District 65 Agrees to Forensic Audit of Dr. Horton
Administrator Stipends and Transportation Expenses under the Microscope
Last night, the District 65 Board discussed and agreed to put out an RFP for a forensic audit of District 65’s finances for years 2021-2024, during the tenure of Dr. Horton. Board President Pat Anderson started the conversation;
To complete an investigation and evaluation during Dr. Horton’s tenure. This is being done to investigate an financial irregularities and to ensure safeguards and processes are in place to protect our financial resources as we are moving forward.
District 65 CFO Tamara Mitchell1 explained how the process works and recommended that the District hire one of the big four accounting firms. The targets suggested for the audit include:
Transportation expenditures (primarily special education)
Administrator stipends
You can watch the video here at the 2:51 mark:
After the discussion began, Sergio Hernandez (Board President 2022-25) brought up no-bid contracts and suggested that the forensic audit go back 20 years or more and focus on District staffers;
We had staff in our business office that went back 20 years. I’ve been through three Superintendents. We thought they were presenting what were balanced budgets. Were there balanced budgets back then or were they moving things around that seemed like a balanced budget?
It’s not clear, but perhaps he was pointing fingers at the former business manager, Kathy Zalewski, who was with District 65 for 23 years? She resigned in June 2024 after ten months (August 2023 to June 2024) during which, District 65 didn’t have a CFO. 2 Mr. Hernandez was Board President during this window.
Either way, the Board already knows the answer to this question which is: yes, they were given misleading budgets. They already hired an auditor who told them this, Dr. Grossi. You can read his memo from 9/12/2024 or a letter to the Board on 8/15/2024:
This is evidenced by two poorly developed budgets, inaccurate information of the financial implication in the construction of the new school, monthly financial reports that reflected data that were more than two months old, and financial reporting that positively skewed the District’s financial condition through techniques that included delaying the payment of bills and accelerating the receipt of grant revenues into the District before the associated expenses actually occurred.
These actions are irregular and not consistent with best practices. The Board of Education and community deserve fidelity in the data that is presented. Had the Board received accurate information on the cost and savings generated from the Fifth Ward School, I believe their decision making related to the new building would have been different, at least in scope and these real expenditure reductions would have started sooner. I also believe that the deficit reduction plan would have been accelerated.
It’s not clear what they would really learn from an additional audit.
However, no bid contracts are a serious issue. I’ve written about this a lot, but very few contracts awarded are ever put out for bid. Examples include:
Contracts Awarded to Dr. Horton’s Former Business Partners - The contracts detailed in the indictment.
Pacific Education Group - Over $200,000 in equity training and material and more than $450,000 in facilitators, none of it bid out.
Sagebird Consulting LLC - Contract with former colleague of Dr. Horton for $112,000
Non-Completed Contract with a Christian Educator, with a criminal record who had his background check skipped ($35,800)
Dillard Educational Consultant- $39,275 paid to Michelle Dillard, a former and current colleague of Dr. Horton’s now involved in controversy in Georgia involving using District funds to purchase her own book and hiring her husband.3
Other Vendors such as GovernmentFrameworks.com - There is a whole long tail of contracts awarded for the “special services” exemption.
Even the transportation contracts have not been put out for bid in a decade. The last one I could find was in 2015. Since then, the District renewed the contract without bidding. You can read meeting minutes regarding the renewal negotiated with Positive Connections in 2020 and the contract addendum in 2023.
In 2023 when they did put something out for bid, I was so surprised I wrote an article on it.
More recently, however, the bid process for the Foster School Construction (excluding the architect) was done completely within the appropriate bidding rules and is now coming in under budget.
Anyway, after some discussion, the Board reached a compromise and agreed to two RFPs:
Forensic Audit of Dr. Horton’s tenure focused on transportation and administrator stipends
Review of Financial Board Policies
The CFO, Ms. Mitchell indicated that the Illinois Association of School Boards (IASB) may be able to provide some guidance on the latter issue.
Meanwhile, in Georgia, the Dekalb County Schools also agreed to conduct a forensic audit of Dr. Horton’s tenure. According to the Decaturish, they will hire a vendor this month;
The decision to seek qualified vendors came after the first of two back-to-back meetings on Oct. 29. The first meeting was held in a closed-door executive session. After the board returned to the meeting, it voted to direct staff to seek proposals from multiple firms for the forensic audit. A recommendation for a firm will be presented to the board in November, a school district spokesperson said.
I am a huge fan of Ms. Mitchell. When this is all said and done, someone should give her the key to the City. It’s such a breathe of fresh air to have serious financial experience in District 65 leadership.
Former District 65 CFO Raphael Obafemi is currently the CFO in Oswego School District 308. He works under former District 65 Assistant Superintendent of HR Andalib Khelghati, who is currently the Superintendent in D308. A month ago, Mr. Khelghati wrote a song (now taken down) promoted by the Dekalb County School District.
I never wrote on this, but here’s the data from the D65 list of bills
2021-06-29 DILLARD EDUCATIONAL CONSULTANT 1865 A $13,500.00
2021-05-27 DILLARD EDUCATIONAL CONSULTANT 1667 A $9,900.00
2021-01-14 DILLARD EDUCATIONAL CONSULTANT 840 A $6,075.00
2021-02-11 DILLARD EDUCATIONAL CONSULTANT 999 A $3,825.00
2022-07-14 DILLARD EDUCATIONAL CONSULTANT 16 A $3,500.00
2021-03-12 DILLARD EDUCATIONAL CONSULTANT 1163 A $2,475.00
If any board members read this… one of the biggest issues you have is insufficient local financial disclosure and conflict of interest regulations and guidelines for your employees. If you had them, a lot of this would have been prevented back in 2020.
I do think ISBE can provide guidance on board policies, and that is the correct place to turn to first, but financial disclosure and conflict of interest policies would not be part of a financial review. You should include this as part of your overhaul.
So should DeKalb. Dr. Horton & his associates were bad actors, but districts are responsible for making themselves less vulnerable.
Why on earth is Sergio still on the board?!? He was a not a bystander as he is posing to be. He actively failed to ask the questions or do the job he was hired to do. Plus, he is a Class A dimwit. Audit 20 years? That’s practical. Tell me what we need to do to lose this dead weight.