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State Audit Shows 'Questionable Payments' Part Of Kinston Charter's Failure

Flickr/Seth Sawyers

The abrupt closing of three charter schools in Charlotte over the past year has made a lot of people wonder what went wrong. In 2013, another charter school in eastern North Carolina closed because of financial troubles.  A state auditor’s report released this week provided an answer in that case. The audit finds fiscal mismanagement and questionable payments were part of its demise. 

 Kinston Charter Academy closed a few days into the school year. Despite being under financial disciplinary status, the state gave the school $670,000 to operate through October. 

The school’s former principal and CEO Ozie Hall said the school used all that money to pay debts. 

“All the money is accounted for and, then, there are still some things that are owed," Hall said shortly after the school closed. 

The audit found one of those things he considered debts was an $11,000 payment Kinston’s board made to him and his wife as compensation for unused vacation time. His wife also served as the board’s chairwoman.

The audit calls those “questionable payments” since the school had $370,000 in unemployment taxes, staff salaries and benefits that went unpaid.

The audit also finds Kinston Charter overstated attendance estimates and, as a result, received an extra $300,000 from the state.

State Board of Education Chairman Bill Cobey says he plans to push for legislation that would give the board more authority to stop state payments to charters having financial problems. He also says the board will pursue civil action to recover any misspent funds.  

The audit made a number of recommendations to the state board of education including establishing guidelines for shutting down charters for financial reasons and prohibiting family relationships between charter board members and administrators.