Colorado officials on Thursday ordered the Adams 14 school district to allow its outside management company to return to district schools and offices by Sept. 27 or immediately lose its accreditation.
The Adams 14 district north of Denver is the only district in the state to be ordered to hand over its authority to an external management company. In 2018, the state ordered the district to pick a manager to hand over daily operations for four years. But with two years remaining on that contract, new superintendent Karla Loria issued a stop work order for the company last month citing concerns about the company’s performance.
The State Board of Education called the hearing Thursday to determine whether the district violated the state order to delegate authority.
The resolution, approved 6 to 1, says the district violated the state order by locking out employees for MGT Consulting, the company managing the district, before seeking changes to the order through the state.
State board members told district officials that if they had come to them first with their concerns, they may have agreed to change partners or the terms of the agreement.
“This is not about whether MGT is doing what they need to do or not,” said State Board member Karla Esser. “If there’s cause... we’re the people you come to first.”
State Board members did not allow the district time to discuss all of its concerns about MGT, noting that wasn’t the purpose of the meeting. But board member Rebecca McClellan, who cast the only vote against Thursday’s resolution, did ask questions allowing the district to explain one major concern: allegations of financial mismanagement.
“We do believe looking at the evidence that there was double dipping,” Loria said. “We were paying their vendors.”
Loria said that in addition to the nearly $7 million that the district has paid MGT in the first two years — which should have covered the expenses of subcontractors that MGT promised to use — that Adams 14 paid the subcontractors separately for the same services.
Neither MGT officials nor Adams 14 Schools Succeed (A14SS) leaders attended the hearing Thursday. A14SS is the subsidiary created to manage Adams 14 on behalf of MGT.
Asked to respond to the allegations levied in Thursday’s meeting, MGT issued a brief statement to Chalkbeat.
“At all times, A14SS has been a responsible steward of public funds,” said Eric Parish, MGT executive vice president.
McClellan said she believed it was the state’s orders that stripped the district of so much authority that left the district vulnerable to possible financial abuse.
Board members noted that the order Thursday does not stop the district from later following the proper steps to seek a state-sanctioned change to the district’s manager or to the contract with the manager.
The resolution states that if Adams 14 later asks the state to amend the order, that plan must include plans to continue working with subcontractors that have been effective, including the University of Virginia, and must also address how the district will resolve complaints with the Office for Civil Rights regarding the needs of English language learners.
The resolution the board approved Thursday directs state attorneys to put the request into a formal order on which the board will vote and finalize Friday.
Loria, who started July 1, and Jonathan Fero, a school district attorney, told the State Board Thursday that they felt the concerns they uncovered recently were so serious that they felt MGT was in breach of its contract.
When he issued the stop work order on Aug. 4, Ferro added, he copied the state board’s attorney to notify the State Board.
State board members at many points asked further questions trying to clarify the timeline. State Board member Steve Durham asked the district why the state had not been informed of the concerns when the district hired external evaluator Stuart Berger in June.
District leaders said they didn’t hire Berger because of major concerns; Loria said she wanted more information in her new role because MGT officials were pressuring her to increase the contract’s budget.
But when Berger filed a draft report, he recommended that MGT’s contract continue.
Still, Fero wrote a letter to MGT on Aug. 4 asking the company to stop its services and listed new concerns not included in Berger’s draft report. After that letter, Berger changed his recommendation to say the company should be removed.
Current and former district employees have also raised concerns about how Berger was selected and about the process in which he conducted interviews for his report.
Adams 14 officials have not responded to repeated questions about how Berger was selected, but Loria told the State Board that when the local school board and MGT gave her approval to hire the consultant, she committed to reaching out to her “networks” to find someone suitable.
In her presentation to the State Board Thursday, Loria told officials that she has already reached out to several nonprofit organizations and has found that The School Superintendents Association would be interested in replacing MGT. Loria said she could present a proposal to the local board by the end of the month to have the group be the new manager.
State Board member Lisa Escárcega was concerned about the lack of community involvement in that plan.
“My heart starts to race when I hear things like we can do this in three weeks,” Escárcega said. “That doesn’t reside well with me.”
She noted that the district had done “a good job” by having a months-long community involvement process to select MGT as the district’s manager in 2019. The community was allowed to participate in open meetings where they interviewed and then discussed the merits of interested managers and presented recommendations to the local school board.
Initially the district selected a different partner, a neighboring school district, but the State Board rejected that partnership and asked the district to pick again, which is when MGT was selected.
In the statement after the meeting, MGT officials also said they look forward to returning to the district.
“Adams 14 Schools Succeed is enthusiastic to return to its important work for the benefit of students in the Adams 14 School District,” Parish said. “We are excited to continue our role and redouble our efforts to make up for time lost in the last month.”