were all properly authorized.

“All consents, approvals or authorizations, if any, of any governmental authority required by Georgia law on the part of the School District in connection with the execution and delivery of the Lease and Placement Agreement and the consummation of the transactions contemplated thereby have been obtained,” Howard wrote in a letter obtained by The Telegraph.

Board approves done deals

Several months after most of the deals were completed, school board members got a hint of what school officials and the board chairman had already done.

During a school board meeting Oct. 18, the school system’s attorneys presented the board with a “memorandum of understanding,” saying that the agreement between the system and Central Georgia Partnership for Individual and Community Development would make sure the money spent was legally limited to “educational purposes,” per state law.

Originally, the board was only supposed to receive information about the Promise Neighborhoods initiative that day, but the meeting agenda was amended during the board’s committee meeting that day to include an actual vote on the matter.

“We are not talking about any new money that wasn’t approved by the board at that earlier time,” Millsaps, an outside attorney for the school system, said during the meeting. “It’s not additional funds.”

Put that way, Bechtel, Farmer and board member Susan Sipe said they understood the approval as a formality, not that the system had already committed millions of dollars through the lease and the agreement with the other Promise Neighborhood partners.

Bechtel asked attorneys various questions about the lease agreement over the course of a discussion that lasted about 20 minutes. Barnes did not say he had signed the lease, and he said little else during the discussion.

After more questions from board members, attorneys and Dallemand said the agreements were authorized by the board’s June 27 resolution.

School board members were given the new memorandum -- but not the Promise Center lease agreement nor the Macon Promise Neighborhood partnership agreement.

Recently, Bechtel, Farmer and Sipe have all said that they didn’t grasp the full implications of the October agreement until after the document had been signed.

While he didn’t deny that attorneys had talked about the lease during that meeting, Bechtel said he didn’t remember hearing any numbers contained in the lease.

“I would have lit up like a Christmas tree,” he said.

He does, however, remember being frustrated that the document was presented to board members during the meeting -- and not in advance.

“I think it was an intentional effort to push it along without much scrutiny,” he said.

Sipe described “major confusion” among board members about the October agreement. She also said board members should have had more time to examine the document before voting on it.

“That’s no excuse for what has happened, but it’s part of how we got to this place,” Sipe said. “There has been confusion about Macon Promise Neighborhood from day one. What we understood about this project is not what it’s turned out to be.”

During the meeting, board member Tom Hudson expressed his support for the Promise Neighborhoods initiative, reiterating that the board had pledged its support in June and that it needed to act quickly to help move the effort forward.

“I think personally it’s a very small amount of money for the benefits in terms of economic growth and development, and it ties in with the Macon Miracle,” Hudson said, referring to the ambitious school improvement plan that Dallemand has implemented. “It’s a comprehensive program that includes the whole community.”

Meanwhile, Millsaps also said the district had already committed the funds through the lease agreement and the multi-agency memorandum of understanding. By signing the October memorandum, the board would put some boundaries on how the money would be spent.

“Without this vote, the money’s still going to be spent,” he said. “It’s just not going to have the educational intention.”

That’s the same lack of specific intention to spend the money on educational purposes that Collier had balked at months earlier, worrying that he could be breaking the law.

While board members eventually agreed to amend the agenda -- and ultimately to the terms of the new memorandum of understanding -- Farmer and board member West asked to see documents and have more time to review them before having to vote on them.

“That puts us in a position of trying to read stuff very quickly,” Farmer said at the meeting. “If you’re going to vote on something, you do want to say you’ve read it and that you do understand it.”

Breaking new ground

The Oct. 18 memorandum of understanding didn’t just formalize some items that had already been approved. It broke new ground -- and changed taxpayers’ obligations for a decade to come.

Though the lease agreement for the Promise Center already obligated the school system for $575,000 a year, the new memorandum added in another $325,000 annually. It also formalized the $1 million payment to the Central Georgia Partnership for Individual and Community Development to customize the interior of the building.

The $325,000 in additional annual costs were to cover utility and maintenance expenses to the Promise Center building, as well as capital equipment and supplies needed for the center. All of that money would flow to the Central Georgia Partnership for Individual and Community Development.

None of the school system cash is assigned to any of the other dozens of Macon Promise Neighborhood partners, or to Mercer University, the fiscal agent for the program.

Brown, a Mercer employee, said partners should be working together directly because it makes for stronger partners and a stronger collaboration.

The October agreement also cites “the $10,000,000 appropriated by the Board and an estimated $9,364,399 of ‘in-kind’ contributions to the (Macon Promise Neighborhood) Program.” This was the first time the board had seen the full amount that Dallemand had approved months earlier. The agreement also didn’t tell board members that they were paying $575,000 a year to lease the Promise Center, though board members were told by attorneys in the meeting.

Ultimately, the board voted 7-0, with Middleton absent, to pass the October agreement.

The agreement also obligates the school board to put a line item in its budget for the $325,000 each year. At the same time, it also includes a clause that makes the payments contingent on the district’s having the funds available for them.

‘Frank conversation’

On Dec. 10, Dallemand sent Collier a letter telling him he was “on special assignment pending an investigation into practices within your department,” with no cause specified. Collier’s subsequent whistle-blower suit claims he suffered “adverse employment action” because he balked at paying the $1 million invoice.

Howard, the school system’s in-house attorney, told The Telegraph that the system had concluded its investigation of Collier on Dec. 19, nine days after Collier found out he was under investigation.

A week after that, Howard told The Telegraph he didn’t know if the investigation had produced any paperwork.

“The District is not aware of any reports, notes, or summary from the investigation at this time,” Howard wrote in an e-mail responding to an Open Records Request. He said some documents might be available after the school system reopened Jan. 7, but he provided no documentation after subsequent requests by The Telegraph last week.

The first $1 million was set aside for the Central Georgia Partnership for Individual and Community Development at the end of October. The school system money was not reallocated from the four schools as the school board ordered in June, however. Instead, that money came from the school system’s fast-dwindling, unrestricted reserve fund, which will also be drawn down an estimated $8 million to cover the school system’s budget shortfall this year.

A budget document showing finances through October 2012 projected the remaining reserves at $11.1 million.

On Dec. 19, the U.S. Department of Education announced the winners of the Promise Neighborhood implementation grants, and the Macon proposal was not one of them. That meant a Macon team did not get $28.5 million to carry on the work of the program. While local partners won’t be able to count on that money in the coming year, they could reapply for the funds in the future, according to federal officials.

“We need to have some frank conversation about where this money came from and where it went,” Sipe said.

Farmer said she isn’t sure what steps the school board could take or if the system could get its money back, since Macon did not receive that grant.

“I think that will be something that will need to be discussed when we come back together” later this month, she said.

Information from Telegraph archives was used in this report. To contact writer Andrea Castillo, call 744-4331. To contact writer Mike Stucka, call 744-4251.

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