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Accounting Questions

North Carolina education officials have seen more than a dozen charter schools in the state founder as the schools' leaders tried to balance the books and fulfill their academic missions.

But a recent state investigation into the finances of two related charter schools in Durham, N.C., may have turned up something more troubling than the fiscal inexperience of many charter organizers.

"It is unusual to see anything of this magnitude," Jennifer S. Bennett, the director of the school business division for the state education department, said of the recent findings on the Turning Point Academy and the Success Academy. "I view it as financial mismanagement, and I'm very concerned there could've been a misappropriation-of-funds morass."

According to the state, the schools, operated by the Shepherd's Mission, a nonprofit group, appear to be paying too much for facilities they rent on the campus of True Life Worship Church in Durham. The schools, which get $750,000 in state funds, have also paid utility bills for the church, though the church building is separate from the school.

The report also suggests that nepotism may have occurred among school leaders and staff members who are related, and who have family ties to contractors hired by the school. Most meetings of the six-member board have been conducted with just one member present.

Not the least of the problems, according to Ms. Bennett, are the schools' unorthodox accounting procedures. In reports to the state, schools' officials said that checks were sent to a credit card company, though the state's inquiry determined that the money actually went to the church. The schools also made loans to Shepherd's Mission without an agreement on loan terms.

The schools are on probation and must have expenditures approved by the state, pending further investigation. Leaders of the schools, which have about 330 students, did not return phone calls seeking comment.

—Kathleen Kennedy Manzo

Vol. 21, Issue 34, Page 14

Published in Print: May 8, 2002, as State Journal

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