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Adams 14 releases audit of spending on external manager MGT Consulting

A middle-aged woman with short dark hair speaks at a podium. To her left, two other masked women, seated, look on. A blue Adams 14 school district logo is on the front of the podium.

Adams 14 school board President Ramona Lewis, left, discusses the results of a forensic audit of spending on school improvement efforts with Superintendent Karla Loria, center, and fellow board member Renee Lovato.

Erica Meltzer / Colorado

The Adams 14 school district paid almost half a million dollars to subcontractors for work that appears substantially similar to work already included in its contract with external manager MGT Consulting, a forensic audit commissioned by the district found. 

Adams 14 district officials released the audit findings Thursday after withholding them for months. The allegations contained in it contributed to the school board’s decision in January to terminate its contract with MGT Consulting, which had managed the district for more than three years. 

The auditors compared contracts between the district, MGT, and vendors. Auditors from Eide Bailly did not conduct interviews with MGT, the subcontractors, or staff in the district’s finance office. 

“The contracts provided to us for eight individual contractors or vendors contained scope of work descriptions that seemed similar to work [MGT] was required to perform,” the auditors concluded. “Based on our examination, we recommend Adams 14 review and examine the contracts from business, operational, and legal perspectives to make a final determination regarding similarities in scope of services/work.”

In some cases, contracts with vendors were approved by the board, but the district ended up paying more than the maximum amount described in the initial contract. In other cases, the contracts were below the $25,000 threshold for board approval. 

During the pandemic, MGT requested and received a policy change that allowed it to approve more contracts without board approval. Board members acknowledged the need for quick spending decisions during the pandemic, for example to buy laptops for students, but said they felt MGT took advantage.

“When the purchasing policy was changed, it created an opportunity for the manager to approve contracts without engaging the board in the approval process,” Superintendent Karla Loria said. “It actually is removing monies that belong to our students and to our teachers in our schools. This is not for me about the money. It is about what we can get with that money for students, and our students did not receive that.”

Payments for additional contracts totaled $495,486.18, the audit found. That was on top of more than $7 million the district had already paid MGT out of a general operating budget of less than $100 million a year.

Adams 14 officials previously shared the audit with the Adams County District Attorney’s Office and cited a law enforcement exemption to not release the findings in response to public records requests. On Thursday, Adams 14 Board President Ramona Lewis said prosecutors told the district there was not enough evidence for criminal charges, and that was why the district was releasing the audit now. 

Officials with MGT said the additional vendor payments were for extra services outside MGT’s contract, and district officials were well aware of the work. In an email statement, MGT Consulting Executive Vice President Eric Parish called the press conference a “charade” and the audit “much ado about nothing.”

“There is nothing here, as the District Attorney’s Office itself has said, and the auditors would have come to a similar conclusion if they had actually interviewed anyone from the district’s accounting or finance departments or anyone from MGT,” Parish wrote. “The district’s ongoing desire to create artificial distractions raises real questions about their interest and ability to lead the type of academic improvements that MGT accomplished during its time as lead partner.”

District spokesman Robert Lundin said that doing interviews with staff and trying to assess the motivation behind the various contracts was outside the scope of the audit. Board members ultimately have responsibility over spending and whether it’s appropriate or within the scope of MGT’s contract, Lundin said.

Joe Salazar, an attorney for the district, said the State Board of Education had pressured Adams 14 to work with MGT while not looking into district officials’ concerns about financial management.

A spokeswoman for the Colorado Department of Education said both department staff and State Board of Education members have asked for the forensic audit repeatedly in recent months and finally received it about 20 minutes before the press conference. 

However, the department does not plan any additional investigation.

“Whether the district had to separately contract for services that it thought MGT should provide or pay for is a contract dispute between those parties,” CDE spokeswoman Dana Smith said in an email. “It is not something within the jurisdiction of either CDE or the State Board.”

In 2018, the State Board of Education ordered Adams 14 to turn over most day-to-day operations to an outside manager after many years of low student performance on state tests. The Adams 14 board chose MGT after the state denied its first choice, the neighboring Mapleton School District. 

Initial reports about MGT’s performance were positive, and the company can point to concrete accomplishments, such as improving graduation rates and securing federal approval for a plan to serve English learners. However, Loria raised concerns about the company, including spending on subcontractors, after she was hired in 2021 as the first superintendent since external management started. 

School board member Maria Zubia said the state order made her feel pressured to go along with MGT’s recommendations. 

“I have to say ‘yes’ to pretty much everything because if I question it, or I say, ‘Well, I don’t think that makes sense,’ they’re like, ‘Well, remember what the State Board decided, that if you don’t want to do this, just remember that you’ll have to be prepared to take that up with them and explain to them why you’re telling us no,’” she said. “It just made it really hard for us to question. 

“When you’re being told that the accreditation of this district is going to be in jeopardy, and you think that the accreditation is tied to the impact of the students’ diplomas, that’s a huge responsibility that we have.” 

MGT formally ended its work in the district on Feb. 11 after months of tensions. 

For the time being, Loria and the elected school board have full authority over the district. However, the state education department has convened a group of experts to make further recommendations, and State Board members have raised the possibility of more drastic interventions. A hearing is scheduled for April.

Bureau Chief Erica Meltzer covers education policy and politics and oversees Chalkbeat Colorado’s education coverage. Contact Erica at emeltzer@chalkbeat.org.

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