The Issue Whether the Respondent, Michael E. Langton, violated Sections 112.313(6) and 112.3141(1)(c), Florida Statutes, and Section 8(e), Article II, Constitution of the State of Florida, by his activities and contacts with staff of the Department of Community Affairs on matters dealing with the Community Development Block Grant Program?
Findings Of Fact The Respondent. The Respondent, Michael E. Langton, took office as a member of the Florida House of Representatives, on October 22, 1985. The Respondent has continuously served as a Florida state representative since October 22, 1985. At all times relevant to this proceeding, the Respondent served as a public officer subject to Sections 112.313(6) and 112.3141(1)(c), Florida Statutes, and Section 8(e), Article II, of the Constitution of the State of Florida. Since October, 1981, the Respondent has been a grants consultant. The Respondent formed, owned and was employed by Langton Associates, Incorporated. Upon taking office as a Florida state representative in 1985, the Respondent requested an opinion of the Commission concerning his continued work for Langton Associates, Incorporated. The opinion of the Commission indicated that the Respondent could continue to work as a grants consultant but that he should not personally appear before state agencies. Langton Associates, Incorporated. The Respondent has been the sole stockholder of Langton Associates, Incorporated (hereinafter referred to as "Langton Associates"), since it was formed in October, 1981. The corporation is a for-profit-corporation. Among its functions, Langton Associates provides consulting services to governments eligible to apply for grants under the Community Development Block Grant Program and assists governments in preparing and submitting applications for grants under the program. During the period of time at issue in this proceeding, the Respondent was paid a salary from Langton Associates for his services to, and on behalf of, the corporation. The salary paid to the Respondent has been determined by the Respondent. Although the salary varies from year-to-year, it averages approximately $50,000.00 a year, including 1988, 1989 and 1990. The City of Macclenny, Florida, was among the clients of Langton Associates. Macclenny paid Langton Associates $12,000.00 a year for five to six years, including 1988. Income paid to Langton Associates by its clients was deposited in a business account from which the Respondent's salary was paid. During the five to six years prior to July, 1990, Langton Associates made approximately $350,000.00 for services to its clients. During the period of time at issue in this proceeding, the Respondent, through Langton Associates, provided services to a number of local governments. Several of these local governments paid Langton Associates an annual fee. The average fee was approximately $30,000.00 a year. Other clients of Langton Associates paid on a per grant application basis approximately $3,000.00 per grant application. The Community Development Block Grant Program. The Community Development Block Grant Program (hereinafter referred to as the "CDBGP"), is a Federal government program whereby funds are provided to States to use to improve small local communities. Funds received for the CDBGP in Florida are administered by the Florida Department of Community Affairs (hereinafter referred to as the "Department"), through the Department's Division of Housing and Community Development. Funds for the CDBGP are received and are distributed for four categories of grant projects: (1) housing; (2) neighborhood revitalization; (3) economic development; and (4) commercial revitalization. CDBGP funds are intended to be used in part to assist small local governments to revitalize homes and neighborhoods. Each year the Department adopts administrative rules governing the CDBGP and the manner in which annual funds are to be distributed in Florida. The Department's revised administrative rules provide the steps to be followed in each annual funding cycle. The procedures for determining which small governments receive CDBGP funds generally include the following steps: An applicant workshop is held at the beginning or the middle of the funding cycle; An opening date is established for when Applications are to be submitted; A closing date is established for when Applications are scored and awards of funds are made; Applications are initially ranked according to their scores; Site visits are conducted by the Department; Applications are ranked again. These rankings can be challenged; and Funds are awarded. The Secretary of the Department makes the final decision as to how CDBGP funds are awarded. All applications for CDBGP funds are "self-scored" prior to filing. Each applicant determines, based upon objective standards, the score of its application and informs the Department of the score on the application. When applications are filed they are initially ranked by the Department based upon the self-score determined by the applicant. Applications may be filed on behalf of small cities of less than 50,000 population or small counties of less than 200,000 population. Applications for CDBGP funds are technically filed by eligible applicants--a county or city. Private individuals and businesses are not eligible to apply for grants from the Department under the CDBGP. Applications are prepared 90 to 95% of the time by consultants, including Langton and Associates. The following question is included on applications from which it may be determined if an application was prepared by a consultant: "Who was the agency or firm responsible for preparing the application?" The eligible county or city for which an application is submitted is considered the "applicant." If a consultant prepared and filed an application on behalf of an applicant, however, it was common for Department staff associated with the CDBGP to refer to the consultant and/or the government entity as the "applicant." Although the number of consultants in Florida who prepared applications for CDBGP awards varied from year to year, there have been approximately six to ten consultants in Florida preparing applications for CDBGP awards. During 1988, there were a total of approximately 276 local governments which were eligible for awards under the CDBGP. Only a small number of these entities, however, actually filed applications for awards. The Department does not consider the identity of any consultant involved in filing a CDBGP application in determining which applicants should be awarded CDBGP grants. Following the filing of applications for CDBGP grants, additional information is not to be provided to the Department unless requested. Nor are arguments to be presented to the Department in support of any application. Target Area Maps and Gerrymandering. Applications filed during the 1988 (as well as prior years) annual funding cycle for CDBGP funds for the housing category were required to include a "target area map". A "target area map" was an area map of the local community of the applicant depicting the specific area that the proposed grant activities were to be conducted in. Therefore, a target area map for a housing grant would identify on the area map the specific houses for which the funds were being requested. Prior to the 1988 annual funding cycle many target area maps had been submitted which included oddly shaped target areas. These oddly shaped target areas were not square or rectangular; instead, the target area was drawn in such a way that houses that qualified for CDBGP funds were included and those that did not qualify, even if located right next door to a qualified house on the same block, were excluded. "[A]pplicants would draw their target area boundaries in such a way to exclude housing units that would adversely affect their score." Lines 24-25, page 73, and line 1, page 74, Transcript of September 30, 1991-October 1, 1991, Formal Hearing (hereinafter referred to as the "Transcript"). This practice was referred to as "gerrymandering." There had been concern and debate in and outside the Department concerning whether gerrymandering should be allowed. There were some who were not concerned about, or bothered by, gerrymandering because the use of gerrymandering to identify a target area did not cause persons who were not in need to be directly benefited from CDBGP funds. For example, in the housing grant area, only the houses of persons with low enough income levels could directly benefit from the CDBGP. Those that did not qualify for assistance could not be directly benefited even if an impacted area was gerrymandered. There were others, however, who were concerned about and bothered by gerrymandering because the use of gerrymandering allowed applicants to achieve higher scores for their applications by drawing the targeted area in such a way to insure that it included mainly or totally houses that were qualified for funding while excluding unqualified houses in the same neighborhood which would reduce their scores. Persons concerned with, and bothered by, gerrymandering, including the Respondent, believed that the CDBGP intended that only relatively box-shaped geographic neighborhoods should be allowed as the target area. At various times, the Department tried to devise a method of preventing gerrymandering, but could find no reasonable solution. The difficulty with preventing gerrymandering was explained by Lewis O. Burnside, the Director (beginning in January, 1989) of the Department's Division of Housing and Community Development: Every time I talked about target areas when we looked at it -- we tried to deal with target areas to see what shape should they be. Should they be square or circular and should they -- we couldn't find any rhyme or reason for that. Also, our program applies to urban and rural areas. And in rural areas it is quite normal to have a large property value farm across from what used to be tenant lands, where you have very low income people directly across the street from a multi-million-dollar piece of farmland. And so, we could not write anything, one that would give you a non-gerrymandered target area unless it was just arbitrary. We would just have to say it has got to be square, or it has got to be rectangular, and it can be no larger than a certain size. . . . Lines 8-20, page 141, Transcript. Most people associated with the CDBGP, other than the Respondent, did not consider the issue of gerrymandering to be a burning issue or a particularly improper practice. This lack of concern was caused by the fact that the general purpose of the CDBGP was to benefit low and moderate income people and gerrymandering did not circumvent this general purpose. Ultimately, individuals in the houses included in a target area, even in a gerrymandered target area, benefited only if they were in need of assistance as established under the CDBGP. There were members of the Florida Legislature, including the Respondent, who believed that gerrymandering in the CDBGP was inconsistent with the goals of the CDBGP. Through at least the 1988 annual funding cycle, gerrymandering of target area maps was not prohibited by federal or Florida law. The 1988 Funding Cycle. The general procedures for determining how CDBGP funds were to be awarded each funding cycle which are described in finding of fact 18, supra, were followed for the 1988 funding cycle. Legislation concerning the CDBGP was adopted during the 1988 legislative session and was codified as Chapter 88-201, Laws of Florida. As a result of the adoption of Chapter 88-201, Laws of Florida, and as was the practice of the Department prior to each funding cycle, the Department undertook to amend its administrative rules governing the CDBGP, Chapter 9B-43, Florida Administrative Code. Rule 9B-43.003(33), Florida Administrative Code, was renumbered as subparagraph (35) and was amended by the Department by adding the following underlined language: "Target area" means a distinct, locally designated slum or blighted area under Section 163.340, F.S.; or a designated Enterprise Zone under Section 290.065, F.S.; or a distinct locally designated area, totally contained and contiguous in nature, that is characterized by concentrations of low and moderate income persons, wherein low and moderate income persons comprise at least 51 percent or more of the target area population. It was believed in the Department when the Department amended the definition of "target area" in its Rules that gerrymandering had been eliminated or substantially reduced. Although no formal opinion was given, an attorney on the Department's legal staff indicated during a CDBGP application workshop conducted by the Department for the 1988 funding cycle that gerrymandering would no longer be allowed. A representative of the Department instructed potential CDBGP grant applicants during a CDBGP application workshop held sometime after October 11, 1988, the effective date of Rule 9B-43.003(35), Florida Administrative Code, that gerrymandered target area maps would not be permitted. The Respondent and Langton Associates were aware of this representation. At some time subsequent to the workshop at which it was announced that gerrymandering would not be allowed, applications for CDBGP housing grants for the 1988 funding cycle were submitted to the Department. There were a total of thirty-four applications received for CDBGP housing grants for the 1988 funding cycle. Langton Associates submitted applications for housing grants for the 1988 funding cycle for three applicants: (1) Macclenny; (2) Fellsmere, Florida; and (3) St. Johns County, Florida. The target areas proposed with the applications prepared and submitted by Langton Associates for Macclenny, Fellsmere and St. Johns County were not gerrymandered. Langton Associates did not submit gerrymandered target areas because the Respondent did not believe that gerrymandering was proper and because the Department had announced that it would not accept gerrymandered maps. Despite the Department employee's statement during the workshop that gerrymandered maps would not be allowed for the 1988 funding cycle, most of the target area maps submitted with applications for the 1988 funding cycle were gerrymandered. Only five applications received by the Department did not include gerrymandered target areas: (1) the three applications submitted by Langton Associates; (2) the application of Apalachicola, Florida; and (3) the application of Century, Florida. On December 1, 1988, a memorandum was sent from Earl H. Parmer, Jr., then Director of the Department's Division of Housing and Community Development, to the Department's General Counsel. Mr. Parmer informed the General Counsel of the target area maps which had been filed for the 1988 funding cycle and stated, in part, the following: As you know, the department has been attempting to reduce the grantsmanship in the CDBG program by substantially reducing the gerrymandering of CDBG target areas; however, we question whether our current rule language supports our position. Advocate's Exhibit 7. On December 2, 1988, the following response was given by the Department's legal staff to Mr. Parmer: "Maps appear to be in compliance with Rule." Advocate's Exhibit 7. The Department, therefore, determined that it could not, despite the previous instructions from a Department representative that gerrymandered target areas would not be accepted, prevent the use of gerrymandered target area maps for the 1988 funding cycle. On December 14, 1988, the applications for CDBGP housing grants were initially ranked by the Department based upon the scores determined by the applicants through self-scoring and reported to the Department. Applications were listed by highest score to lowest score. The total 1988 funding cycle housing grant funds available were sufficient to meet the requests for funds of only the top fifteen-ranked applications. There were not sufficient funds to fund those applicants who ranked below fifteenth. The applications filed by Langton Associates ranked as follows, based upon their self determined scores, on the initial ranking: (1) Macclenny was seventeenth; (2) St. Johns was thirtieth; and (3) Fellsmere was thirty-second. The scores for these applicants determined through self-scoring were not high enough to entitle any of the applicants to an award of a housing grant for the 1988 funding cycle. The Respondent's Contacts with Linda Frohock. During December, 1988, the Respondent was informed that most applications for CDBGP housing grants for the 1988 funding cycle included gerrymandered target area maps and that the Department intended to accept those maps. After learning of the Department's acceptance of gerrymandered target area maps, the Respondent telephoned Thomas Yeatman, an employee of the Department. The Respondent left a message requesting that his telephone call be returned. Between December 20 and 31, 1988, Linda Frohock, then Chief of the Bureau of Housing and Community Assistance, in the Department's Division of Housing and Community Development, returned the telephone call the Respondent had made to Mr. Yeatman. This telephone call probably took place on or about December 20, 1988. The Respondent's initial telephone call to Mr. Yeatman and his conversation with Ms. Frohock were the result of his frustration over the fact that the Department was going to allow gerrymandering of target areas. The Respondent had expressed concern over the Department's administration of the CDBGP prior to 1988. The Respondent described his frustration: I called Mr. [Yeatman] and Linda, and I wanted to speak to the secretary as Representative Langton. I made it very clear, I said, I don't care what this is going to cost me politically or financially; you guys have got to stop this craziness. You are disadvantaging tons of cities, cities that are doing this right, they are doing this fair. They have no shot at ever competing for these grants, if you are going to continue this abuse of a program. . . . . Lines 16-24, Page 35, September 12, 1991, Deposition of the Respondent. The Respondent admitted that when he called the Department he intended to put pressure on the Department through his position as a legislator and that he attempted to use his power as a public official to force the Department to take action. The Respondent let it be known to Ms. Frohock that he was calling in his capacity as a legislator. Ms. Frohock informed the Respondent that she was returning his telephone call at the direction of the Assistant Secretary of the Department and that she would report their conversation back to the Secretary and the Assistant Secretary of the Department. During Ms. Frohock's telephone conversation with the Respondent, she took notes of the nature of the conversation. During the telephone conversation with Ms. Frohock, the Respondent was very upset and angry. The Respondent was excited, and he talked loudly and rapidly. The Respondent was angry that his competitors were benefiting by being allowed to submit gerrymandered target area maps while the applications prepared for, and submitted on behalf of, Langton Associates' clients had not included gerrymandered target area maps. The Respondent believed that Langton Associates had lost money in the past because it had not gerrymandered target areas while the Respondent's competitor's had. During the Respondent's conversation with Ms. Frohock, the Respondent indicated the following: He had met with Mr. Parmer in the summer of 1988 and discussed gerrymandering. Mr. Parmer had promised him that gerrymandering would not be allowed. A Department employee had stated at a workshop that gerrymandering would not be allowed for the 1988 funding cycle. He wanted to be allowed to gerrymander the target area maps Langton Associates had submitted on behalf of its clients or he wanted the Department to require that those applicants that had gerrymandered their target area maps be punished. He indicated that he did not care what it cost him politically or financially to fight the Department's actions. He intended to shut down the CDBGP and see that all of the employees involved in the CDBGP were fired if the matter was not resolved to his satisfaction; "Heads would roll." He indicated that Florida Senator Carrie Meek and Florida Representative C. Fred Jones had asked him to play a major role in the Legislature in revising the CDBGP. He stated that the matter would end up in a court of law. He would get Fred Baggett and Jack Skelding, both of whom are attorneys, to assist him to fight the Department. He indicated that he would stop the 1988 funding cycle by suing the Department. He stated that he would probably only get two grants funded during the 1988 funding cycle. He stated that he would return to his office on January 2, 1989, and would have a legislative committee meeting on January 9, 1989; if he had not heard back from the Department about the problem, he wanted to talk to the Secretary of the Department after his return. If he was not satisfied after talking to the Secretary of the Department, he indicated he intended to speak to the then Lieutenant Governor and the Speaker of the House Designate. The Respondent asked Ms. Frohock to pass his concerns on to the Department's Secretary. The Respondent requested that Ms. Frohock provide him with copies of all target area maps submitted in the housing category and the neighborhood revitalization category for the 1988 funding cycle. These documents were public records. The Respondent's conversation with Ms. Frohock made her nervous, in part because he was a legislator. During the Respondent's conversation with Ms. Frohock, he did not specifically say that he was calling on behalf of himself, Langton Associates or any local government for which the Respondent or Langton Associates was working. Nor did the Respondent specifically mention being compensated for the call. Despite the foregoing finding of fact, it is obvious that the Department's actions which the Respondent complained of during his conversation with Ms. Frohock had directly affected applicants which had paid Langton Associates to prepare and file applications on their behalf during the 1988 funding cycle. It is also obvious that the alternative resolutions of the problem suggested by the Respondent had the potential to benefit those same applicants. In light of the fact that the Langton Associates' three applications were among only five applications out of thirty-four applications filed that were not gerrymandered, it was in the interest of Langton Associates and the Respondent that the Department take the actions the Respondent suggested or some other action to correct the Department's decision to accept gerrymandered target areas. It is also true that the Respondent did not specifically request any change in the scores of the applicants represented by Langton Associates; and that the specific actions recommended by the Respondent were suggested for the "entire set of eligible applicants." But the Respondent's suggestions included the applicants represented by Langton Associates and those applicants stood to gain more from the Respondent's suggestions than those applicants that had filed gerrymandered target area maps; especially if the applicants that had filed gerrymandered target area maps were penalized as suggested by the Respondent. While it is true that the concerns which the Respondent expressed to Ms. Frohock were to some degree concerns which the Respondent or any other legislator could have raised in their capacity as a legislator, the Respondent's actions also could have beneficially impacted clients of Langton Associates that had paid Langton Associates to prepare and file applications on their behalf in the funding cycle at issue. The fact that issues may have been raised by the Respondent in his capacity as a legislator does not negate the fact that the raising of those issues before the Department could also have benefitted the clients of his company, Langton Associates. The Respondent's actions in telephoning Mr. Parmer and talking to Ms. Frohock were also considered necessary by the Respondent because of the possible harm to the reputation of Langton Associates caused by the Department's actions. Langton Associates was one of the only consultants that heeded the Department's instructions concerning the use of gerrymandered target areas for the CDBGP 1988 funding cycle. When the Department reversed its position and accepted the gerrymandered target areas proposed by most of the applicants in the 1988 funding cycle for housing, the Respondent had to be concerned about those who would question why Langton Associates had not filed gerrymandered maps. In light of these concerns, the Respondent had to have felt compelled to take some action to force the Department to admit that it had been in error and not Langton Associates, even if the clients of Langton Associates were not directly benefited. Finally, some of the comments and requests made by the Respondent to Ms. Frohock may have been reasonable in light of the events which precipitated the conversation. If the Respondent had not been a member of the legislature who was prohibited from representing others for compensation before a state agency, some of his actions were actions which might be expected of, and considered reasonable if taken by, any consultant in light of some of the Department's actions. Some of the Respondent's actions were taken and some of his comments were made because he believed that the Department's actions had improperly misled Langton Associates. Some of his actions were taken and some of his comments were made, however, solely because of his position and power as a legislator. Following her telephone conversation with the Respondent, Ms. Frohock gave a copy of her notes to, and briefed, the Department's Assistant Secretary. She also gave a copy of her notes to Mr. Burnside. Ms. Frohock also subsequently wrote a memorandum memorializing her telephone conversation with the Respondent. The January 10, 1989, Meeting. Subsequent to the Respondent's telephone conversation with Ms. Frohock, the Respondent requested that a meeting be held with the Secretary of the Department in Representative C. Fred Jones' office. In January, 1989, Representative Jones was the Chairman of the House Committee on Community Affairs, the committee of the House of Representatives with jurisdiction over the Department's programs. The Respondent asked Mario Taylor, Staff Director of the House Committee on Community Affairs, to arrange the meeting with the Secretary of the Department. Mr. Taylor obtained approval for the meeting requested by the Respondent from Representative Jones, and Mr. Taylor informed Michael Richardson, the Department's legislative liaison, of the meeting. The meeting requested by the Respondent was scheduled for January 10, 1989 (hereinafter referred to as the "Meeting"). Mr. Richardson informed the then Secretary of the Department, Thomas Pelham, of the Meeting. Mr. Richardson told Mr. Pelham that the meeting was being held to discuss target area maps and gerrymandering. Mr. Pelham met with Mr. Burnside prior to the meeting to be briefed on the issue and requested that Mr. Burnside attend the Meeting with him. Prior to the Meeting, Ms. Frohock and Mr. Burnside met with Department staff to discuss the gerrymandering issues raised by the Respondent during his telephone conversation with Ms. Frohock. A "discussion paper" was drafted by Ms. Frohock as a result of this Department staff meeting and was dated January 10, 1989. It was agreed by Department staff that the Department had presented faulty instructions concerning gerrymandering during the workshop which took place before applications for the 1988 funding cycle were filed. There were some in the Department that wanted to take this incident into account in any recommended solution to the problem. There were others, including the Department's legal staff, who believed that the Department had done nothing illegal and, therefore, wanted to take no action. The following possible solutions to the gerrymandering issue were discussed and agreed upon by the Department's staff and were discussed in the discussion paper: Allow all applicants to resubmit target area maps (this would benefit the five applicants, including the three Langton Associates' applicants, that had submitted maps that had not been gerrymandered); Give the maximum score for the target area for all the proposals (this would also benefit the five applicants, including the three Langton Associates' applicants, that had submitted maps that were not gerrymandered); and Do nothing and allow any disappointed applicant to follow the Chapter 120, Florida Statutes, process to challenge the Department's actions. This is the option that was ultimately recommended in the discussion paper. The Meeting was attended by Representative Jones, the Respondent, Mr. Pelham, Mr. Burnside, Mr. Taylor and Mr. Richardson. The Meeting was held in Representative Jones' office. Representative Jones agreed to the meeting because he had a number of concerns about the manner in which the Department was administering the CDBGP. Representative Jones was not aware that the Respondent's company, Langton Associates, had filed applications on behalf of its clients which had been affected adversely by the Department's actions in accepting gerrymandered maps. Therefore, Representative Jones was not aware that the Respondent had not requested the Meeting solely in his legislative capacity. During the Meeting the Respondent was hostile, agitated, upset and "seemed about to explode". His manner was threatening. Mr. Pelham described the Respondent's actions as a "tirade". The Respondent did most of the talking during the Meeting: He expressed his displeasure with the Department's administration of the CDBGP and, in particular, the Department's actions in accepting the gerrymandered target area maps. Representative Jones also expressed concern about the Department's administration of the CDBGP. He indicated that he and others, in preparing applications on behalf of local governments for the 1988 funding cycle, had been misled by information presented at a workshop to the effect that gerrymandering would not be allowed for the 1988 funding cycle. The Respondent stated that "he and others had relied upon that misinformation, and now he feared that they were going to be penalized in the way those applications were scored." Lines 4-6, page 194, Transcript. He stated that he did not believe the Department was administering or interpreting the law correctly, especially with regard to gerrymandering. He stated that the law did not allow gerrymandering. He indicated his displeasure with staff of the Department and indicated that they should all, with one exception, be fired. He demanded that all applications be thrown out; that they should not be scored or acted upon. He suggested that the Department should do nothing until the Legislature could take a look at the problem. He threatened to take legal action to stop the Department if it did not stop the funding cycle. Later during the Meeting, he suggested that the Department accept redrawn target area maps that were not gerrymandered or at least require all the applicants to "play by the same set of rules." The Respondent wanted the Department to halt the 1988 funding cycle process so that legislation prohibiting gerrymandering could be adopted. As of the date of the Meeting, if the Department had halted the 1988 funding cycle process it would not have harmed the applicants represented by Langton Associates. All three applicants had scores at that time which were below the funding ranking cut off score. Without some action by the Department, those applicants did not appear destined to receive a grant for the 1988 funding cycle. While it is true that the suggestions made by the Respondent during the Meeting would apply in general to all applicants, it is also true that if all applicants were required to submit maps that were not gerrymandered, the applicants that had submitted gerrymandered maps would in all probability end up with reduced scores, depending on how their target areas were drawn. The applicants for which applications had been prepared by Langton Associates and two other applicants, on the other hand, would not suffer such a reduction in scores because they had already submitted target areas which were not gerrymandered. Those applicants which had the top fourteen scores for the 1988 funding cycle for housing at the time of the Meeting would have suffered disproportionately if the funding cycle were suspended: their status would have changed from prospective award winner to non-award winner. During the Meeting, although the Respondent did not specifically indicate that the Meeting had been called, or that he was voicing his displeasure, on behalf of himself, Langton Associates or its clients, the Respondent made reference to the fact that he was a consultant and that Langton Associates had prepared applications for local governments that had been filed in the 1988 funding cycle being discussed. This was apparent to the Department employees present at the Meeting. The Respondent, although expressing his concerns in terms of all applicants generally, was nonetheless also concerned about the impact on the Langton Associates' applicants and Langton Associates. The Department employees present at the Meeting were aware of this fact also. The Respondent indicated that unless the Department took the actions he had suggested, Langton Associates and the two other applicants that had not gerrymandered their target areas would be prejudiced. The Respondent, through Langton Associates, could have benefited if any of its 1988 funding cycle grants were approved for funding. For example, applicants which are approved will more often than not hire the consultant that prepared a successful application to administer the awarded funds. Fees for such services can be more profitable than the fees for preparing an application. Therefore, if the Respondent's actions during the Meeting could ultimately result in the awarding of a grant to one of the Langton Associates' clients, the Respondent would have benefited. The Respondent's actions in calling and participating in the Meeting were also considered necessary by the Respondent for the same reasons described in finding of fact 71, supra. As was true of the Respondent's conversation with Ms. Frohock, it is true that the concerns which the Respondent expressed during the Meeting were to some degree concerns which the Respondent or any other legislator could have raised in their capacity as a legislator. It is also true that the Respondent's actions also could have beneficially impacted clients of Langton Associates that had paid Langton Associates to prepare and file applications on their behalf in the funding cycle at issue. The fact that issues may have been raised by the Respondent in his capacity as a legislator does not negate the fact that the raising of those issues before Department employees could also have benefited the clients of his company, Langton Associates. It is also true that some of the comments and requests made by the Respondent during the Meeting may have been reasonable in light of the events which precipitated the conversation. If the Respondent had not been a member of the legislature who was prohibited from representing others for compensation before a state agency, some of his actions during the Meeting were actions which might be expected of, and considered reasonable if taken by, any consultant in light of some of the Department's actions. Some of the Respondent's actions were taken and some of his comments were made because he believed that the Department's actions had improperly misled Langton Associates. Some of his actions were taken and some of his comments were made, however, solely because of his position and power as a legislator. The 1988 Funding Cycle Awards in the Housing Category. Following the Meeting, Mr. Burnside met with Ms. Frohock and discussed the meeting. Following this discussion, Ms. Frohock, at Mr. Burnside's direction, prepared a revised discussion paper in the form of a memorandum from Mr. Burnside to Mr. Pelham. In the memorandum from Mr. Burnside to Mr. Pelham a fourth option was added: to cancel the funding cycle and start over. Mr. Burnside ultimately decided, after discussion with Ms. Frohock, to recommend that the Department adopt the option included in the original discussion paper described in finding of fact 83b: give the maximum score for the target area for all the proposals. This option was recommended, in part, because Mr. Burnside and Ms. Frohock had determined that awarding all applicants maximum scores for their target areas would not have any real impact on which applicants were ultimately awarded funds for the 1988 funding cycle for the housing category and the option recognized that the Department had made a mistake at the workshop. The option recommended was also chosen, in part, because the Department had taken a similar action in the past and because the Respondent was a legislator. Mr. Pelham ultimately approved Mr. Burnside's recommendation. The decision of the Department as to how to resolve the issues raised by the Respondent concerning the gerrymandered maps received during the 1988 funding cycle for housing was the direct result of the actions of the Respondent described, supra. After approval by Mr. Pelham of the recommended action, Mr. Burnside telephoned the Respondent to inform him of the Department's decision. This conversation took place sometime in February, 1989. After Mr. Burnside explained the decision to the Respondent, the Respondent went over the scores of the applicants and asked how the decision would affect those scores. Mr. Burnside, in response to the Respondent's question, indicated how the decision would impact the score for the application of Macclenny, one of Langton Associates' clients. This conversation took place after site visits had taken place and after an applicant previously ranked above Macclenny had been moved down in the rankings as a result of the site visits. Therefore, Mr. Burnside was able to inform the Respondent that Macclenny was within the fundable range of applicants. The Department's solution to the dispute was based in part on the fact that Macclenny was going to receive an award. The Respondent told Mr. Burnside that the result of the Department's solution, as explained by Mr. Burnside, might be acceptable to him. The Respondent was satisfied even though the solution did not resolve the ultimate problem of gerrymandering. , which the Respondent has suggested was the reason he was so upset about the Department's actions. The Respondent also asked Mr. Burnside whether the Department's decision could withstand a legal challenge. Mr. Burnside informed the Respondent that the Department's legal staff had opined that the decision was defendable. If the problem raised by the Respondent had been raised by any person who was not a member of the Florida Legislature, Mr. Burnside would have recommended to Mr. Pelham that the Department take no action and allow the complaining individual to take legal action. The Respondent, therefore, clearly affected the manner in which the Department administered the CDBGP. The Respondent's Contact with Department Staff Concerning the Monitoring of CDBGP Grants. During October, 1989, Terri Ganson was employed as a Community Assistant Consultant for the Department. Ms. Ganson's duties included, among other things, monitoring CDBGP grants. During late 1989, Ms. Ganson was responsible for monitoring three CDBGP grants that had been awarded to Marion County (hereinafter referred to as the "Marion Grants"). Ms. Ganson was required to write periodic monitoring reports concerning the Marion Grants. The Marion Grants were being administered on behalf of Marion County by a grant consultant and competitor of the Respondent, Fred Fox Enterprises. Prior to October 30, 1989, Marion County was awarded a fourth grant (hereinafter referred to as the "Fourth Marion Grant"), in the CDBGP. Marion County was seeking bids for the administration of the Fourth Marion Grant. Langton Associates and Fred Fox Enterprises had submitted proposals to administer the Fourth Marion Grant. As of October 30, 1989, Marion County had not yet decided who would administer the Fourth Marion Grant. On October 30, 1989, the Respondent telephoned Ms. Ganson. During this telephone call, the Respondent yelled at her and was very angry and upset. The Respondent believed that Ms. Ganson was cooperating with Fred Fox, his competitor, and he wanted her to stop. The Respondent feared that Ms. Ganson's monitoring reports for the Marion Grants would cause the administration of the Fourth Marion Grant to be awarded to Fred Fox Enterprises. The Respondent did not believe the monitoring reports were critical enough of Fred Fox Enterprises. The evidence failed to prove that Ms. Ganson in fact had favored Fred Fox Enterprises. During his telephone conversation with Ms. Ganson on October 30, 1989, the Respondent indicated the following to Ms. Ganson: He was concerned that Marion County would select Fred Fox Enterprises to administer the Fourth Marion Grant because of the monitoring reports Ms. Ganson had written concerning the Marion Grants. He accused Ms. Ganson of siding with Fred Fox. He told Ms. Ganson that she had "probably cost him a $96,000 administration grant because of the way [her] reports were written" Lines 2-4, page 181, Transcript. He demanded that a mistake in Ms. Ganson's monitoring reports for one of the Marion Grants be corrected. He requested that Ms. Ganson send him a copy of the current contracts and milestones, all of the monitoring reports and all requests for modifications pertaining to the Marion Grants. Ms. Ganson told the Respondent that she would check her reports to determine if she had made a mistake and, if so, would correct it. She ultimately determined that she had made a mistake and corrected it. She did not, however, totally modify her reports in the manner that the Respondent had demanded. Ms. Ganson reported the October 30, 1989, telephone conversation with the Respondent in a memorandum to her immediate supervisor. The Respondent's actions in telephoning Ms. Ganson on October 30, 1989, and his comments to Ms. Ganson were intended to avoid the loss by Langton Associates of the administration fees for the Fourth Marion Grant, which the Respondent believed could be $96,000.00. Although the decision as to who administered the Fourth Marion Grant was a local decision, the Respondent attempted to influence that decision by demanding that Ms. Ganson, an employee of the Department, modify her monitoring reports. The Respondent's conversation with Ms. Ganson was intended to benefit Langton Associates and, thus, benefit himself. The evidence failed to prove that the Respondent's conversation with Ms. Ganson was on behalf of any person or entity (other than Langton Associates) that he had received compensation from. Although the evidence proved that the Respondent was paid a salary by Langton Associates during the year in which his conversation with Ms. Ganson took place, the evidence failed to prove that Langton Associates had any clients at that time that were paying for Langton Associates' services. Although general testimony was elicited concerning Langton Associates' business and clients, testimony concerning clients that paid Langton Associates during any specific period of time was limited to the period of time preceding approximately July, 1989. The Respondent's Contact with Department Staff Concerning Awards of Multiple Service Grant Contracts. A copy of a letter dated September 22, 1989, was received by the Department. The letter was from Patricia Teems, the business manager of Langton Associates, to the Mayor of the City of Bunnell, Florida. The letter was on the letterhead of Langton Associates. In the September 22, 1989, letter Ms. Teems claimed that the City of Bunnell had awarded an administrative contract in violation of Florida law. In the last paragraph of the contract, Ms. Teems stated the following: Also, by this letter I am requesting DCA make a formal investigation into the procurement practices of the City of Bunnell. The complaint made by Ms. Teems in the September 22, 1989, letter, concerned the award of multi-service contracts. A "multi-service" contract includes the awarding of a contract to administer a grant to the same consultant that prepared the application for which the CDBGP grant was awarded. Under Florida law in effect during 1989, multi-service contracts were prohibited unless the local government awarding such a contract indicted in writing that the multi-service contract was in the best interest of the local government. Mr. Burnside was aware of the September 22, 1989, letter and the request of Langton Associates that the Department investigate its complaint against the City of Bunnell. The Department was investigating the complaint in October, 1989. During October, 1989, Mr. Pelham was walking through a hall in the House of Representatives' office building. The Respondent approached Secretary Pelham and indicated that he wanted to speak to him. During the Respondent's October, 1989, conversation with Mr. Pelham, the Respondent indicated the following: He indicated that the Department was not enforcing one of the laws governing the CDBGP. The Respondent indicated that the problem involved the services that could be performed by someone who contracted with a local government to administer a CDBGP grant. He indicated that he "was being hurt by . . . " the Department's failure to properly enforce the law. He threatened to sue the Department unless the Department enforced the law properly. The Respondent, who spoke in a low-key voice, was firm in expressing his position to Mr. Pelham that the law concerning multi-service contracts should be enforced as the Respondent interpreted the law. Shortly after the conversation with the Respondent concerning multi- service contracts, Mr. Pelham spoke to Mr. Burnside about the conversation. Mr. Burnside explained to Mr. Pelham that Langton Associates had filed a copy of the September 22, 1989, letter to the Mayor of the City of Bunnell and that the Department had been requested to investigate the matter. After Mr. Pelham and Mr. Burnside discussed the Secretary's encounter with the Respondent, they realized that the Respondent had been talking about the City of Bunnell incident when he spoke to Mr. Pelham. Mr. Pelham realized that the Respondent had been suggesting that the City of Bunnell had not followed the correct procedures in awarding the administration contract and the consultant that was awarded the administration contract should not have been the same consultant that had obtained the grant. Mr. Burnside responded on behalf of the Department to the request that the Department investigate the City of Bunnell incident by a letter to Ms. Teems dated January 22, 1990. Based upon information reviewed by the Department, including review by the Department's legal staff, the Department informed the Mayor of Bunnell and Ms. Teems that it had been concluded that the City had not violated the law. Although the Respondent admitted that he was aware that he should not directly request that the Department investigate the City of Bunnell, he approached Mr. Pelham to discuss the matter with him. The Respondent's conversation with Mr. Pelham was intended to benefit Langton Associates because Langton Associates was interested in obtaining the grant administration contract the City of Bunnell had awarded to another consultant and, thus, benefit himself. If the Department had agreed with Ms. Teems' and the Respondent's argument that the City of Bunnell had acted illegally, the City of Bunnell could have been forced to select a different administrator for its grant. The Respondent hoped Langton Associates would be the newly selected administrator. The evidence failed to prove that the Respondent's conversation with Mr. Pelham was on behalf of any person or entity (other than Langton Associates) that he had received compensation from. Although the evidence proved that the Respondent was paid a salary by Langton Associates during the year in which his conversation with Mr. Pelham took place, the evidence failed to prove that Langton Associates had any clients at that time that were paying for Langton Associates' services. Although general testimony was elicited concerning Langton Associates' business and clients, testimony concerning clients that paid Langton Associates during any specific period of time was limited to the period of time preceding approximately July, 1989. The Respondent's Contact with Department Staff Concerning Certain Department Policies. In January, 1990, Wanda A. Jones, worked in the Department's Bureau of Housing, Division of Housing and Community Development. On January 23, 1990, Ms. Jones attended a CDBGP workshop in Jacksonville, Florida, sponsored by the United States Department of Housing and Urban Development. The Respondent was introduced to Ms. Jones during the January 23, 1990, workshop by an employee of Langton Associates. The Respondent began questioning Ms. Jones about the Department's policy that allowed Noma, Florida, to continue to be awarded funds under the CDBGP year after year. Noma is a very small community that had received a number of grants and the Respondent was challenging the Department policy that allowed such a small community such as Noma to continue to receive grants. Ms. Jones attempted to explain the Department's policy to the Respondent. At the time of the Respondent's conversation with Ms. Jones, the Department was in the middle of a funding cycle. The weight of the evidence, however, failed to prove that any application had been filed by Langton Associates on behalf of any client during that funding cycle. The Respondent became upset with Ms. Jones' responses and raised his voice. The Respondent was aggressive, confrontational and he badgered Ms. Jones. Ms. Jones felt very uncomfortable. Her discomfort was caused in part by the fact that the Respondent was a legislator and he was holding her accountable for Department actions. The Respondent told Ms. Jones that the Department's policy was impacting on his business. By eliminating the situation that allowed governments like Noma to continue to obtain grants, other governments would become eligible to receive CDBGP funds. Some of those governments might include Langton Associates' clients or prospective clients. After Ms. Jones left the Respondent, he again approached her, apologized and then started to berate her again. During this conversation, the Respondent asked if Ms. Jones would speak to him "off the record" and express her personal opinions about Department actions. The Respondent's conversation with Ms. Jones was intended to benefit Langton Associates and, thus, benefit himself. The evidence failed to prove that the Respondent's conversation with Ms. Jones was on behalf of any person or entity (other than Langton Associates) that he had received compensation from. Although the evidence proved that the Respondent was paid a salary by Langton Associates during the year in which his conversation with Ms. Jones took place, the evidence failed to prove that Langton Associates had any clients at that time that were paying for Langton Associates' services. Although general testimony was elicited concerning Langton Associates' business and clients, testimony concerning clients that paid Langton Associates during any specific period of time was limited to the period of time preceding approximately July, 1989.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Commission on Ethics enter a Final Order and Public Report finding that the Respondent, Michael E. Langton, violated Sections 112.313(6) and 112.3141(1)(c), Florida Statutes, and Section 8(e), Article II, of the Constitution of the State of Florida, as alleged in Complaint No. 90-86. It is further RECOMMENDED that the Respondent be subjected to public censure and reprimand and be required to pay a civil penalty of $5,000.00 ($2,500.00 for each statutory violation). DONE and ENTERED this 27th day of November, 1991, in Tallahassee, Florida. LARRY J. SARTIN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 27th day of November, 1991. APPENDIX TO RECOMMENDED ORDER The parties have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. The Advocate's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection A. 1 1-3. 2 6-7. 3 8. 4 See 10. The weight of the evidence failed to prove what years the percentages apply. 5 11. 6 Hereby accepted. 7 5. B. 1 13-14 and 21-23. 2 See 25. 3 24. "Gerrymandering" 1 29-30, 38 and 41. 2 32-34. 3 31-33. 4 32-33 and 35. 5 35. 6 See 35. 7 37. The 1988-1989 Funding Cycle 1 18 and 38. 2 18. 3 44 and 51. 4 82 and hereby accepted. 5 46-47. 6 48-49. 7 19, 38 and 52. 8 52-53. 9 The first sentence is not relevant. 54-55. 10 55-56. 11 59. 12 56. 13 57 and 61-63. 14 58 and 61. 15 63. 16 58. 17 62-63. 18 59, 66 and 73. Hereby accepted. See 75 and 80. 21 76-77 and 80. 22 34. 23 81-83. 24 81. 83 and hereby accepted. Hereby accepted. 27 80. 28 84. 29 87. 30 86-87. 31 87. The testimony supporting these proposed findings was too speculative. 52 and hereby accepted. 34 89-90. 35 87 and 89-90. 36 90. 37 Not relevant. 38 92. 39 95, 97 and 101. 40 97. 41 101. 42 104. 43 100-101. 44-45 102. 46-47 Although these findings of fact are true, there could have been a number of reasonable explanations for why the Respondent did not proposed legislation concerning gerrymandering. 48 There proposed findings of fact are generally true. The fact that there are inconsistencies in testimony alone is not why some of the Respondent's testimony was not credible, however. The Respondent's explanation has been rejected based upon the weight of all of the evidence in this proceeding. C. 1 105. 2 Hereby accepted. 3 Not relevant. 4 106. 5 112-113. 6 114. 7 113. 8 114. 9 109-111. 10 113-114. 11 See 113. The evidence did not prove whether Ms. Ganson did or did not intend to favor Mr. Fox. 12 116. 13 118. D. 1-2 112. 3 120-121. 4 Hereby accepted. 5 124-125. 6 126. 7 127. 8 Not supported by the weight of the evidence or not relevant. 9 128. 10 129 and see 130. E. 1 131. 2 132. The meeting took place on January 23, 1990. 3 133 and 135. 4 133-134. 5 134 and 139. 6 See 136. 7 134. 8 138. 9-10 Not supported by the weight of the evidence. No weight has been given to the sworn statement of Ms. Jones. 11 Hereby accepted. 12 141. 13 Hereby accepted. 14 139. 15 Hereby accepted. 16 140. The Respondent's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1 1-2. 2 4, 6 and 8. 3 7. 4 13-14 and 16. 5 21-22. 6 22. Not supported by the weight of the evidence. The interrogatories were not offered into evidence. See 26. 9 5. 10 Not supported by the weight of the evidence. The interrogatories were not offered into evidence. 11 27. 12 28. 13 52. 14 57. 15-16 Hereby accepted. 31-32. The last sentence is not supported by the weight of the evidence. Respondent's exhibit 14 was offered and accepted into evidence only for impeachment purposes. Not relevant. 19 14. Hereby accepted. See 32 and 35. Hereby accepted. 23 39-42. 24 Although generally true, the intent of one legislator does not support a finding concerning the intent of the entire Legislature in enacting any law. 25 41. 26 40-42. 27 See 43. 28 44. 29 51. 30 56. 31 See 58. The Respondent's conversation with Ms. Frohock was not to raise "numerous complaints regarding the DCA's administration of the CDBG program." 32-36 See 67-72. 37 See 75 and 77-78. The evidence failed to prove that the Meeting was requested by the Respondent to discuss the general administration of the CDBGP. 38 76. 39 85. 40 78. 41 81. 42 79 and 84. 43 87. See 87. Not relevant. See 91. 47 See 87 and 89-90. See 91. Not relevant. Not supported by the weight of the evidence except as found in 101. See 100-104. 50-51 Not supported by the weight of the evidence. Ms. Frohock's sworn statement was hearsay. 52-54 Not relevant. 55 84. 56 Not relevant. 57 See 67-72 and 90-94. 58 124. 59 125. 60 See 120-121. The third sentence is not supported by the weight of the evidence. 61 See 130-131. 62 112-114. 63 114-115. 64 115. Not supported by the weight of the evidence. See 118. Not relevant. 67 See 118-119. 68 132. 69 133-134. 70 134. 71 137. 72 137 and 143. 73 See 142. 74 Not supported by the weight of the evidence. 51 COPIES FURNISHED: Virlindia Doss Bonnie J. Williams Craig B. Willis Executive Director Assistant Attorneys General Commission on Ethics Department of Legal Affairs The Capitol, Room 2105 The Capitol, Suite 1601 Post Office Box 6 Tallahassee, FL 32399-1050 Tallahassee, FL 32302-0006 Mark Herron, Esquire Jeffrey H. Barker, Esquire Akerman, Senterfitt, Eidson & Moffit 216 South Monroe Street Suite 300 Post Office Box 10555 Tallahassee, FL 32302-2555
The Issue The issue is whether the School Board has the authority to include a provision in a charter that limits a charter school's annual capacity to the number of applications received as of a date certain (March 1) and whether that proposed enrollment cap is legal under Florida law.
Findings Of Fact RCA is a Florida not-for-profit corporation organized for the purpose of governing and operating charter schools. The School Board is a public body corporate, organized and existing under the Florida Constitution and Florida Statutes to govern the provision of public education to students in Leon County. On August 1, 2011, RCA submitted an application to replicate a high-performing charter school to the School Board, requesting approval of a start-up or new charter school in Leon County based upon a high-performing charter school already in existence. On September 20, 2011, School Board staff sent written correspondence to the charter school informing them of several issues with its application, and that approval of their application would be contingent upon the fulfillment of stipulations set forth in the correspondence. In paragraph 11 of the correspondence, the School Board informed the charter school that it would be required to "provide documentation to Leon County Schools by March 1, 2012, regarding the number of students who have completed official applications at the school, and this number will be utilized to set enrollment for the 2012-2013 school year." RCS responded to the September 11 letter through email on September 23, 2011, stating that most of the issues outlined therein would be worked out during contract negotiations. School Board staff responded by reiterating that, for those items to be handled through the charter, the application would not be approved "as is." The charter application was considered at its September 27, 2011, regular board meeting, and was unanimously approved, "contingent upon amendments to the application and compliance with deadlines as outlined in the [September 20] letter to [RCA]. RCS believed that, under the charter school statutes set out at sections 1002.33 and 1002.3311, Florida Statutes, and related regulations, the School Board was not legally empowered to conditionally approve a high-performing charter application, but instead could only legally approve or deny the application under limited circumstances. RCS communicated this position to the School Board during the charter negotiation process at the parties' meeting to negotiate the charter in January 2012. In late November 2011, the parties began negotiating the terms of the charter and were ultimately able to reach agreement on all issues except the March 1 enrollment cap issue that is the subject of this proceeding. On December 19, 2011, the School Board received a response from RCS to the correspondence of September 20 which stated "[t]he school's board will either have documentation that 862 students have enrolled in the school and in Genesis by August 1, 2012, or will provide documentation of available funding and an approved budget that will fully support the program described in the school's application at the number of students enrolled in the school and in Genesis by August 1, 2012. The school will provide documentation to Leon County Schools by March 1, 2012, regarding the number of students who have completed official applications to the school, and this number will be utilized to set enrollment for the 2012-2013 school year." However, at no time did RCS agree to cap the enrollment for the proposed school as of the number of applications received by March 1 of any given year. In January 2012, representatives for the parties met to work through specific terms in the proposed charter. The parties were unable to reach agreement on the March 1 enrollment deadline language. The language in the proposed charter relating to the disputed issue states in pertinent part, "[t]otal annual enrollment for each year shall be determined by the total number of applications received by March 1 of each year." RCS submitted a request for mediation in accordance with section 1002.33(6)(h). The parties participated in two days of mediation, assisted by Thomas Bateman, Supreme Court Certified Circuit Court Mediator, and were able to resolve all outstanding issues except for the issue relating to the March 1 enrollment deadline. Mr. Bateman submitted a mediation report to the Florida Department of Education declaring impasse as to this one issue. On March 12, 2012, RCS filed a Notice/Request for Initiation of Proceedings with the Division of Administrative Hearings (DOAH). RCS has broken ground on, and is currently in the process of constructing, a multi-million-dollar school facility in Leon County to house the school. Construction is currently scheduled to be completed as of late summer 2012. RCS operates a number of other charter schools throughout the state and no other school district in which it owns and operates charter schools is enrollment limited to a March 1 deadline. The School Board has granted charters to a number of other charter schools in Leon County. Currently, there are five charter schools operating in Leon County. All current charters contain the enrollment deadline provision at issue in this matter.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Leon County School Board issue a final order finding that the School Board's proposed contractual provision proposing a March 1 enrollment deadline does not violate the charter school law and does not constitute an unadopted rule. DONE AND ENTERED this 1st day of June, 2012, in Tallahassee, Leon County, Florida. S BARBARA J. STAROS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 1st day of June, 2012.
Findings Of Fact On February 7, 14 and 21, 1989, respondent, School Board of Pinellas County (Board), published a legal advertisement in an area newspaper inviting prospective bidders to submit proposals for certain construction work to be performed on two elementary schools, Walsingham and Cross Bayou, located in Largo and Pinellas Park, Florida, respectively. The bidders were advised that their bids must be "prepared and submitted in accordance with the drawings and specifications" and that such drawings and specifications could be obtained from the Board. Such bids were to be filed with the Board no later than 2:00 p.m. on March 6, 1989. The notice also provided that the bids would be opened the same day. Bids were timely filed by at least five contracting firms, including petitioner, Prelude Construction Company, Inc. (Prelude), and intervenors, Lincoln Construction Company (Lincoln) and Bandes Construction Company (Bandes). In filing these proposals, each bidder represented he had "thoroughly examined all of the contract documents." After the bids were opened and reviewed by Board personnel, Lincoln, Prelude and Bandes were ranked first, second and fourth, respectively, based upon the dollar amount of their proposals. 2/ Thereafter, the Board issued its notice of intended action on March 7, 1989, wherein it advised all parties of its intention to award the contract to Lincoln. In doing so, the Board concluded that, although a bid bond accompanying Lincoln's proposal was not dated March 5 or 6 as required by the specifications, the deviation was minor and could be waived. That action prompted Prelude to file its protest. Through testimony of Lincoln's vice-president, it was established that the Board staff intended to change its initial position and to recommend to the Board that Lincoln's bid proposal be rejected and the contract awarded to Bandes. This change was prompted by the Board staff's discovery on the day of hearing (April 3) that, with the exception of Bandes, all bidders had failed to list the, roofing subcontractor on their bid proposals. The Board staff accordingly concluded that all bidders except Bandes should be disqualified. The bid specification upon which the Board relies to award the contract to Bandes is found in Part One, paragraph 1.1 of section 07511 of the bid specifications. The requirement is a relatively new one and imposes the following requirement upon bidders: NOTE: The contractor is required to list the name of the roofing subcontractor on the form of proposal, Section 1C. Section 1C is entitled "Form of Proposal" and includes the following section on page 1C-3 to be filled in by the bidder: The following subcontractors will be contracted with on this project. Type of Subcontractor Name of Subcontractor (Trade Specialty) (Company/Firm) The column on the left side is intended to identify the subcontractor by specialty, such as plumbing or roofing, while the blank spaces in the right hand column are to be filled in by the bidders with the name of the subcontractor who will perform the specialty. The Board has not been consistent in requiring bidders to list the name of subcontractors on the bid documents. According to the uncontroverted testimony of Lincoln, the Board requires the listing of subcontractors on some projects but not on others. For example, on the specifications for the recently let contract for the prototype new media center at four elementary schools, the left hand column on the above form was filled in by the Board with five types of subcontractors who were required on the project, including roofing. This meant that the bidder was to fill in the blanks in the right hand column with the name of the subcontractor who he intended to use on each specialty. However, on other contracts, including the one under challenge, both columns in the Form for Proposal have been left blank, and Lincoln construed this to mean that the name of the subcontractor was not required. Indeed, Lincoln pointed out, without contradiction, that on a recent contract which left both columns blank, as was true in this case, it was awarded the contract even though it did not identify the roofing subcontractor on its proposal. Because of this prior agency practice, Lincoln assumed the same policy would be used again. However, Lincoln conceded it had failed to read the requirement in paragraph 1.1 of section 07511 before preparing its proposal. There was no evidence that Lincoln gained any substantial advantage over other bidders by this omission. Also relevant to this controversy is Paragraph 10A of the General Requirements. This item is found on page 1B-11 and reads as follows: Each bidder shall indicate the names of specific major Subcontractors if called for on the form of proposal. If listing of Subcontractors is required and the Bidder fails to list them, the bid may, at Owner's option, be disqualified. (Emphasis added) This authority to waive the requirement is reinforced by language in Paragraph 21 of the General Requirements which provides in part that "(t)he owner reserves the right to waive minor technicalities." According to the Board's outside architectural consultant, who was the author of a portion of the contract specifications including section 07511, the omission of the name of the roofing subcontractor is a "minor" technicality that can be waived. However, the consultant had no personal knowledge as to whether the provision had actually been waived by the Board on prior contracts.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a Final Order be entered awarding the contract in question to Bandes Construction Company. DONE AND ORDERED this 20th day of April, 1989, in Tallahassee, Leon County, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 20th day of April, 1989.
The Issue Whether Respondent Legacy Academy Charter, Inc.’s (Legacy) school charter for the Legacy Academy Charter School should be terminated for the reasons set forth in Petitioner the School Board of Brevard County’s (School Board or the Sponsor) November 20, 2019, 90-Day Notice of Proposed Termination of Charter, pursuant to section 1002.33(8)(b), Florida Statutes (2019).
Findings Of Fact Legacy operates Legacy Academy Charter School, a non-Title 1 public elementary charter school (grades K through 6), currently located at 1923 Knox McRae Drive in Titusville, Florida. It is currently in its third year of operations. Legacy represents itself as a STEAM (Science, Technology, Engineering, Arts, and Mathematics) charter school. Legacy and the School Board entered into a charter contract on April 12, 2016. Legacy chose to defer opening for one year, with the intent of opening at the beginning of the 2017-2018 school year. From the time of the original charter, the School District found numerous deficiencies and issues with Legacy’s attempt to open and operate a charter school. For example, in October 2016, it reviewed Legacy’s progress and prepared a “pre-opening checklist” that noted certain deficiencies. In April 2017, representatives from the School District and Legacy met to review the pre-opening checklist and discuss Legacy’s progress toward opening for the school year on August 10, 2017. Assistant Superintendent Archer testified that, based on this meeting, she felt that Legacy was not ready to open, and thought it was in Legacy’s best interest for the School District to offer an opportunity for a second deferral. The School District’s concerns were well-taken; Legacy had not yet secured a school site, had not ordered textbooks, had not hired a Principal, did not have a student enrollment or lottery process in place, did not have an approved and established bank account, did not have office staff in place, and had not hired teachers. Legacy declined the offer to defer another year. Legacy ultimately found a location for the 2017-2018 school year: a former preschool located at the First United Methodist Church in downtown Titusville. During a pre-opening site visit in July 2017, the School District found that the school site was not ADA compliant, that there were safety issues concerning the playground, that the school site lacked infrastructure for necessary technology, and that Legacy had not removed religious symbols. On July 31, 2017, when the School District learned that Legacy had not obtained a certificate of occupancy from the City of Titusville (the first day of school was August 10), the School District issued a recommendation for the immediate termination of the charter for health, safety, and welfare concerns. The School District ultimately rescinded that recommendation for immediate termination on August 8, 2017, after Legacy obtained a certificate of occupancy. Legacy opened for the 2017-2018 school year on August 10, 2017. The School District received various complaints soon after, concerning whether ESE and gifted students were receiving their services, whether Legacy was providing free and reduced lunch, and whether Legacy was providing the appropriate materials and curriculum to its teachers. During the 2017-2018 school year, the School Board issued 10 notices to Legacy for various concerns, defaults, and deficiencies, including concerns found during a new site checklist for Legacy’s November 2017 move into a second location in Port St. John, Florida, and information revealed in a specific review audit of Legacy’s fiscal management and financial position conducted by RSM US LLP (RSM) on March 12, 2018. On April 18, 2018, the School Board issued a “90 Day Notice of Termination,” which listed six grounds for termination: Evidence of the School’s failure to meet generally accepted standards of fiscal management and/or willfully or recklessly failing to manage public funds in accordance with the law as set forth in Rule 6A-1.0081, Florida Administrative Code, Section 218.503, F.S., Section 1002.33(9), F.S., Section 1002.33(7)(a)(9), F.S., Section 1002.345(1)(a), F.S., and Sections 4(G) and 9(A) of the Charter Contract; Evidence of the School’s failure to comply with laws related to public meetings and records as set forth in Section 286.011, F.S., Section 1002.33(16)(b)1, F.S., and Section 9(A_ of the Charter Contract; Evidence of the School’s failure to comply with laws related to teacher certification as set forth in Chapter 1012, F.S., Section 1002.33(12)(f), F.S., and Section 10(C) of the Charter Contract; Evidence of the School’s failure to cure the material breaches of terms or conditions of the Charter Contract after receiving the District’s written notice of noncompliance as set forth in Section 1002.33(7), F.S., 1002.33(9)(c), F.S., and Sections 1(D)(l)(iv)(a) and 12(F) of the Charter Contract; Evidence of the School’s failure to comply with background screening and other requirements set forth in Chapter 1012, F.S., Sections 1002.33(12)(g), F.S., 10132, F.S., 1012.465, F.S., and 1012.458, F.S. and Section 10(J) of the Charter Contract; and Evidence of the School’s failure to comply with all applicable laws, ordinances, and codes of federal, state, and local governance including, without limitation, the Individuals with Disabilities Education Act (IDEA) as referenced in Rule 6A-6.030191(4)(d) and Rule 6A-6.030191(7), Florida Administrative Code, Sections 1003.571(1)(a) and 1002.33(16)(a)(3), F.S., and Section 3(l) of the Charter Contract. Legacy contested the termination, and the School Board referred the matter to the Division, which assigned it DOAH Case No. 18-2778. Rather than proceed to a final hearing, the parties agreed to and executed an Amended Charter Agreement, dated September 11, 2018 (Amended Charter), and filed a Joint Notice of Voluntary Withdrawal. The Preamble to the Amended Charter sets forth, in pertinent part, the explicit agreement of the parties concerning the issues that resulted in the execution of the Amended Charter: By entering into this Amended Charter, the parties wish to address the areas of deficiencies identified in the 90-Day Termination Notice. In doing so, Sponsor agrees to withdraw its 90-Day Termination Notice, allowing the School a chance to address the areas of deficiency and come into compliance with the terms of the original Charter, as amended by this Amended Charter. In exchange, the School agrees to submit to the Division of Administrative Hearings for Case Number 18-2778 a notice of withdrawal of its request for hearing. Each party is responsible for its own attorneys’ fees and costs incurred related to this DOAH proceeding. Nothing herein shall prevent the Sponsor from, or waives the Sponsor’s right to, issue another 90- Day Termination Notice based on repeated instances of non-compliance with the six (6) areas set forth in the April 18, 2018 Termination Notice issued by the Sponsor, based on new areas of non- compliance, and/or to immediately terminate the Charter in the event of a health, safety, and welfare issue under section 1002.33(8), Florida Statutes. The School will be allowed to present evidence that it believes prior alleged breaches were cured, wherein the assigned DOAH judge will make the final decision regarding whether the Sponsor has met the burden of proof under then existing laws.[4] 4 As referenced previously, Legacy filed a Motion for [sic] Limine and Motion to Strike on April 6, 2020, which, inter alia, argued that the undersigned should not consider evidence or allegations related to the previous conduct that resulted in the April 18, 2018, 90-Day Notice of Termination, contending that the Joint Notice of Voluntary Withdrawal constituted a resolution of those issues, and additionally contending that the doctrine of equitable estoppel precludes the School Board from raising those issues in this proceeding. In the April 29, 2020, Order Denying Respondent’s Motion in Limine and Motion to Strike, the undersigned found that Legacy had not established that the Joint Notice of Voluntary Withdrawal constituted a resolution of those issues, and also concluded that consideration of equitable estoppel, which could constitute a defense to this action, requires an evidentiary record. See, e.g., Fewless v. Dep’t of Mgmt. Servs., Div. of Ret., Case No. 18-5787 (DOAH June 17, 2019, Fla. D.M.S. Oct. 24, 2019). The undersigned provided the parties with “the opportunity at the final hearing to address the terms of the Amended Charter Agreement, create a record, and argue, in the proposed final orders, whether such pre-Amended Charter Agreement issues should be considered in the instant proceeding.” At the final hearing, Legacy did not attempt to introduce evidence to establish that equitable estoppel would preclude the undersigned’s The Amended Charter also makes specific reference to the deficiencies enunciated in the April 18, 2018, 90-Day Notice of Termination, stating: In the event that a proceeding is requested before an Administrative Law Judge based on any of the six (6) identified areas set forth in the April 18, 2018 90-day Termination Notice issued by the Sponsor, the School agrees to an expedited hearing within forty-five (45) days of the Sponsor’s written notice based on the calendar availability of the Administrative Law Judge. All other provisions of law regarding a DOAH termination hearing will apply. The undersigned finds that consideration of evidence related to the six areas set forth in the April 18, 2018, 90 Day Notice of Termination, in addition to evidence related to those areas set forth in the Termination Notice is warranted.5 Legacy moved into its current location on or about July 11, 2018. After the filing of the Joint Notice of Voluntary Withdrawal, and shortly after the parties executed the Amended Charter, the School District, starting October 19, 2018, began issuing multiple official notices of default, insufficiency, and other notices, to Legacy, for a variety of reasons. Thereafter, the School Board issued the Termination Notice. Florida charter schools are generally governed by section 1002.33. Section 1002.33(8)(a) provides as follows: (8) CAUSES FOR NONRENEWAL OR TERMINATION OF CHARTER.— (a) The sponsor shall make student academic achievement for all students the most important consideration of these issues, and made no argument concerning equitable estoppel in its proposed final order. 5 The undersigned will also only consider those grounds raised in the Termination Notice in the ultimate determination of whether the School Board is entitled to terminate the Amended Charter. factor when determining whether to renew or terminate the charter. The sponsor may also choose not to renew or may terminate the charter if the sponsor finds that one of the grounds set forth below exists by clear and convincing evidence: Failure to participate in the state’s education accountability system created in s. 1008.31, as required in this section, or failure to meet the requirements for student performance stated in the charter. Failure to meet generally accepted standards of fiscal management. Material violation of law. Other good cause shown. ACADEMIC ACHIEVEMENT AND STUDENT PERFORMANCE The School Board contends that Legacy failed to meet academic achievement and requirements of student performance under sections 1002.33(2), 1002.33(7)(a)4., and, 1002.33(8)(a)1., and sections (2) and 9(C) of the Amended Charter. Within this first ground, the Termination Notice identifies the following three categories: (a) failure to demonstrate improvement in student learning and academic achievement; (b) failure to demonstrate accountability by analyzing student performance data and by evaluating the effectiveness and efficiency of its major educational programs; and (c) failure of the Charter Governing Board to demonstrate oversight of assessments and accountability procedures to assure that the School’s student performance standards are met or exceeded. Failure to demonstrate improvement in student learning and student achievement. The School Board contends that Legacy failed to demonstrate improvement in student learning and student achievement, and that there was actually a significant decline in student proficiency, as measured by student performance on the Florida State Assessment (FSA) in English Language Arts, Math, and Science. 17 At the elementary school level, the FSA is administered annually in the areas of English Language Arts (ELA) and Mathematics to students in grades 3 through 6. In addition, the FSA is administered in the area of Science to students in grade 5. See § 1008.22(3)(a), Fla. Stat. All FSA assessments use scaled scores and achievement levels. Achievement levels range from 1 through 5, with level 1 being the lowest achievement level, level 5 being the highest achievement level, and level 3 indicating satisfactory performance on an assessment. See § 1008.22(3)(e)1., Fla. Stat. Ms. Ward’s expert report further explained these achievement levels as follows: 1–inadequate, highly likely to need substantial support for the next grade; 2–below satisfactory, likely to need substantial support for the next grade; 3–adequate, may need additional support for the next grade; 4– proficient, likely to excel in the next grade; and 5–mastery, highly likely to excel in the next grade. School grades are calculated, in part, based on students’ FSA scores. See § 1008.34, Fla. Stat. The School Board presented evidence and testimony, including expert testimony, concerning Legacy’s student performance data for grades 3 through 6 in ELA and mathematics, and grade 5 in science, for its first two school years of existence—2017-2018 and 2018-2019.6 Ms. Ward, the School Board’s expert, ultimately opined that Legacy’s student performance significantly declined from the 2017-2018 to the 2018-2019 school year, as evidenced by an increase in students receiving achievement levels of 1 or 2 on the FSA, and, with one exception (to be discussed below), a percentage of 6 On March 23, 2020, Commissioner of Education Richard Corcoran issued DOE Order No. 2020-EO-01, an Emergency Order, that, inter alia, cancelled all assessments for the 2019-2020 school year, including the FSA Assessment, as well as school grades. students receiving achievement levels of 3 or higher being lower than the State or Brevard School District average. The School Board’s contention that Legacy’s student performance significantly declined over the two school years in question can be summarized in these charts: ELA Year Level 1 Level 2 Level 3 Level 4 Level 5 2017-2018 19.5% 22% 31.7% 22% 4.9% 2018-2019 34% 23.3% 28.2% 11.7% 2.9% Mathematics Year Level 1 Level 2 Level 3 Level 4 Level 5 2017-2018 34.1% 34.1% 17.1% 9.8% 4.9% 2018-2019 47% 26% 19% 6% 2% Science Year Level 1 Level 2 Level 3 Level 4 Level 5 2017-2018 18.2% 36.4% 18.2% 27.3% 0% 2018-2019 56.7% 30% 10% 3.3% 0% Legacy’s ELA performance in the 2017-2018 school year was higher than the School District average. However, the percentage of Legacy students performing at level 3 and above for the remaining assessments was lower than State and School District averages for all assessments. The School Board also presented evidence and testimony, including expert testimony, that analyzed students’ 2016-2017 school year assessment levels in ELA and mathematics prior to attending Legacy, and then traced those students’ assessment levels during their time at Legacy.7 The School Board presented evidence that the number of students whose assessment levels were 1 and 2 increased after attending Legacy, while the number of students whose assessment levels were 3 and above decreased. In its first school year (2017-2018), Legacy received a school grade of C, and in its second school year (2018-2019), Legacy received a school grade of D. Legacy was the only public school in the school district that received a D school grade for the 2018-2019 school year. Legacy argues that, based on the percentage of points earned for the calculation for school grades, it has averaged a C for the school years 2017- 2018, 2018-2019, and 2019-2020. Legacy notes that this grade is the same, or better, over this same period of time than two schools within its geographic proximity: Mims Elementary and Coquina Elementary. Legacy further noted that Mims and Coquina received D grades for the 2016-2017 school years. Legacy also introduced evidence that it received capital outlay funding for the school year 2019-2020, and that, according to the guidelines set forth in section 1013.62, Florida Statutes, as charter schools must have “satisfactory student achievement based on state accountability standards applicable to the charter school[]” to receive such funding, it must be found to have satisfactory student achievement. The School Board presented evidence that comparing Legacy’s “average” grade to other geographically-proximate schools is not persuasive. First, Coquina, Mims (and other schools Legacy compared itself to during the final hearing, such as Apollo and Oak Park Elementary Schools), are Title I public elementary schools. Legacy, as a charter school, should be considered a “high-performing” school. The other “comparator” schools contain higher subgroups of economically disadvantaged, minority, and ESE populations than Legacy. Second, as a charter school, Legacy can enroll students from 7 The School Board could not provide such an analysis with respect to science assessment levels, as the science FSA is administered only in fifth grade. anywhere in the district, and has no boundaries, so that a comparison to neighboring schools is not persuasive. Third, if Legacy is compared to other charters and schools that emphasize STEAM innovation, such as Sculptor Charter School, South Lake Elementary School, and Educational Horizons Charter, those schools are consistently “A” schools, and Legacy’s declining grades only emphasize its failure to demonstrate improvement. Assistant Superintendent Archer testified that to establish academic achievement, comparing one school to another is not ideal; rather, it is important to drill down to data on individual student achievement to determine whether each student displays the appropriate level of growth each school year. The School Board further contends that Legacy, with one exception, failed to achieve any of its self-identified academic goals listed in its Application (which is incorporated into the Amended Charter), academic goals submitted to the School Board, and those academic goals identified in a School Improvement Plan (SIP) that Legacy submitted annually to the School Board pursuant to the Amended Charter.8 With respect to Legacy’s goals listed in its application: Legacy Goal Student Achievement Performance Meet or exceed performance scores of District and State traditional public schools (based on percentage of students assessment levels 3 through 5 on FSA) 2017-2018 ELA: Legacy–58.5%; District 60.3%; State 55.9% (Note–Legacy met this goal) 8 Legacy contends that the annual SIP requirement imposed by the School Board runs afoul of section 1002.33(7), which provides that “[t]he sponsor may not impose unreasonable rules or regulations that violate the intent of giving charters greater flexibility to meet educational goals.” The undersigned notes that section 1001.42(18)(a), Florida Statutes, requires school boards to annually approve and require implementation of a new, amended, or continuation of an SIP for each school in a district which meets certain criteria, such as receiving a school grade of D or F, among others. Assistant Superintendent Archer testified that it requires an SIP for all of its charter schools. She further testified that Florida requires academic achievement goals, which the School District now includes in the SIP. Legacy agreed to the SIP process in its Amended Charter, and submitted an SIP to the School District for each year of its existence. Further, having received a D grade in 2018-2019, Legacy was obligated to submit an SIP under section 1001.42(18)(a). 2017-2018 Math: Legacy–31.7%; District 61.6%; State 57% 2017-2018 Science: Legacy–45.5%; District 60.8%; State 58.7% 2018-2019 ELA: Legacy–42.7%; District – 61.6%; State 57% 2018-2019 Math: Legacy–45.5%; District 59.9%; State–57.8% 2018-2019 Science: Legacy–13.3%; District 59.9%; State 57.8% Grades K through 2 reading: Mean growth from fall to spring will be at least one year, as evidenced by outcomes from fall, winter, and spring Florida Assessment for Instruction in Reading (FAIR) Legacy cannot meet this goal because it did not administer FAIR for grades K-2 students Grades 3 through 6 FSA ELA and Math: 86% level 3 or higher; 10% decrease in level 1 or 2 2017-2018 ELA: levels 3 through 5– 58.5%; levels 1 and 2 – 41.5% 2018-2019 ELA: levels 3 through 5– 42.7%; levels 1 and 2 – 57.3% 2017-2018 Math: levels 3 through 5– 31.8%; levels 1 and 2–68.2% 2018-2019 Math: levels 3 through 5– 27%; levels 1 and 2–73% Grade 5 Science: 50% level 3 or higher 2017-2018 Science: levels 3 through 5–45.5% 2018-2019 Science: levels 3 through 5–13.3% Growth/Performance: the longer a student stays at Legacy, as the student is promoted, the higher the performance of that student ELA: increase in levels 1 and 2 from 48% to 50%; decrease in levels 3 through 5 from 52% to 50% Math: increase in levels 1 and 2 from 49% to 53%; decrease in levels 3 through 5 from 51% to 47% School Grade: first year grade of “B”; second year grade at or above “B”; third year grade of “A” First year school grade of “C” Second year school grade of “D” No reported grade for year three With respect to Legacy’s goals identified in the 2017-2018 SIP: Legacy Goal Student Achievement Performance 75% grade level average will be achieved by students in grades 1-2 on the Quarterly Literary Assessment (QLA) spring assessment Legacy failed to administer the spring QLA for grades 1 and 2 70% average percentile rank will be achieved by students in grades 3 through 6 on the Reading Comprehension portion of the final FAIR assessment Legacy did not administer the FAIR assessment to grades 3 through 6 75% average proficiency rate (FSA levels 3 through 5) will be achieved by students in grades 3 through 6 on the 2018 FSA assessment in ELA 58.67% of Legacy students in grades 3 through 6 achieved levels 3 through 5 on the FSA ELA 65% average proficiency rate (FSA levels 3 through 5) will be achieved by students in grades 3 through 6 on the 2018 FSA assessment in Mathematics 31.8% of Legacy students in grades 3 through 6 achieved levels 3 through 5 on the FSA for Mathematics 70% average proficiency rate (FSA levels 3 through 5) will be achieved by students in grade 5 on the 2018 FSA assessment in Science 45.5% of Legacy students in grade 5 achieved levels 3 through 5 on the FSA for Science With respect to Legacy’s goals identified in the 2018-2019 SIP: Legacy Goal Student Achievement Performance Reduce the percentage of achievement at level 1 or 2 to 10% or below, and increase students at level 3 or above to 35% or greater for the FSA assessment in ELA 57.3% of students in grades 3 through 6 achieved proficiency rates of levels 3 through 5 (did not meet) Decrease the amount of students who fell to levels 1 and 2 range by at least 5% and increase level 3 and above by 10% for the FSA assessment in Mathematics Level 1 increased by 12.9%; Level 2 decreased by 8.1%; and Level 3 decreased by 4.8% (did not meet) Exceptional Education Students (ESE) increase to 35% at level 3 or higher for ELA, and 25% at level 3 or higher for Mathematics 19% of ESE students scored level 3 or higher on FSA for ELA, and 14.3% of ESE students scored level 3 or higher on FSA for Mathematics English Language Learners (ELL) students increase by 10% proficiency from the first diagnostic test to the last exam of the school year Legacy provided no data With respect to Legacy’s Academic Achievement Goals for 2018-2019, which were separate from its SIP, the School Board introduced evidence that: with respect to ELA, Legacy failed to reduce level 1 and 2 to 10% or below, or increase levels 3 through 5 to 35% or greater, as level 1 achievement increased from 19.5% to 34% over the previous year, and level 3 through 5 achievement decreased from 58.6% to 42.8% over the previous year; and, with respect to Mathematics, Legacy failed to decrease levels 1 and 2 by at least 5% each, and increase levels 3 through 5 by 10% overall, as levels 1 and 2 increased by 4.8% over the previous school year, and levels 3-5 decreased by 4.8%. Clear and convincing evidence establishes that, over the two school years of its existence, Legacy’s students, with little exception, have declined in the area of student achievement. Although Legacy’s ELA performance in the 2017-2018 school year was higher than the school district’s average, it declined in all other areas during this time period, and declined across-the- board the subsequent year. The School Board also established, by clear and convincing evidence, that Legacy, with one exception, failed to meet its self- identified goals in its application, SIPs, and academic achievement goals submitted to the School Board. Failure to demonstrate accountability by analyzing student performance data and by evaluating the effectiveness and efficiency of its major educational programs. Section 1002.33(7)(a)4. requires charter schools to address: The methods used to identify the educational strengths and needs of students and how well educational goals and performance standards are met by students attending the charter school. The methods shall provide a means for the charter school to ensure accountability to its constituents by analyzing student performance data and be evaluating the effectiveness and efficiency of its major educational programs. Students in charter schools shall, at a minimum, participate in the statewide assessment program created under s. 1008.22. Assistant Superintendent Archer testified and provided an expert report, concerning Legacy’s failure to analyze its student data, as required under governing law, the Amended Charter, and district requirements. Assistant Superintendent Archer testified: [Legacy’s] failure to implement any type of strategy to address and analyze data and establish methods to measure goals and make those data-informed decisions for instruction has negatively impacted the student achievement. Again, if you don’t know what your students need, how do you fill any gaps in their education or knowledge? If you don’t know what they know, and what to do if the student doesn’t understand, you cannot continue to support the children. Therefore, any kind of lack of analysis is the responsibility of the school. There are numerous progress monitoring tools available to Legacy that would document and permit analysis of individual student data and progress. Most notably, “Performance Matters” is a progress monitoring tool available to all schools within the school district. Assistant Superintendent Archer testified that Legacy did not consistently use Performance Matters or any other progress monitoring. On a site visit to Legacy, Assistant Superintendent Archer testified that she was unable to review any other documentation, notebooks, or other evidence that teachers were engaging in sufficient progress monitoring. Section 1008.25(4), Florida Statutes, provides that a student who does not achieve level 3 on an FSA assessment for ELA or mathematics, and who does not have an individualized education plan (IEP) in place, must be placed on an individualized progress monitoring plan (PMP). A PMP would be referenced in Performance Matters. Assistant Superintendent Archer testified that Legacy did not access Performance Matters during its first school year, and during their second year, only accessed it sporadically and inconsistently. Assistant Superintendent Archer further testified that during their third school year (2019-2020), Legacy had potentially 33 students that should have a PMP, but that Performance Matters indicated only 4 PMPs were in place. Legacy had previously indicated that it would utilize personalized academic plans (PAP) for its students, which were designed so that students and teachers would monitor an individual student’s progress. Assistant Superintendent Archer testified that Legacy never produced any evidence of a PAP for any of its students. Legacy contends that it reviewed performance data of its academic programs continuously, and that it submits its academic achievement goals to the School Board on an annual basis. Ms. Montford, Legacy’s current principal (who also served as its first principal in 2017-2018), testified that Legacy’s governing board provides oversight of assessments and accountability procedures for its school, but was unable to provide any evidence of this oversight. Despite Legacy’s contentions, the School Board established, by clear and convincing evidence, that Legacy failed to consistently and accurately utilize methods that identified the strengths and weaknesses of its students, and how well educational goals and performance standards were met by students attending Legacy. Failure of the Charter Governing Board (Governing Board) to demonstrate oversight of assessments and accountability procedures to assure that the Legacy’s student performance standards are met or exceeded. Similar to subsection I.B. above, the School Board contended, in its Termination Notice, that over the preceding two and one-half years, after reviewing the minutes of 35 meetings of Legacy’s Governing Board, there were only four instances in which Legacy’s Governing Board discussed an SIP. The School Board further contends that these minutes do not reflect input into the development of a plan, review of school and/or student performance data, or analysis of school needs. And, similarly, Legacy contends that its Governing Board conducted public meetings on a regular basis to discuss and invite public input concerning its student performance standards. As this contention is directly related to the findings in subsection I.B. above, the undersigned finds that the School Board has established, by clear and convincing evidence, that Legacy’s Governing Board failed to demonstrate oversight of assessment and accountability procedures to assure that Legacy’s student performance standards were met or exceeded. EXCEPTIONAL STUDENT EDUCATION The School Board contends that Legacy failed to comply with all applicable laws, ordinances, and codes of federal, state, and local governance including the Individuals with Disabilities Education Act (IDEA), as implemented by Florida through sections 1002.33(2), 1003.571(1)(a), and 1002.33(16)(a)3., Florida Statutes, Florida Administrative Code Rules 6A- 6.030191(4)(d) and 6A-6.030191(7) and adopted in section 3(j) of the Amended Charter. ESE concerns services required for students with disabilities. At the federal level, ESE is governed by the IDEA, which makes available a free appropriate public education (FAPE) to eligible children with disabilities. Florida law incorporates the IDEA in section 1003.571. Upon parental consent for an evaluation under IDEA, a child may be found eligible for ESE if the child has a disability that results in a need for special education services to make progress in school. If the child is eligible, the school is then required to develop an IEP, which is a document that details the individual child’s area(s) of need, educational goals, and support that the school will provide. The school must provide ESE services to the student at the duration and frequency indicated in the IEP. If a school fails to provide these services, the student may be owed compensatory education services, which are an equitable form of reimbursement when a school does not provide FAPE. Section 1002.33(16)(a)3. requires charter schools to comply with laws pertaining to ESE. Dr. Davis, the School Board’s fact and expert witness in charter school compliance, explained that each ESE student’s records are contained in an audit file, which is separate from that student’s cumulative student file. This audit file contains all meeting and conference notes, test results, meeting dates and notices, and the student’s IEP. And Ms. Gilman, the School Board’s fact and expert witness in ESE, stated that a school must provide services in accordance with the student’s IEP, and if it fails to do so, the student is owed compensatory education services. All ESE services must be reflected in lesson plans, and a school is required to report each student’s progress to the student’s parents a minimum of every nine weeks. Ms. Gilman further testified of the importance of documenting and monitoring ESE students, as progress monitoring determines whether a student is meeting his or her goals in a timely manner within the duration of the IEP. If the School District does not provide documentation that a student receives these services, then it determines that the student is owed compensatory education services. The School Board presented evidence that during Legacy’s first school year (2017-2018), it had not hired an ESE teacher within 15 days of the first day of class, and that student’s schedules did not provide any time for ESE services. The School District conducted a site visit after receiving complaints, and found the ESE teacher who was ultimately hired covering another classroom, and that Legacy could not produce ESE documentation when requested. Legacy received multiple official notices from the School Board regarding its ESE services and documentation, starting October 13, 2017, with a Notice of Deficiency. After receiving what it deemed an inadequate response from Legacy, on December 1, 2017, the School Board issued a Notice of Default, which stated that Legacy had not provided appropriate programs, strategies, and support services for ESE students. Legacy responded, and the School Board issued another Notice of Default. On February 22, 2018, the School District’s ESE department conducted one of many ESE audits of Legacy’s ESE services. The audit report showed four areas of noncompliance: (1) teachers need to document the accommodations they provide to each student in a user-friendly format; (2) ESE teachers need to have a well-documented lesson plan that details the services provided to the ESE students; (3) ESE teachers need to document attendance of ESE students and log of daily services provided; and (4) progress reports need to be provided to ESE students at the same time period as non-disabled peers. This audit included a corrective action plan, and the District additionally required Legacy to conduct an internal audit of its records to determine if any evidence existed that it actually provided ESE services. Legacy identified 27 students who were owed a total of 11,574 compensatory education service minutes, and proposed a compensatory education plan to provide those minutes. In March 2018, Legacy provided additional information in response to the December 1, 2017, Notice of Default. The School Board reviewed that information, finding that Legacy continued to be deficient in its documentation and provision of ESE services. On April 18, 2018, the School Board issued the first notice of termination, which included Legacy’s failure to comply with ESE laws. As discussed previously, the parties entered into an Amended Charter after this first notice of termination. The Amended Charter refers to previous ESE issues concerning Legacy: In the audit report dated February 22, 2018, the Sponsor cited four (4) findings of non-compliance regarding the ESE services provided by the School, including the School’s failure to document accommodations provided to each student in accordance with the student’s IEP, failure to provide well-developed lesson plans that detail the services provided to ESE students as documented on each student’s IEP, failure to provide documentation of attendance of ESE students and log of daily services provided, and failure to provide evidence that the School generated Annual Goals Progress Reports and EP Goals Progress Reports (Gifted) with data driven comments for parents. It has since adopted the District’s attendance logs, has adopted standardized lesson plans, and will continue to follow the District’s Corrective Action Plan as contained in the audit report dated February 22, 2018. The School has conducted an internal audit to determine what students may be owed compensatory education. By September 30, 2018, the School shall work with District ESE staff to ensure that all students have been properly identified and submit a plan to the District setting forth compliance with the deficiencies mentioned above and a plan to provide compensatory education to all students who did not receive the proper ESE services. Said plan shall include the methods by which each affected student will be receiving compensatory education, including the School’s plan for students who may no longer be enrolled at the School. All expenses related to compensatory education shall be borne by the School and all compensatory services shall be provided to the affected students by November 15, 2018, with supporting documentation of compliance provided to the District by December 1, 2018. Said plan shall be approved by the Sponsor. Upon a showing of good cause, the School may request an extension of any of these dates, and the Sponsor’s consent to such request shall not be unreasonably withheld. There was no persuasive evidence presented at the final hearing that Legacy has ever provided the 11,574 compensatory education service minutes owed from the 2017-2018 school year. Legacy contends that it responded to every notice received from the School District, as provided in the Amended Charter, and that an April 2019 ESE audit conducted by the School District, which identified numerous deficiencies and corrective measures, did not mention these minutes. However, the School Board had no record of, and Legacy presented no evidence that, these compensatory education minutes were provided to eligible students. After the execution of the Amended Charter, which included the requirement that Legacy submit a compensatory education plan to the School District by September 30, 2018, Legacy requested an extension for the deadlines contained in this provision of the Amended Charter, to be completed by January 15, 2019, with supporting documentation to the School District by February 1, 2019. In that time period, Legacy engaged in a familiar pattern of submitting a draft plan that the School District considered insufficient, but, on December 7, 2018, the School District contingently accepted Legacy’s following of a draft plan pending minor revisions. However, Legacy never submitted a revised document, and on January 18, 2019, the School District issued a Notice of Non-Satisfaction for failing to submit an acceptable compensatory education plan (which, at that point, would be the third amended compensatory education plan). Thereafter, on February 4, 2019, the School District issued a Notice of Default, and provided Legacy a February 19, 2019, deadline to come into compliance by submitting an acceptable compensatory education plan. Instead, Legacy requested an extension of the February 19, 2019, deadline, which, in a letter dated February 27, 2019, the School District denied. On April 4, 2019, the School District issued another Notice of Non- Satisfaction, for Legacy’s failure to comply with the February 4, 2019, Notice of Default. Following this April 4, 2019, Notice of Non-Satisfaction, the School District met with Legacy, and on April 16, 2019, issued a Notice of Deadlines, which outlined information and new deadlines that the School District and Legacy agreed to comply with concerning compensatory education services. The School District’s Division of ESE conducted follow-up audits on April 16 and 22, 2019, to ensure that Legacy was in compliance with ESE requirements. The report from these audits cited seven areas of noncompliance: (1) documentation of accommodations and strategies; (2) documentation of services; (3) documentation of daily attendance and services; (4) documentation of student progress reports; (5) documentation of parent notification; (6) documentation of written IEPs; and (7) documentation of supplemental aids and services. Three of these areas of noncompliance (documentation of accommodations and strategies, services, and daily attendance) were repeat deficiencies from the previous February 22, 2018, audit. Ms. Gilman testified that the findings of these follow-up audits raised concerns of whether Legacy’s ESE students were actually receiving the services that the law requires. Ms. Gilman’s expert testimony is credited. As a result of the April 2019 audit, Legacy was required to provide 1,305 compensatory education service minutes for the six sample students identified. Legacy completed these compensatory education service minutes, which were for the 2018-2019 school year, at the beginning of the summer between the 2018-2019 and 2019-2020 school years. At the beginning of the 2019-2020 school year, Legacy had completed the compensatory education service minutes (1,305) owed to those six students, but had not completed the compensatory education service minutes (11,574) owed to the 27 students from the 2017-2018 school year. The School District presented evidence that Legacy experienced ESE staff turnover during its three years of operation. Legacy presented evidence of an ESE teacher shortage for several weeks, making it difficult to hire and retain such teachers. During the 2019-2020 school year, Legacy lost its only ESE teacher for a period from September through October 2019, when Legacy hired a new ESE teacher. During these weeks without an ESE teacher, additional compensatory education minutes accrued because none of Legacy’s ESE students received services during this time. As a result, the compensatory education services minutes owed for 2019-2020 was 16,200 minutes. At subsequent parent meetings, some of the parents of Legacy’s ESE students waived some of the compensatory education minutes owed, resulting in a total of 9,990 minutes owed. Ms. Luna, one of Legacy’s current ESE teachers and who worked as an ESE teacher for Legacy during the 2019-2020 school year, testified that Legacy worked to fulfill ESE compliance issues. Ms. Luna testified that all regular and compensatory ESE services for the 2019-2020 school year have been provided during remote learning caused by the COVID-19 pandemic, and documented through the Google Classroom platform. However, because Legacy failed to produce progress monitoring reports related to ESE students during discovery, and failed to timely disclose its desire to introduce these progress monitoring reports as exhibits at the final hearing, the undersigned excluded such evidence. The School Board has established, by clear and convincing evidence, that Legacy failed to provide 11,574 compensatory education service minutes to 27 ESE students from the 2017-2018 school year. The School Board also established, by clear and convincing evidence, that Legacy failed to properly provide ESE services to its ESE students in the 2018-2019 school year, despite numerous notices. Although Ms. Luna’s testimony that Legacy has completed regular and compensatory ESE services for the 2019-2020 school year was persuasive, it is not clear, because of the lack of admissible progress monitoring reports, that Legacy’s ESE students received the services required under their IEPs. FINANCIAL MANAGEMENT The School Board contends that Legacy failed to meet generally accepted standards of fiscal management and/or willfully or recklessly failed to manage public funds in accordance with the law and promote enhanced academic success and financial efficiency by aligning responsibility with accountability as set forth in sections 218.503, 1002.33(9), 1002.33(7)(a)9., 1002.33(2)(a), and 1002.345(1)(a)3., Florida Statutes, Florida Administrative Code Rule 6A-1.0081, and sections 4(H), 4(G)(3)(a), and 9(A) of the Amended Charter. Section 1002.33(8)(a)2. provides that a sponsor may terminate a charter if it finds, by clear and convincing evidence, a “[f]ailure to meet generally accepted standards of fiscal management.” The School District administers the public funds that Legacy receives for its operations. Pursuant to section 1002.33(9)(g), Legacy is responsible for its finances, with various reporting requirements to the School District. Legacy’s Governing Board is responsible for the operation and fiscal management of the school, and shall provide oversight over the school’s operations. Legacy’s Governing Board must submit a monthly financial statement to the School District no later than the last day of the month following the month being reported. Section 1002.33(9)(g)1.a. requires Legacy to use the accounts and codes prescribed in the most recent issuance of the “Financial and Program Cost Accounting and Reporting for Florida Schools,” a publication, for all financial transactions and maintenance of public records. The primary source for revenue for a charter school is the Florida Education Finance Program (FEFP), which is based on a weighted calculation of the enrollment of the school (also known as full-time equivalent (FTE)). See § 1002.33(17) Fla. Stat. Legacy also qualified for a $500,000.00 Charter School Program grant (CSP), in which Florida provides start-up and implementation funds for new charter schools. CSP is a reimbursement grant, in which a charter school first purchases items, and upon submission of appropriate documentation, receives a reimbursement of the funds spent. The School District acts as a pass-through for the CSP funds, and reviews documents for proper documentation and adherence to the Governing Board policy before authorizing reimbursement. CSP funds are to be distributed in two phases: start-up (prior to opening, $25,000.00) and implementation (after opening, $475,000.00). Legacy failed to receive full reimbursement from CSP at either phase because it did not properly document purchases and failed to follow its Governing Board purchasing policies. This failure caused financial issues with Legacy, to be discussed further below. On November 19, 2018, Legacy took out a short-term loan from Legacy Funding Services, LLC, evidenced by a promissory note, in the original principal amount of $112,505.00.9 Legacy agreed to repay the promissory note by March 15, 2019, and accrue interest. The purpose of this loan was to provide funds to purchase items, to be reimbursed by the CSP grant. The School Board presented evidence that, in early 2018, it had various concerns about Legacy’s financial situation. The School District requested its internal auditor, RSM, to conduct a review of Legacy’s financial condition, and report whether financial emergency indicators, as defined in section 1002.345, were present. After meeting with School District staff, and Ms. Montford, RSM provided a “Specific Review” audit dated March 12, 2018. This Specific Review formed part of the basis for the April 18, 2018, 90-Day Notice of Termination. The 2018 RSM Specific Review found that Legacy made no payments on this short-term loan before the maturity date. Legacy had not paid the promissory note by the maturity date because it did not receive CSP funds. According to section 218.503(1)(a), one condition of a “financial emergency” is “[f]ailure within the same fiscal year in which due to pay short-term loans . . . as a result of a lack of funds.” Legacy made a payment on the promissory note after the maturity date. Then, it renegotiated the loan into a new promissory note dated September 20, 2019, in the principal amount of $88,322.11, with a maturity date of August 1, 2021. That promissory note included a security agreement, by which Legacy agreed to pledge all of its furniture, fixtures, equipment, and 9 Legacy Funding Services, LLC, is not connected to or otherwise affiliated with Legacy Academy Charter, Inc., or any of its principals. the like as collateral; however, as the school’s assets are purchased with public funds, it was improper to enter into this security agreement. Legacy provided evidence, in a Uniform Commercial Code (UCC) filing, that this security agreement was removed from the promissory note. The 2018 RSM Specific Review also found that Legacy listed this loan as revenue on its monthly financial report, as opposed to a liability, which is problematic. By standard accounting principles, revenue is income that an entity generates; a loan, such as the Legacy loan, obviously does not qualify as revenue. Legacy has engaged an external third-party auditor, King & Walker, CPA, P.L. (King & Walker) to conduct an annual financial statement audit. This annual financial statement audit is a review of the balances of Legacy’s financial statements, and the auditor ultimately issues an opinion on whether those balances are reasonable and accurate in all material respects. These audits are reported in accordance with generally accepted accounting principles (GAAP), which are standards set by the American Institute of Certified Public Accountants. GAAP is an all-encompassing version of the financial statements that includes every long-term item, pension, long-term capital assets, long-term payables, and the like. In all of its previous annual audits from King & Walker, Legacy has received a “clean” audit, that is, that the financial statements “present fairly, in all material respects[,]” with no adverse findings. Although Legacy contends that this is sufficient to establish that it has met accepted standards of financial management, the evidence presented at the final hearing indicated otherwise. The King & Walker audit report provides exceptions. For example, it states that the audit is “not for the purpose of expressing an opinion on the effectiveness of the school’s internal control.” It also states that “consideration of internal control . . . was not designed to identify all deficiencies in internal control that might contain material weaknesses or significant deficiencies . . . material weaknesses may exist that have not been identified.” Ms. Manlove, who was an auditor for RSM and was accepted as an expert in the field of auditing, explained that government entities commonly report their funds on a “fund balance” or “modified accrual basis,” which does not include every long-term asset or liability, but only includes short-term items. Ms. Manlove stated that this differs from GAAP. In 2019, the School District again engaged RSM to conduct a review to analyze Legacy’s compliance with the Amended Charter, fiscal management and controls, compliance with Florida law (focusing on indicators of a deteriorating financial condition or financial emergency), and compliance with Florida law concerning background screenings of Legacy employees. The 2019 RSM Review differed from the King & Walker audits, as it looked for compliance with what the Florida Department of Education requires of charter schools to report to sponsors, which means a “fund balance” approach that includes short-term items that are normally found in monthly financial statements. RSM met with Ms. Montford and performed field work on site at Legacy in August and September 2019, and additionally contacted Kevin Lugar of Building Hope, which Legacy had contracted with to support accounting support. Ms. Manlove testified that Ms. Montford, who was then serving as Principal, had possession of the documents, and that many of the requested financial documents were not kept at the school. The 2019 RSM Review, in analyzing whether any indicators of a financial emergency existed, looked for evidence of failure to pay uncontested claims from creditors within 90 days after the claim is presented, as required by section 218.503(1)(b), and found: A December 27, 2018, debit card payment in the amount of $323.12 to IC Systems, which was supported by a demand for payment that stated that IC Systems was a debt collection agency for Parrish Medical Group. Legacy could not provide a copy of the original invoice, and contended that this was a payment to AT&T, but could provide no evidence to support this contention. Based on this lack of documentation, it is not clear whether this payment aged over 90 days; A March 8, 2019, debit card payment in the amount of $843.96 to Florida Power & Light (FPL), which was supported by a document that indicated that this was a “final notice before power is turned off,” with a due date of March 7, 2019. Legacy did not respond to RSM’s inquiries as to whether FPL shut off Legacy’s power; Ms. Manlove testified that there was a pattern of FPL shut-off and past- due notices. The School Board presented evidence of four additional shut-off notices from FPL–July 10, 2018, November 27, 2018, February 26, 2019, and March 26, 2019—as well as four past due notices from FPL—April 2, 2019, June 3, 2019, November 2, 2019, and March 3, 2020. The Governing Board was not aware of these FPL shut-off and past-due notices. The 2019 RSM Review also analyzed a sampling of expenditures. Legacy’s segregation of financial duty policies provides that the Principal may authorize payments of $5,000.00 or less, and the Principal and Treasurer must jointly authorize (i) payments greater than $5,000, and (ii) payments of $1,500 or more that utilize CSP funds. The 2019 RSM Review found a December 5, 2018, check for $67,635.00 to CFL Alarms, LLC (CFL Alarms), for the purchase of computers and related equipment. The records provided to RSM indicated that Ms. Montford, as Principal, and Mr. Carroll, as Treasurer, approved of this expenditure. However, Ms. Montford was not the Principal of Legacy at that time, and Mr. Carroll had never served as Treasurer, but rather as Governing Board Vice Chair. Legacy submitted a CSP reimbursement request to the School District for the CFL Alarms purchase, but provided invoices from CFL Alarms that did not contain details such as types of equipment purchased or serial numbers of computers. Mr. Pulchan, the owner of CFL Alarms, testified that, in response to the School Board’s subpoena for its records, he added serial numbers and modified the invoices per Ms. Montford’s request. It also became apparent during the final hearing that CFL Alarms was not a licensed reseller of the Lenovo or Dell computers that it sold to Legacy. In fact, the evidence showed that CFL Alarms purchased computer equipment directly from Dell and Amazon, and then resold the equipment to Legacy at a substantial mark-up of between 45 and 60 percent. While Mr. Pulchan testified that he delivered and installed this equipment, Legacy provided no evidence or testimony why it could not have purchased this equipment directly, or in a more cost-effective manner. Legacy provided bank records that reflected a refund from CFL Alarms to Legacy in the amount of $33,131.50. CFL Alarms provided records from Mr. Pulchan’s Amazon account that reflected the return of Lenovo laptops. The undersigned finds that the evidence was unclear as to what Legacy purchased from CFL Alarms for $67,645.00, or what Legacy returned to CFL Alarms for $33,131.50. The payment to CFL Alarms, evidenced by a check signed by Ms. Montford, is also evidence that Legacy did not follow its segregation of financial duties policies. The School Board presented additional evidence that Legacy lacked a formal monitoring process for debit card purchases. It presented evidence that Legacy’s December 2019 bank statement reflects four payments to FPL, only one of which by check. Legacy made the other three payments with a debit card in the amounts of $948.31, $74.31, and $485.60, which were unsupported by other documentation. The School Board also presented evidence that it was, at best, unclear whether Legacy’s Governing Board properly monitors, performs due diligence, and exercises fiduciary responsibility over the school, as required under section 1002.33(9)(i) and (j). Part of the reason for this was that Legacy did not produce complete board packets for its monthly Governing Board meetings. An additional reason is that Mr. Carroll, the Governing Board vice chair, who has extensive background in finance and who previously served as the chief financial officer for NASA, provided inconsistent testimony about past-due bills and oversight. The School Board also presented evidence of Legacy’s monthly financial statements, which reflected a negative cash position for each month between October 2019 and March 2020. The negative cash position classified Legacy as being in a “deteriorating financial condition” under section 1002.345, and required Legacy to submit a Corrective Action Plan (CAP). The School District provided Legacy with notice about the submission of a CAP in November 2019. Legacy prepared a CAP, but the School District determined it was insufficient because it did not identify the specific actions needed to recover from this negative cash position. Legacy did not provide an updated CAP, and the School District forwarded Legacy’s CAP to the Department of Education on December 19, 2019. The Department of Education directed Legacy to prepare a CAP, with a deadline of May 1, 2020, which Legacy timely submitted, with assistance of the School District. As part of the CAP, Legacy plans to reduce salaries over a period of a year, and renegotiate its lease to reduce payments.10 With respect to the lease, which Legacy entered into with Legacy Charter Holdings, LLC, on April 21, 2017, the renegotiation resulted in a temporary reduction of the monthly rent from $41,483.67 per month, to 10 Legacy presented evidence at the final hearing that another charter school in Brevard County, Emma Jewel Charter Academy in Cocoa, Florida, has been required to submit a CAP for the 2014-2015 and 2015-2016 school years, but has never received a notice of termination from the School Board, while Legacy, who is undergoing the CAP process for the first time, received a notice of termination. Legacy contends that this disparate treatment is discriminatory. The undersigned finds that such evidence related to Emma Jewel does not alter the undersigned’s ultimate findings concerning whether Legacy has failed to meet generally accepted standards of fiscal management. $10,000.00 per month, for April, May, and June 2020. Thereafter, in July 2020, the rent increased to $37,941.98 per month.11 Mr. Moreno, the chief financial officer of Building Hope Services, testified, since fall 2018, that Building Hope Services provides back office accounting services for Legacy. His staff assists in the preparation of Legacy’s monthly financial statements, which he reviews. He testified that based on his review of Legacy’s financial statements, its revenues will exceed its expenditures at the end of the fiscal year. Mr. Moreno based this conclusion on the lease adjustment, and that Legacy received through the Small Business Administration (SBA) and USA CARES Act, see 15 U.S.C. § 636, et seq., a Paycheck Protection Program (PPP) loan in the amount of $198,810.00. The PPP loan could be forgivable if the funds received are used for: payroll costs; costs related to the continuation of group healthcare benefits; mortgage interest payments (but not mortgage prepayments or principal payments); rent payments; utility payments; interest payments on any other debt obligations that were incurred before February 15, 2020; and/or refinancing another specific SBA loan. If not, the PPP loan must be repaid monthly in the amount of $8,370.15, commencing November 1, 2020. Mr. Carroll testified that Legacy intends to use the PPP loan proceeds for salaries. It is unclear at best how Legacy needs funds to pay the salaries of its employees as a result of the COVID-19 pandemic, as those funds are derived from FEFP. It is also unclear if Legacy has done so, or whether it will be required to repay the loan beginning in November 1, 2020. Apparently, Legacy’s belief is that the PPP loan operates as a deus ex machina that solves all of its financial problems, and thus should convince the undersigned that the PPP loan cures and excuses the clear and convincing evidence presented 11 The lease originally tied the rent amount to enrollment of students at Legacy. Legacy’s year one enrollment was 165, year two was 235, and year three was 246. Pursuant to an addendum to the lease, the monthly rent was $1,100 per student, but no less than $200,000 in year two, and no less than $449,000 in year three. by the School Board that Legacy, time and time again, failed to meet generally accepted standards of fiscal management. It does not. The undersigned finds that the School Board presented clear and convincing evidence that Legacy failed to meet generally accepted standards of fiscal management. Additionally, the School Board presented clear and convincing evidence that Legacy did not manage public funds in a responsible manner. BACKGROUND SCREENING The School Board contends that Legacy failed to comply with requirements for background screening of its employees and Governing Board members, as set forth in chapter 1012, sections 1002.33(12)(g), 1012.32, 1012.465, 1012.467, and 1012.468, Florida Statutes, and sections 10(I) and (J) of the Amended Charter. As part of the 2019 RSM Review, RSM reviewed a sample of employees and Governing Board members for proper background screening. RSM found that two Governing Board members began their positions on the Governing Board prior to obtaining the required background clearance, two substitute teachers had either inaccurate employment records or did not receive the proper background screening before beginning employment at Legacy, and one teacher was not fingerprinted in a timely manner. Dr. Davis then reviewed all payroll, clearance, and database records for Legacy, and concluded that there were other issues concerning Legacy’s failure to conduct background screening. However, the Termination Notice, which forms the basis of this proceeding, only identifies the five persons analyzed in the 2019 RSM Review, as evidence that Legacy failed to comply with background screening laws. Legacy presented evidence that the School District had accidentally deleted a Governing Board member’s background screening information, but that RSM identified this Governing Board member as not obtaining the appropriate background screening. With respect to the other Governing Board member, the Governing Board approved of this member, and he received his clearance, during the summer months, when students are not normally on campus. Legacy also presented evidence that, with respect to the other four individuals identified in the 2019 RSM Review as not having obtained the required background clearance, the School District had issued a Notice of Default, as required under the section 12(F) of the Amended Charter, and Legacy had cured that default within the time prescribed in the Notice of Default. In fact, the School District issued written notices of satisfaction with respect to these issues. The undersigned finds that the School District has not established, by clear and convincing evidence, that Legacy failed to comply with background screening requirements for its employees and Governing Board members. VIOLATION OF LAW AND BREACH OF CONTRACT The School Board contends Legacy failed to comply with law and/or cure material breaches of terms or conditions of the Amended Charter after receiving the School District’s written notice of noncompliance, and that Legacy failed to promote enhanced success and financial efficiency by aligning responsibility with accountability as set forth in sections 286.011, 1002.33(2), 1002.33(7), 1002.33(9)(c), 1002.33(12)(f), 1002.33(16)(b)1., 1012, Florida Statutes, and sections 1(D)(1)(d)(i), 10(C), and 12(F) of the Amended Charter. Many of the School Board’s contentions made under this sub-category are repetitive of issues raised with respect to the other four sub-categories, such as: Legacy’s pledging its assets as collateral for a short-term loan; Legacy’s untimely submission of monthly financial reports; Legacy’s not providing proper minutes of its Governing Board meetings; the Governing Board’s failure to exercise oversight; and the Governing Board’s failure to implement policies and procedures. The undersigned previously found that the School Board presented clear and convincing evidence to establish these contentions, and further finds that these also constitute a violation of the provisions of the Amended Charter. Section 10(C) of the Amended Charter states that “teachers employed or under contract to the School shall be certified as required by Chapter 1012.” The School Board presented evidence that Legacy employed two teachers who were not certified, and two who worked out-of-field, but not approved by the Governing Board.12 Legacy presented evidence that the two teachers who lacked certification were substitute teachers, who were not required under Florida law to possess a certification. See § 1012.35, Fla. Stat. The School Board presented clear and convincing evidence that two teachers—Jane Anne Burnett and Vilma Perez—taught out-of-field without the Governing Board’s approval. See Fla. Admin. Code R. 6A-1.503(3). Section 1002.33(9)(p)2. provides that each charter school’s governing board must appoint a parent representative “to facilitate parental involvement, provide access to information, assist parents and others with questions and concerns, and resolve disputes.” Section 1002.33(9)(p)3. provides that this parent representative, or his or her designee, must be physically present at each meeting. The School Board presented clear and convincing evidence that Legacy’s appointed parent representative did not attend four meetings in the 2016-2017 school year, 13 of 15 meetings in the 2017-2018 school year, and six of 13 meetings in the 2018-2019 school year, in derogation of section 1002.33(9)(p). Section 1002.33(9)(p)3. also provides that all governing board meetings “must be noticed, open, and accessible to the public.” The School Board presented evidence, as found in the 2019 RSM Review, that between July 2018 and August 2019, Legacy posted 11 public notices on its website, but that four public meeting notices were not available, one meeting notice 12 An out-of-field teacher is one who is certified in a certain area, but teaches in an area outside of his or her certification. See Fla. Admin. Code R. 6A-1.503(1)(c). was “corrupted,” and three meeting notices were not posted on Legacy’s website. The 2019 RSM Review also revealed that of these 11 public notices on Legacy’s website, four were not timely noticed under Legacy’s April 2018 Notice of Meeting Policy, which provided that for all regular meetings, “notice should be given to the public at least seven (7) days prior to the meeting.” The School Board presented clear and convincing evidence that Legacy failed to provide notice of its Governing Board meetings, in derogation of section 1002.33(9)(p)3., and its Notice of Meeting Policy. Section 1002.33(9)(p)1. provides that “[e]ach charter school shall maintain a website that enables the public to obtain information regarding the school … and, on a quarterly basis, the minutes of the governing board meetings.” The School Board presented evidence, as found in the 2019 RSM Review, that two of the 15 meeting minutes sampled between July 2018 and August 2019 did not have any minutes posted to Legacy’s website. The School Board presented clear and convincing evidence that Legacy failed on two occasions to post required meeting minutes of its Governing Board, in derogation of section 1002.33(9)(p)1. Finally, the School District introduced evidence that it had issued 26 notices of deficiency between the date of the Amended Charter and the date of the 2019 RSM Review. The School District found that Legacy had not cured 14 of these notices. The undersigned’s review of these 14 uncured notices reveals that they are duplicative of School Board contentions that the undersigned has already found to be established by clear and convincing evidence. The undersigned further finds that the School Board has established, by clear and convincing evidence, that Legacy has defaulted under section 1(D)(1)(d)(i) of the Amended Charter, which provides that good cause for termination includes the failure to cure a material breach of any term or condition after written notice of noncompliance. The undersigned has not overlooked evidence that, after the April 18, 2018, “90 Day Notice of Termination,” and as the parties executed the Amended Charter, members of the School District, including Assistant Superintendent Archer, requested that Ms. Montford and Mr. Carroll be removed from their positions as principal and Governing Board Member. While the undersigned may agree with Legacy that such a request was an inappropriate invasion of Legacy’s autonomy, the undersigned cannot overlook the overwhelming evidence presented by the School Board of Legacy’s numerous, well-documented issues that support termination of the Amended Charter, or somehow reason away that these numerous, well- documented issues are actually evidence that the School District has a vendetta against Legacy, which Legacy contends.
Findings Of Fact The Petitioner, a nonprofit corporation, was licensed by the Respondent to operate as a vocational, technical, or trade school during 1977. The school was designed to teach business machine repair and maintenance skills to students. The Petitioner applied for a renewal of the license with the Respondent for 1978. By letter dated August 14, 1978, the Respondent advised the Petitioner that it would not reissue the license. The Petitioner requested an administrative hearing, and this proceeding ensued. Beginning in January, 1977, the Petitioner was funded by the "CETA Administration" as a service delivery agent. Under this funding, the Petitioner would submit requests for reimbursement based upon its expenditures in providing an educational program to its students, and the Petitioner was funded directly. Petitioner enjoyed this status from January through September, 1977, and received a total of $87,806.07 in direct funding. As of October 1, 1977, the Petitioner's funding status with CETA changed. After that date the Petitioner became what was called a "sub-subgrantee" of the vocational education component of the local CETA Administration. The vocational education component of CETA became the service delivery agent, and was directly funded. The Petitioner thereafter was not able to do its own recruiting of students, and no longer received direct funding from CETA. Rather, CETA would pay to students a stipend adequate to compensate them for tuition, and other costs of the program. On October 1, the Petitioner had eleven students. Despite the Petitioner's efforts to provide the new service delivery agent with the names of persons interested in participating in the Petitioner's program, CETA did not refer new students to the program. The school lost approximately one student per month from October, 1977 through May, 1978. CETA discontinued all funding of the Petitioner on June 7, 1978. Since that date the Petitioner has had no students. The financial statement submitted by the Petitioner to the Respondent in connection with the renewal application revealed that the Petitioner was operating with a net income loss of $524.76; had total assets of minus $203.57; a fund balance of minus $446.96; and total liabilities of more than two hundred dollars. The projected finances for the period October 1, 1978 through September 30, 1979 indicates that the school will lose approximately ten thousand dollars. The Petitioner, in its renewal application, did not reveal that it had had a drastic change in its funding status, and that it had lost all of its students. During the time that it was in operation, only approximately five persons completed the Petitioner's course work. The Petitioner submitted with its renewal application, a copy of its school catalog. The catalog revealed that certain persons remained on the school's board of directors, who in fact had resigned from these positions. This failure is excusable. The catalog that was submitted was the same catalog that had been used the year before. Due to the loss of its CETA funding, the Petitioner could not afford to have new catalogs printed.
Findings Of Fact Background And Overview Respondent was first employed by Petitioner, School Board Of Palm Beach County, Florida (the "School Board"), in 1964 as a teacher. Respondent was promoted to principal in 1971, Assistant Superintendent for the School Board in 1978, and Associate Superintendent of Schools for Planning and Operations on July 1, 1984. Respondent was one of three Associate Superintendents in the Palm Beach County school district. There was also an Associate Superintendent of Instruction and an Associate Superintendent of Administration. Each Associate Superintendent reported to the Deputy Director who reported to the Superintendent. Respondent served as Associate Superintendent of Planning and Operations until he was demoted to principal on November 5, 1991. Respondent served under an annual contract as an Associate Superintendent and maintains a continuing contract as a teacher. While employed as an Associate Superintendent, Respondent never received notice of an allegation of incompetent conduct, was never disciplined, and never received a negative performance evaluation prior to this proceeding. In the Summer of 1991, Respondent was a finalist for the position of Superintendent. The position of Associate Superintendent of Planning and Operations was subsequently abolished effective July 1, 1992. Planning And Operations: Organization And Regular Duties The organization of Planning and Operations has changed in specific regards during the years Respondent was its Associate Superintendent. 1/ For the purposes of this proceeding, however, Planning and Operations employed approximately 1,500 people and was organized and operated in three subdivisions: Growth Management; Facilities Planning and Management; and Personnel Relations. Personnel Relations is not at issue in this proceeding. 2/ Growth Management responsibilities included: identifying school district demographics; determining racial balance; and site acquisition for development of schools and other facilities. Facilities Planning and Management responsibilities included: building new schools; renovations; improvements; and maintenance. Each of the three subdivisions of Planning and Operations was supervised directly by an Assistant Superintendent. The Assistant Superintendents supervised one comptroller and nine directors. Directors had direct responsibility for assistant directors. Assistant directors supervised first-line managers. First-line managers supervised numerous employees who regularly worked on: major school center projects; new school construction; facility design and contract services; facility operations; maintenance and renovations; personnel administration; information management; recruitment and selection; and human resources. Additional Duties In addition to their regular duties, Respondent and other senior administrative supervisors were required by Mr. Thomas Mills, the former Superintendent, to promote and solicit the involvement of members of the local business community in the Palm Beach County school system. The school system faced student overcrowding, a lack of materials, a lack of adequate funding, and a rising drop out rate. Members of the business community were recruited to help raise money for operating expenses and to support a bond issue for which the School Board sought voter approval in 1986. Many members of the local business community were also vendors to the School Board. Respondent was directed by former Superintendent Mills and Dr. James Daniels, the Deputy Superintendent, to contact and network with as many members of the business community as possible. Such activities were considered by former Superintendent Mills to be a high priority. Respondent complied with the directives of the former Superintendent and Deputy Superintendent. The efforts of Respondent and other senior managers proved successful. The business community in Palm Beach County raised funds to supplement the operating expenses of the school system and supported a bond issue for construction of new facilities and capital improvements to existing facilities. In 1986, the majority of registered voters in Palm Beach County approved a Special Referendum authorizing a $678 million bond issue for the construction of educational facilities in the Palm Beach County School District. The School Board established a five year plan for the construction of educational and ancillary facilities (the "five year construction plan"). A portion of the bond money was allocated to capital improvement projects to renovate or remodel existing facilities. Planning and Operations supervised all bond issue projects, including capital improvement projects. In the 1986- 1987 school year, such projects, including capital improvement projects, were supervised by the division of New School Construction. In the Fall of 1987, supervision of capital improvements was transferred to Maintenance and Renovations. Maintenance and Renovations was also organized within Planning and Operations. Approximately 39 new schools were constructed in Palm Beach County while Respondent was Associate Superintendent of Planning and Operations. The total budget for construction of new schools was approximately $550 million. Thousands of construction projects, renovations, and improvement or maintenance projects were performed by Planning and Operations. Approximately $317 million of the authorized bond issue was issued from 1987 through 1989. In addition to the construction of new schools, the School Board approved a plan in 1985 to acquire land and construct four ancillary facilities. The ancillary facilities included a new administrative complex, a central warehouse, and a maintenance and operations facility. Planning and Operations supervised the site acquisition and construction of all four ancillary facilities. Deficiencies In Planning And Operations Deficiencies in the organization and operation of Planning and Operations were well known to both the School Board and Planning and Operations personnel. They were pandemic deficiencies that Respondent could not correct without the approval and financial support of the School Board and the technical assistance of experts. 3/ The School Board retained an outside consultant, Price Waterhouse, to study deficiencies in Planning and Operations and to formulate an improvement program. The improvement program was to be developed in three phases. The first phase identified deficiencies within Planning and Operations on the basis of discussions with department personnel and outside specialists. The second phase would have focused on verifying and prioritizing problems and their impacts. The third phase would have formulated a program for improvement of Planning and Operations. Deficiencies in Facilities Planning and Management were identified in interviews conducted by the accounting firm of Price Waterhouse with directors, assistant directors, and first- line managers. In 1987, Price Waterhouse issued a draft report to the School Board describing the deficiencies found in Facilities Planning and Management (the "Price Waterhouse Report"). 4/ The School Board determined that the Price Waterhouse Report merely told the School Board what was already common knowledge and that further expenditures on a program for improvement with Price Waterhouse would be a waste of money. The School Board knew of the deficiencies in Planning and Operations. The School Board knew that those deficiencies created impediments to the supervision of Planning and Operations. Known deficiencies within Facilities Planning and Management involved: financial procedures and controls; staff performance, including personnel and control; planning of operations and projects; contract administration; construction administration; and organization structure. Deficiencies in financial procedures resulted in budgeting without adequate preparation, historical data, timing, and coordination between departments. Poor cost and schedule accounting for capital improvements, maintenance, and operations made it difficult to capture and report cost information in sufficient detail and in a timely manner. Poor cost controls directly affected the control of operations, decisions to perform work by in-house staff or contractors, and the value received for money spent. Adequate project management tools and policies were not in place to contain costs and adhere to schedules for maintenance, capital improvements, and new construction. Payment of suppliers, contractors, architects, and other vendors was slow, frustrated vendors, and made them reluctant to do work for the School Board. There were deficiencies in staff performance, personnel, and control. Productivity appeared to be low. There was a lack of performance measurement and reporting mechanisms in place to accurately assess productivity. Productivity was significantly affected by: inadequate work planning and coordination; the condition and availability of equipment and materials; logistics; and geographic constraints. Many employees were uncertain as to their responsibilities and corresponding authority, particularly at the first-line manager level. Uncertainty over responsibility and authority undermined the effectiveness of first-line managers dealing with vendors, contractors, and architects. Staffing levels and management span were not adequate to maintain existing facilities and operations, control personnel growth, and prevent duplication of field personnel skills between maintenance and capital improvements. Support resources were weak in technical expertise, administrative staff, reference materials, and computer aided design equipment. Capital improvement, new construction, and maintenance tasks were frequently not scheduled in sufficient accuracy and detail to foresee and anticipate potential problems. Frequent schedule slippage allowed contractors less time to complete construction and meet schedules; adversely affecting productivity, project costs, and the ability to plan for and manage project issues and achieve targeted completion dates. Shortages of materials and supplies often caused project delays. Coordination of work between and within departments failed to determine the optimal sequence in which work was to be performed to maximize the utilization of trade employees and avoid conflicts and rework. Deficiencies in contract administration led to lack of clarification in the responsibilities, requirements, and expectations of parties to contracts. Contract documents and conditions were too vague and resulted in frequent disputes, delays, and occasional change orders. To avoid delays caused by change orders, contractors sometime proceeded without proper authorization at their own risk. The definition of authority and responsibility and the guidelines for quality control and inspection for in-house employees and contractors needed to be improved. Such deficiencies in construction administration resulted in project delays, poor construction, and higher facility life cycle costs. A lack of consistency in procedures and policies for project management exacerbated the deficiencies in construction administration. Deficiencies in organization structure directly affected problems in other areas of Planning and Operations. Continuity of work was lacking on new construction. Project managers changed when responsibility passed from one division to the next; resulting in a start-stop effect on the project and a loss of specific project knowledge. Improvement was needed in communications between and within departments and in upper management support of lower management authority. There was a need for a long range organization structure and staffing strategy which addressed alternatives such as internal staffing and contracted services. The presence of deficiencies described in the Price Waterhouse Report in 1987 was confirmed in 1993 in a Report On Audit Of The Palm Beach County District School Board For The Fiscal Year Ended June 30, 1992 Dated: June 24, 1993 issued by the State of Florida, Office Of The Auditor General (the "Auditor General's Report"). The Auditor General's Report found that deficiencies similar to those described in the Price Waterhouse Report for Facilities Planning and Management also existed in Growth Management. Problems reported in the Price Waterhouse Report and in the Auditor General's Report described a deficient organizational and operational system in which the School Board required Respondent to supervise unprecedented growth and activity. Respondent was required to: supervise a $550 million construction plan involving thousands of projects and four ancillary facilities; 5/ promote involvement of the business community in the school system; and perform the duties he was otherwise required to perform in the absence of the five year construction plan established by the School Board and associated promotional responsibilities. In 1987, the Price Waterhouse Report stated that supervisors and assistant directors were stretched very thin, and their roles needed to be more clearly defined. Communication between and within departments and from directors and similar supervisors was poor. 6/ Many of the deficiencies described in the Price Waterhouse Report and the Auditor General's Report created impediments to Respondent's supervision of Planning and Operations irrespective of his additional duties associated with the five year construction plan. Petitioners' Allegations Petitioners' allegations against Respondent are based on two separate investigations conducted by Petitioners. 7/ Petitioners' allegations involve: acquisition of a site for a central warehouse for $3.161 million (the "District Warehouse Site"); acquisition of a site for a west bus compound for $750,000 (the "West Bus Compound"); construction of an addition to a new maintenance and operations building on Summit Boulevard in West Palm Beach for Maintenance and Renovations and Facility Operations and construction of an addition to a north maintenance building (the "Summit Facility"); requests for additional services on form G-604 (the "G-604" issue); acceptance of gratuities from members of the business community who were also vendors of the School Board; and evaluation of two employees. Petitioners' allegations of incompetency primarily involve the five year construction plan and ancillary facilities. Few of the alleged acts of incompetence involve other aspects of Respondent's job performance from July 1, 1984, through November 5, 1991. The District Warehouse Site The School Board determined in 1985 that a need existed for a centralized warehouse site in Palm Beach County. 8/ The School Board determined that approximately 10 acres would be adequate. Since the value of land in Palm Beach County was appreciating, the School Board also approved the policy of former Superintendent Mills that encouraged the acquisition of land for future expansion if the land could be acquired at a desirable price, i.e., "warehousing" land for future use. Respondent had advocated a decentralized warehouse system in which separate warehouse functions would be carried out in various regions of Palm Beach County. Others in Planning and Operations supported the concept of a centralized warehouse site. The centralized warehouse concept was accepted and approved by former Superintendent Mills and the School Board. On October 11, 1989, the School Board purchased approximately 16 acres of real property as a site for a centralized district warehouse. The property was purchased for $3.161 million from KEI Palm Beach Center, Ltd. ("KEI"), a limited partnership in which Mr. William Knight was a limited partner and Knight Enterprises, Inc., a corporation controlled by Mr. William Knight, was the general partner (the "Knight property"). Respondent did not act incompetently and did not violate any statute, rule, policy, instruction, or directive, or circumvent normal acquisition procedures (collectively referred to hereinafter as "applicable standards") with regard to the evaluation and purchase of the Knight property. Respondent neither proposed nor advocated the purchase of a particular warehouse site. Respondent did not propose or advocate the identification, evaluation, selection, and purchase of the Knight property. Respondent showed no favoritism to Mr. William Knight, to his son, Mr. Jim Knight, or to any entity owned by the Knights. Respondent committed no act or omission which impaired his business judgment, compromised his independence, or which was otherwise improper in connection with the acquisition of the District Warehouse Site. Initial Site Selection And Evaluation Prior to the acquisition of the Knight property, the School Board attempted to acquire property owned by Palm Beach County and known as Section 6. Negotiations for the acquisition of Section 6 terminated when Section 6 became unavailable. A site search for the District Warehouse property was conducted by Growth Management. Ten separate sites, including the Knight property, were initially identified and reviewed by a site acquisition team within Growth Management. The site acquisition team was headed by Mr. William Hukill, Assistant Superintendent for Growth Management. The site acquisition team also included Mr. Robert Skakandy, a real estate acquisition coordinator in Growth Management, and Mr. David Williams, Assistant Director of Growth Management. Respondent was not significantly involved in identifying the 10 properties considered by the site acquisition team, including the Knight property. Each property was placed on the list by the site acquisition team because it was within or proximate to the geographical area preferred by the site acquisition team or possessed other targeted location characteristics. 9/ Site selection procedures typically did not involve Respondent. Site selection procedures were described in detail in the Auditor General's Report: . . . upon identification of potential sites, the sites were evaluated by the District's Growth Management Center. A description of each site was presented to the Assistant Superintendent, Growth Management and to the Assistant Director, Growth Management for their review, after which the descriptions were . . . presented to the Superintendent. Following the Superintendent's review, the preliminary site investigations and site descriptions with the Superintendent's recommendation were to be presented to the School Board for their review and approval. (emphasis supplied) Auditor General's Report at 63. Growth Management first considered the Knight property in August, 1988. Mr. Jim Knight communicated the availability of the Knight property to Ms. Linda Howell, a real estate coordinator in Growth Management. Ms. Howell and Mr. Jim Knight conducted further discussions. Ms. Howell identified the Knight property as a potential site and relayed the site information to Mr. Skakandy. The site acquisition team reduced the list of ten sites to a list of three final sites. The Knight property was not one of the three final sites selected. The three final sites were all less expensive than the Knight property. The three final sites were the Riviera Beach site, the Boyton Beach site, and the Farmer's Market site. Feasibility problems developed with each of the three final sites. The Riviera Beach site was sold to another party. The Boyton Beach site was objected to by other staff not on the site acquisition team. It was 15-20 miles south of the center of the county and failed the express criteria for a "central" warehouse. Environmental problems and costs associated with the disposal of building materials caused Maintenance and Renovations to recommend against purchase of the Farmer's Market site. 10/ Reconsideration Of Knight Property On or about January 11, 1989, former Superintendent Mills sent a memorandum to Mr. Hukill indicating that Mr. William Knight had called the Superintendent to express his interest in having the Knight property reconsidered for the District Warehouse Site. Respondent received a copy of that memorandum but was not otherwise involved significantly in the reconsideration of the Knight property. On or about January 20, 1989, Mr. Hukill sent a letter to the former Superintendent indicating that the Knight property was still under consideration and that the Knight property location was quite good under the circumstances. Mr. Hukill indicated that appraisals had been ordered and that a site recommendation would be forthcoming. 11/ The Knight property was reconsidered in accordance with procedures customarily followed in Growth Management. There was no formalized procedure followed in Growth Management for the evaluation of property for site acquisition. Sites were discussed in a free form fashion. Except for a recommendation of the final site selected, written records for recommendations on specific properties were not customarily prepared by staff in Growth Management. 12/ Mr. Hukill made the ultimate decision to add or drop sites from consideration. Acquisition sites were added or deleted from site acquisition lists without notifying Respondent. The Knight property was evaluated by the entire staff in Growth Management. The evaluation of the Knight property included a review of environmental issues, utilities, zoning, and road use. Mr. Jim Knight had more than 20 meetings with Growth Management staff including Mr. Hukill, Mr. Skakandy, and Mr. Williams. Respondent was not significantly involved in those discussions. 13/ The Knight property was recommended by staff because of its suitability for the District Warehouse and because of the unavailability or unsuitability of the first three sites originally selected by the site acquisition team. The Knight property was located in almost the exact center of the county. It was also located on Southern Boulevard, a roadway that runs directly to western communities in Palm Beach County where many new schools were scheduled for construction. Respondent properly relied on staff recommendations for the Knight property in accordance with his customary practice. At no time prior to the time the property was acquired did any employee within Growth Management state to Respondent that the Knight property was not a suitable site or that the purchase of the Knight property would be detrimental to the School Board. Mr. Hukill did not sign the written recommendation for the Knight property. The reason for his refusal, however, had nothing to do with the suitability of the Knight property for the District Warehouse. Mr. Hukill believed, as a philosophical matter, that the School Board should spend its money on schools rather than on additional warehouse sites. Mr. Hukill, in effect, objected to a determination made by the School Board in 1985. Mr. Hukill agreed with the recommendation that the Knight property was suitable based on the marketplace, location, and ease of distribution for servicing schools. Respondent neither identified nor advocated the Knight property. Respondent had no conversations with either Mr. William Knight or Mr. Jim Knight concerning the evaluation of the Knight property as a site for the District Warehouse except as previously described. Except for the price paid for the Knight property, Respondent's involvement in the acquisition of the Knight property was limited to a review of staff recommendations and the acceptance of those recommendations. Additional Acreage The initial search for a District Warehouse site focused on the acquisition of 10 acres of property. However, the Knight property included 16 acres. The additional acreage was purchased to overcome access problems that would have occurred if only 10 acres had been purchased. Unanticipated problems in site selection was one of the deficiencies known to the School Board and discussed in the Price Waterhouse Report in 1987. Engineering involvement frequently did not occur early enough in site acquisition. As a result, sites selected by the site acquisition team required unanticipated expenses, and the full cost of the project was not properly assessed. 14/ The decision to purchase additional acreage was not made by Respondent. Former Superintendent Mills wanted the additional acreage to accommodate future expansion for office space on the warehouse site. The former Superintendent believed that a larger site was desirable to properly accommodate future expansion needs and directed the purchase of the additional acreage. The issue of whether to increase the site for the District Warehouse from 10 acres to 16 acres was discussed at a Superintendent's staff meeting. The former Superintendent, the School Board attorney, Respondent, and a dozen other members of the former Superintendent's staff attended the meeting and participated in the discussion. The decision and recommendation to purchase the additional acreage was made by the former Superintendent. Purchase Price The final purchase price for the Knight property was reasonable and beneficial for the School Board. Respondent was responsible for the final purchase price. Two separate appraisals for the Knight property were obtained by Growth Management in accordance with its customary practice and applicable law. 15/ Respondent did not select the appraisers. They were selected by Mr. Skakandy with the approval of Mr. Williams. The appraisers were qualified and had been used many times in the past by Planning and Operations. The two appraisals for the Knight property differed by $1.00 a square foot. The higher appraisal was for $5.50 a square foot. The lower appraisal was for $4.50 a square foot. 16/ Respondent refused to accept Mr. William Knight's offer to split the difference between the two appraisals and insisted on a sales price of $4.42 a square foot. The price paid for the Knight property was reasonable and less than the lowest appraised value. Contract Negotiations Respondent was not involved in contract negotiations for the Knight property and did not dictate any of the terms of the contract for the purchase of the Knight property; except the final purchase price discussed in the preceding paragraph. Site acquisition personnel typically negotiated site acquisition contracts in concert with the School Board attorney. Site acquisition personnel did not customarily report the status of contract negotiations to Respondent. No established procedure required such reports. Contract negotiations for the acquisition of the Knight property were carried out entirely by site acquisition personnel within Growth Management and Mr. Robert Rosillo, the School Board attorney. Negotiations by staff and the School Board attorney for the Knight property were within the scope of normal functions for site acquisition. The School Board attorney did not confer with Respondent during the three months in which contract negotiations for the Knight property were conducted. Respondent never gave the School Board any direction or other information concerning the acquisition of the Knight property. It is the responsibility of the School Board attorney and technical staff in Growth Management to draw acquisition contracts, address zoning requirements, and determine contingencies for closing. Any problems associated with the final contract for purchase of the Knight property were the responsibility of the School Board attorney and staff negotiators. Road Improvements: Allocation Of Costs Between The Parties The contract for the Knight property addressed road improvements, right-of-way, and relocation measures necessary for the use of the property. Engineering drawings reflected the right-of-way issues, the need to relocate water and sewer lines and a lift station, and the need for road improvements. The parties to the contract agreed to share the cost of road improvements proportionally. The contract required the seller to place $70,000 in a separate escrow account to be used to fund the necessary road improvements. While Petitioners now complain that the amount escrowed by the seller was inadequate, the terms of the contract were prepared by the School Board attorney and recommended by Growth Management staff in accordance with long standing practice. In 1987, The Price Waterhouse Report stated that contract documents did not delineate specific responsibilities. The result was confusion, disagreements, and additional costs to the School Board or outside parties. 17/ Adverse impacts from the purchase of the Knight property on October 11, 1989, reflected deficiencies reported in the Price Waterhouse Report in 1987. Those deficiencies were well known to the School Board at least two years before the acquisition of the Knight Property. The School Board chose not to expend additional funds on a program of improvement suggested by Price Waterhouse. Financial Ability Of Seller To Comply With Repurchase Option The contract for the Knight property contained a provision which gives the School Board the right to require the seller to repurchase the property if conditions pertaining to zoning are not satisfied (the "repurchase option"). The repurchase option was drafted by the School Board attorney. A decision not to enforce the repurchase option was made by the School Board, the School Board attorney, and the former Superintendent. If the School Board had elected not to proceed with closing, the contract afforded the seller to right to sue for specific performance. A foreclosure suit was filed against the Knight property a few days prior to the closing on October 11, 1989. Mr. Rosillo discussed the impact of the foreclosure suit on the purchase with former Superintendent Mills. The issue was not discussed with Respondent. The contract did not require the seller to evidence its financial ability to perform the terms of the contract. Nor did the contract require Mr. William Knight to personally guarantee the obligation of the seller under the repurchase option. Temporal Considerations The time required for the evaluation and purchase of the Knight property was reasonable and adequate. The transaction was not "rushed." The evaluation and purchase of the Knight property required approximately 14 months to complete. Once the decision to purchase the property was made, approximately three months were required to finalize the terms of the contract and close the transaction. Even if the evaluation and purchase of the Knight property was rushed, Respondent did not act as an impetus to rush the transaction. Respondent was not significantly involved in the identification, evaluation, and purchase of the Knight property except for the final purchase price. Mr. Jim Knight actively negotiated the transaction with Mr. Rosillo, Mr. Hukill, Mr. Williams, and Mr. Skakandy. The entire transaction was discussed fairly and adequately by Growth Management staff and the School Board attorney. Respondent did not propose or advocate the Knight property. Respondent did not negotiate the terms of the contract to purchase the Knight property except for the final purchase price. Respondent did not decide whether to close the transaction or whether to enforce the repurchase option. Bifurcated Funding For Land Acquisition And Construction The fact that the Knight property was acquired prior to the time that money was available to construct the District Warehouse does not make Respondent incompetent. Property was customarily purchased first and a building constructed out of budget appropriations in subsequent years. In 1987, The Price Waterhouse Report included such practices in its list of deficiencies. The capital budgeting process lacked sufficient coordination, timing, and input. Adequate cost accounting tools were not available. Existing reports lacked sufficient detail, accuracy, and timeliness. Capital improvement funding sources were not clearly identified. The fact that priorities for capital improvements were not easily or accurately tracked was a source of frustration for administrators including Respondent. 18/ Those deficiencies were known to the School Board prior to 1987. In 1987, the School Board chose not to pursue a program of improvement with Price Waterhouse. In 1993, the Auditor General's Report found that originally designated capital outlay moneys had been expended on projects, land purchases, and other purposes which were not contemplated in the 1986 school construction plan. Expenditures not contemplated in the five year construction plan included the District Warehouse Site. 19/ The notice of tax levy for capital improvements had not been prioritized within categories as required by Section 200.065(9)(a), Florida Statutes. Failure to prioritize the projects contributed to delays in undertaking some of the projects at issue. Furthermore, the School Board did not segregate and account for the proceeds and related expenditures of each respective year's levy. 20/ The decision to purchase the Knight property and rely on budget appropriations in subsequent years for construction was made by former Superintendent Mills. The former Superintendent's policy was to purchase land at a reasonable price if there was a future need for the property. Land values in Palm Beach County were appreciating rapidly. The money to construct the buildings on such properties typically came from budget appropriations in subsequent years. The Knight property was purchased for less than its lowest appraised value. 2.10 Gratuities And The Knight Property Respondent went fishing in 1986 and 1987 on Mr. William Knight's fishing boat in St. Thomas, U.S. Virgin Islands, and in Bimini, Bahama Islands. Respondent reported both fishing trips on his annual financial disclosure forms. The two fishing trips did not adversely affect Respondent's business judgment or create the appearance of impropriety. Respondent was not significantly involved in the acquisition of the Knight property in October, 1989. In 1986, Respondent accepted an invitation from Mr. Robert Howell, a member of the School Board at the time, to go fishing in St. Thomas. The invitation was made to Respondent through former Superintendent Mills. The former Superintendent joined Respondent on the fishing trip. Respondent had never met Mr. William Knight before that time. The fishing trip lasted two days. Respondent paid for his own transportation to St. Thomas. In 1987, Respondent and former Superintendent Mills accepted an invitation from Mr. William Knight to fish with their children in Bimini. The fishing trip lasted one day. The West Bus Compound On or about April 24, 1990, the School Board purchased property in Royal Palm Beach for $750,000 (the "West Bus Compound"). The property was purchased from Mr. John Bills. Site selection procedures typically did not involve Respondent. 21/ Respondent did not act incompetently or violate applicable standards with regard to the identification, evaluation, and purchase of the West Bus Compound. Respondent did not propose or advocate the West Bus Compound or the evaluation, selection, and purchase of the West Bus Compound. Respondent showed no favoritism to Mr. Bills, or any entity owned by Mr. Bills. Respondent committed no act or omission which impaired his judgment, compromised his independence, or which was otherwise improper in connection with the evaluation and acquisition of the West Bus Compound. The need for a site to service the western portion of Palm Beach County was identified by Mr. George Baker, the Director of Transportation. Transportation was a division of the Department of Administration. The Associate Superintendent of Administration was Dr. Henry Boekhoff. Respondent had no authority or responsibility over Transportation. The need for a site to service the western portion of Palm Beach County was uncontroverted. Due to westward population migration, several new schools were built in the western regions of the County. Mr. Baker determined that it was not cost effective to transport buses back and forth from compounds in the eastern portion of the County for maintenance and storage. Mr. Baker and Dr. Boekhoff determined that a West Bus Compound would result in significant savings in the operating budget. The need for a West Bus Compound was well known within the school district administration, including Growth Management. Mr. Baker had repeatedly stated to everyone "within earshot" that the need for a West Bus Compound was urgent. Mr. Baker identified a site location in Royal Palm Beach owned by Mr. Bills. Mr. Baker told Mr. Williams, who worked in Growth Management, that Transportation wanted the site owned by Mr. Bills for the West Bus Compound. Mr. Bills was trying to sell his property. Mr. Bills submitted a brochure on the property to Mr. Hukill and other staff in Growth Management. Mr. Hukill recommended the property owned by Mr. Bills to Respondent. Respondent discussed the site with former Superintendent Mills. At Mr. Hukill's request, the former Superintendent authorized Mr. Hukill to proceed with negotiations for the property owned by Mr. Bills. Respondent advised Mr. Williams of the availability of the property owned by Mr. Bills. Respondent instructed Mr. Skakandy to follow normal procedures regarding the West Bus Compound site. The West Bus Compound site was evaluated by Mr. Skakandy and Mr. Williams. They also negotiated the contract for acquisition. Such action on the part of Mr. Skakandy and Mr. Williams was consistent with customary practice within Growth Management and was within the scope of their regular duties and responsibilities. Two appraisals were obtained for the West Bus Compound. The higher appraisal was for $810,000. The lower appraisal was for $703,000. The property was purchased for $750,000. Respondent properly relied on the recommendations and advice of technical staff in Growth Management with respect to the acquisition of the West Bus Compound site. Respondent was never informed by anyone within Growth Management that there were any limitations on the use of the site. Certain zoning and easement requirements reduced the usable area for the site below that originally projected by Growth Management. Mr. Baker recommended the site even though the usable area was less than originally projected. Respondent was not acquainted with Mr. Bills at the time that the West Bus Compound was evaluated and acquired. Subsequently, however, Respondent developed a friendship with Mr. Bills. Respondent never showed any favoritism to Mr. Bills in connection with the West Bus Compound. The Summit Facility On July 1, 1989, employees of Maintenance and Renovations and employees of Facility Operations were housed in a leased facility at 3323 Belvedere Road, West Palm Beach, Florida (the "Belvedere" site). A new ancillary facility was nearing completion in the Fall of 1989. The new facility was located at 3300 Summit Boulevard in West Palm Beach (the "Summit Facility"). The Summit Facility included a second building known as the north building. The landlord for the Belvedere site exercised its rights under the lease to obtain use of the Belvedere site sooner than originally anticipated by the School Board. Electronics employees housed at the Belvedere site were moved to Northshore High School ("Northshore") on a temporary basis until the Summit Facility was completed. Residents of the neighborhood adjacent to Northshore complained to some members of the School Board about increased traffic. The School Board took the matter up at a public meeting during the Fall of 1989. Approval Of Day Laborers In Trades Sections At the public meeting conducted in the Fall of 1989, the School Board specifically authorized Mr. David Lord, Director of Maintenance, and former Superintendent Mills to use day- laborers in the trades sections 22/ to construct additions to buildings at the Summit Facility and to relocate electronics employees from Northshore to the Summit Facility by January 1, 1990. Mr. Lord and the former Superintendent discussed the matter with the School Board in detail. 23/ At the public meeting, the School Board instructed Mr. Lord to use whatever resources were available to him to make needed capital improvements to the Summit Facility by January 1, 1990. Confusion over when to use contractors or in-house personnel was one of the deficiencies discussed in the Price Waterhouse Report in 1987. Criteria for determining when to perform work on a contract basis and when to perform work in- house were not clearly established. This made planning difficult and increased project costs. 24/ Lack of communication and agreement between project managers and construction personnel concerning time and cost of in-house projects resulted in incorrect decisions concerning the desirability of building in-house or by contract, caused delays, cost overruns. 25/ Comparative cost analyses of in- house and contract maintenance construction were not available. 26/ In 1993, the Auditor General's Report found that established procedures did not provide reasonable safeguards to monitor day-labor projects to ensure that goods and labor were used only for authorized projects. The Auditor General's Report recommended that such procedures be established. 27/ Mr. Lord used day-laborers from his trades sections to make the capital improvements mandated by the School Board in accordance with the School Board's instructions. The work was begun in December, 1989, and completed in March, 1990. Code Violations In 1991, after considerable time for discussion and analysis among attorneys and technical staff within the Department of Education and Planning and Operations, it was determined that some additions to the Summit Facility were not in compliance with applicable safety code regulations. Respondent properly relied on Mr. Lord and Mr. Lord's immediate supervisor for technical compliance with applicable code provisions. Florida Administrative Code Chapter 6A-2 contains the State Uniform Building Code. Part A of Chapter 6A-2 ("Part A") applies in some circumstances, and Part B of Chapter 6A-2 ("Part B") applies in other circumstances. In July, 1990, officials of the Department of Education, Educational Facilities Department, in Fort Lauderdale, Florida, were invited to a demonstration of fire alarms at the Summit Facility. Mr. Russell Smith, Director of Facilities Design, determined that life/safety code violations existed in the two buildings at issue in the Summit Facility. Mr. Smith's determination of code violations was based on the assumption that Part A applied to the capital improvements at the Summit Facility. Mr. Lord had determined that Part B applied to the capital improvements. The capital improvements at the Summit Facility complied with the requirements of Part B but not Part A. Mr. Smith did not report the alleged code violations to Respondent until December, 1990. Respondent directed Mr. Smith to obtain a determination from the Department of Education. Mr. Smith pursued the matter with representatives of the Department of Education as well as Mr. Lord in Growth Management. Ms. Abbey Hairston, General Counsel for the School Board, concluded that there was a strong likelihood that Part B applied. Mr. Lord suggested that an outside consulting firm be retained to determine the applicability of Part A or Part B to the capital improvements at the Summit Facility. Respondent could not have detected the existence of the alleged code violations in the capital improvements to the Summit Facility. Respondent did not have the expertise to make such a determination. Respondent's regular duties and responsibilities did not require that Respondent maintain such expertise, conduct inspections for the purpose of detecting code violations, or correct code violations. Respondent did not act incompetently and did not violate applicable standards with regard to the capital improvements to the Summit Facility. Respondent did not propose or advocate that capital improvements be made to the Summit Facility in compliance with Part B. Respondent properly relied on his staff for technical compliance with applicable code requirements. When Respondent received notice of alleged code violations, Respondent acted in a competent and timely manner. In 1987, The Price Waterhouse Report discussed several deficiencies in staff performance, personnel, and control. The Price Waterhouse Report stated: Internal expertise is limited. Knowledge of specialized areas is limited, project quality suffers, life cycle costs are higher. . . . Training programs and budgets are insufficient, especially with respect to technical and safety training. Employees are not as efficient or effective as they could be. Knowledge of project managers is less than they feel is necessary Project managers are resistant to new management techniques. . . . Inadequate technical library. . . . Price Waterhouse Report, Staff Performance, Personnel And Control, Issues 5, 7, and 9, and corresponding Impacts. In 1993, the Auditor General's Report recommended that: . . . District personnel strengthen procedures to provide that, prior to occupancy in the future, the required approvals for occupancy are obtained to ensure that the facilities meet the prescribed safety standards. Auditor General's Report at 64. Tracking And Reporting Costs The computer codes and accounting approach used to track and report the cost of capital improvements to the Summit Facility complied with applicable standards. The computer codes and accounting approach recorded each transaction and were subject to separate retrieval in accordance with established procedures. Required object, fund, and function codes were used to document the expenditure of funds for the capital improvements to the Summit Facility. In 1987, the Price Waterhouse Report stated: Adequate cost accounting tools are not available. Existing reports lack sufficient detail, accuracy and timeliness. [There is] . . . [n]o ability to manage and control project cost. This results in true project cost being unknown and lack of problem identification on a timely basis. . . . Capital Improvement Requests are not easily or accurately tracked. Priorities are difficult to track and coordinate. This is a source of school administration frustration. . . . Project management tools are not available. Project cost containment suffers. Control and reporting is lacking. . . . Accountability is difficult to enforce. Price Waterhouse Report, Financial Procedures And Controls, Issues 4, 8, and 17, and corresponding Impacts. The day-labor hours billed for additions to the Summit Facility totaled approximately 6,373. In the three fiscal years from 1989 through 1992, approximately 566,853.75 day-labor hours were paid and approximately 454,701.75 were billed. Day-labor hours paid exceeded day-labor hours billed by approximately 112,152 hours. 28/ As the Price Waterhouse Report indicated in 1987, adequate cost accounting tools were not available. The cost accounting and reporting procedures that were in fact utilized for the additions to the Summit Facility complied with available cost accounting procedures. Respondent did not act incompetently and did not violate applicable standards in connection with the method used to track and report the cost of capital improvements to the Summit Facility. Respondent did not propose or advocate any particular accounting procedure. Respondent properly relied on technical staff to track and record the cost of capital improvements to the Summit Facility, and staff properly utilized the accounting tools available to them. Purchase Orders Purchase orders for mezzanine and modular offices were originated by staff in lower levels of Maintenance and Operations. The purchase orders were processed in accordance with normal procedure and approved by Ms. Betty Helser, Director of Purchasing. Ms. Helser was under the supervision of the Associate Superintendent of Administration and was not subject to the authority of Planning and Operations. Planning and Operations had no authority over Purchasing. Respondent did not participate in the purchase order approval process. Respondent was not responsible for that process. Several names were listed on the purchase orders as resource or contact persons in connection with the purchase order. Respondent was not one of those named. Funding Source For Capital Improvements Respondent did not act incompetently and did not violate applicable standards in connection with the funding source for capital projects, including acquisition of the District Warehouse site, the West Bus Compound, and additions to the Summit Facility. Funding sources for such projects were approved by the School Board. The funds used to pay for the District Warehouse, the West Bus Compound, and the Summit Facility were not misappropriated or misapplied. The School Board approved those capital projects and their corresponding budgets. The budget for each capital project provided for the transfer of capital outlay moneys to the general fund. 29/ Taxes had been levied for capital improvements pursuant to Section 236.25(2), Florida Statutes. Funds were transferred from this special millage money and not from general obligation bond money. Such transfers occurred in prior years and were consistent with customary procedure. Moreover, no funds were used for capital projects without the prior knowledge and consent of the School Board. Deficiencies in the budget reporting and control process impeded full consideration by the School Board of the impact of capital projects and budget transfers on the 1986 school construction plan. As a result, originally designated capital outlay moneys were expended on capital projects not contemplated in the 1986 school construction plan. Accordingly, some originally contemplated projects were not undertaken in the five year plan due to lack of funds. 30/ Deficiencies in financial processes and controls reported by Price Water House in 1987 and known to the School Board prior to that time created impediments to proper budgeting and resulted in poor budget quality. In 1987, the Price Waterhouse Report stated: Performance measurement (feedback) needed to assess and improve budget accuracy is lacking. Poor budget accuracy, control, and forecasting [results]. . . . The capital budgeting process lacks sufficient coordination, timing and department input. Budget priorities may not be sufficiently addressed and quality of actual budgets may suffer. Priorities for improvements are defined by construction and remodeling, but they may not be consistent with the school's needs. High priority projects may not be addressed on a timely basis. Price Waterhouse Report, Financial Procedures And Controls, Issues 2, 16, and corresponding Impacts; Price Waterhouse Report, Planning Of Operations And Projects, Issue 9 and corresponding Impact. Projects funded by the capital outlay millage derived under Section 236.25(2), Florida Statutes, were not prioritized within categories in the notice of tax levy as required by Section 200.065(9)(a). Failure to prioritize the projects to be funded by the capital outlay millage contributed to delays in undertaking some of the projects contemplated in the 1986 construction plan. In addition, the proceeds and related expenditures of each year's levy was not segregated and accounted for. 31/ Reports reviewed by the School Board consisted of monthly financial statements containing analyses of revenues by source of funds and analyses of expenditures by function. Status reports showed comparisons of projected revenues designated for the 1986 school construction plan with actual revenues received. Comparisons of projected construction costs anticipated in the five year construction plan with actual construction costs were not available. Like the notice of tax levy, available status reports did not prioritize projects within categories. The failure to prioritize projects and reporting inadequacies constituted some of the pandemic deficiencies known to the School Board prior to 1987 and did not result from Respondent's alleged incompetence. In 1993, the Auditor General's Report recommended several procedures for rectifying deficiencies in the budgeting process. First, quarterly status reports on capital projects should be revised to show the projected costs of projects, current expenditures, and the variances over or under projected costs. Second, proposed budget amendments should include an explanation of the possible effects on capital construction plans and operating budgets. Third, the ". . . Board and the Superintendent. . ." 32/ should develop written management reporting guidelines. Finally, the School Board should re- examine the remaining bond plan projects to ensure that they reflect current needs. G-604s: Requests For Additional Services Respondent did not act incompetently and did not violate applicable standards with regard to the use of requests for additional services or change orders on form G-604. Requests for additional professional services or for change orders are made on form G-604. Palm Beach County requires that such requests be reviewed by the School Board. Respondent never attempted to hide requests for architectural services from the School Board or to prevent their review by the School Board. In August of 1986, Mr. Hukill wrote a memorandum to Respondent requesting that directors be allowed to review and approve appropriate requests for additional services in an amount no greater than $20,000 per request and then submit the G-604 to the School Board for subsequent review. Respondent approved the procedure requested by Mr. Hukill. Two weeks later, Mr. Larry Mione, Contract Administrator, erroneously wrote a memorandum to four assistant directors authorizing requests for additional services of up to $20,000 per request without the need to have such requests subsequently reviewed by the School Board. As a result of the erroneous memorandum from Mr. Mione, some G-604s were approved by directors and were not subsequently reviewed by the School Board. This practice was in derogation of the memorandum issued by Respondent. When the discrepancy was discovered, several investigations were ordered by former Superintendent Mills and Deputy Superintendent Daniels. There were approximately 30 people at staff meetings two times a month. All of them review School Board reports. None of them discovered the discrepancy in the conflicting memoranda until after the violations had occurred. Respondent was not charged with wrongdoing or incompetence and was not found incompetent. An independent outside consultant confirmed the need for the G-604s and the procedure authorized by Respondent. Gratuities Former Superintendent Mills established a policy that required all senior administrative personnel, including Respondent, to promote the involvement of members of the business community in the school system. The policy was designed to obtain the aid of business in solving problems such as overcrowding, lack of materials and text books, a lack of funding, and an increasing drop out rate. The policy was a high priority for former Superintendent Mills. Respondent performed the duties required under the policy established by former Superintendent Mills. Respondent entertained members of the business community and was entertained by them. The gratuities accepted by Respondent generally involved free lunches, dinners, and golf outings. Policy Directive Respondent's activities did not violate the policy directive of former Superintendent Mills. Former Superintendent Mills knew of Respondent's activities and approved of those activities. Upper management was encouraged to socialize with members of the business community, including contractors and architects, in an effort to get them involved in solving problems facing the school system. Business Judgment And Impropriety Respondent's business judgment was not adversely affected by his association with vendors of the school system. Respondent's association with such members of the business community did not create the appearance of impropriety. The award of contracts to vendors was the responsibility of Purchasing. Purchasing was under the control of Dr. Boekhoff, the Associate Superintendent of Administration. Ms. Helser was the Director of Purchasing. Respondent did not have the authority to influence decisions made in Purchasing. Incompetence Respondent carried out the policy directive of former Superintendent Mills competently with no adverse affect on his business judgement and without the appearance of impropriety. The business community became actively engaged in solving problems of the school district. Companies such as Motorola, Pratt Whitney, and IBM provided opportunities for speakers to address employees to promote the bond issue. The bond issue was approved by the voters. A program known as "Cities in Schools" was developed as a business partnership to prevent drop out. Funds were raised for programs and materials. Respondent did not improperly promote a particular vendor or product in connection with the business of the School Board. Respondent never violated any administrative directive or established standard of conduct of the Department of Education. Evaluations 128. The Amended Petition For Demotion alleges that Respondent was incompetent in evaluating two employees. Those employees were Mr. Goode and Mr. Hukill. No credible and persuasive evidence was submitted by Petitioners to support their allegations in this regard. Attorney Fees And Costs The parties' request for attorney fees and costs are addressed in the Conclusions of Law.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Palm Beach County School Board enter a Final Order finding Respondent not guilty of any of the allegations in the Amended Petition For Demotion, award Respondent back salary with applicable interest for the entire period of his demotion, immediately reinstate Respondent to a salary level comparable to that received as Associate Superintendent of Planning and Operations in accordance with Section 231.36(6)(b), Florida Statutes, dismiss the request to return Respondent to annual contract status under Section 231.35(4)(c), and maintain Respondent on continuing contract. RECOMMENDED this 23rd day of July, 1993, in Tallahassee, Florida. DANIEL MANRY Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 23rd day of July, 1993.
The Issue The issues in this protest are whether either or both of Respondent's intended actions in dispute——namely, (i) deeming one application eligible for funding despite the existence of reasonable grounds for uncertainty as to whether the amount of capital the applicant's equity proposal states will be invested during construction is sufficient to cover development costs; and (ii) awarding another applicant a number of proximity points based on information in its application that was later discovered to be mistaken——are contrary to governing statutes, administrative rules, or the specifications of the solicitation; and, if so, whether the erroneous action or actions are contrary to competition, clearly erroneous, or arbitrary or capricious.
Findings Of Fact FHFC is the housing credit agency for the state of Florida whose responsibilities include the awarding of low- income housing tax credits, which developers use to finance the construction of affordable housing. Tax credits are distributed pursuant to a competitive process similar to a public procurement that starts with FHFC's issuance of a request for applications.1/ On September 6, 2018, FHFC issued Request for Applications 2018-110 (the "RFA"). Applications were originally due on October 23, 2018, but this deadline was extended to December 4, 2018. FHFC received 191 applications in response to the RFA, through which FHFC seeks to award housing credits worth up to approximately $14.3 million for developments that will be located in medium counties. A Review Committee was appointed to evaluate the applications and make recommendations to FHFC's Board of Directors (the "Board"). Pursuant to the ranking and selection process outlined in the RFA, applicants were evaluated on eligibility items and were awarded points for other items. The eligibility items included Submission Requirements, Financial Arrearage Requirements, and a Total Development Cost Per Unit Limitation requirement. To be eligible for funding, an application must meet all of the eligibility items. A Funding Test in the RFA provides that "[a]pplications will be selected for funding only if there is enough funding available to fully fund the Eligible Housing Credit Request Amount." The Review Committee found 181 applications eligible (95 percent of the total), deemed ten applications ineligible, and selected ten applications for recommendation to the Board for funding. At a meeting on March 22, 2019, the Board approved the Review Committee's eligibility and funding recommendations. That same day, FHFC notified all applicants that the Board had approved the staff recommendations. The notice, which was posted on FHFC's website, listed the many eligible applicants along with the handful of eligible applicants that had been chosen for an intended award of housing credits. Among the putative successful applicants were Norton Commons and Harrison Parc.2/ Though deemed eligible, HTG Oak Valley, Harmony Pinewood, and Fountains were not recommended for funding. Harmony Pinewood. Harmony Pinewood timely submitted an application requesting an allocation of housing credits for an 86-unit housing development in Brevard County. FHFC determined that Harmony Pinewood's application was eligible for an award of housing credits but did not preliminarily select Harmony Pinewood for funding. In evaluating Harmony Pinewood's application, FHFC found that the applicant had earned enough proximity points to qualify for the Proximity Funding Preference, which gives Harmony Pinewood an advantage in the ranking over other applicants who failed to qualify for the preference. Applicants earn proximity points based on the distance between their Development Location Point ("DLP")3/ and the Transit Service or Community Service they select. The closer the applicant's DLP is to the corresponding Transit or Community Service, the more proximity points the applicant will receive. As an eligible Community Service, an applicant might choose a Grocery Store, Public School, Medical Facility, or Pharmacy. The RFA required applicants to "state[] [their respective DLPs] in decimal degrees, rounded to at least the sixth decimal place." Harmony Pinewood selected latitude 28.041319 and longitude -80.615026 as the coordinates for its DLP. As a Community Service, Harmony Pinewood identified a Grocery Store, Thrifty Specialty Produce, located at 2135 Palm Bay Road Northeast, Palm Bay, Florida 32905, latitude 28.035489, longitude -80.610050. The RFA instructed applicants to round up the distance between the DLP and selected service to the nearest hundredth of a mile. Harmony Pinewood's application declared the distance between its DLP and Thrifty Specialty Produce to be exactly one-half of a mile. The RFA required applicants to obtain a minimum of 7.0 proximity points to be eligible for funding. Applicants needed to earn 9.0 or more proximity points to be entitled to the Proximity Funding Preference. During the evaluation, FHFC does not independently calculate any distances based on the coordinates provided by applicants, but instead awards points based on the distances stated in the applications, which it accepts as true. The distance of 0.50 miles entitled Harmony Pinewood to an award of 3.5 proximity points for its Grocery Store, which contributed to the applicant's total proximity score of 9.0. Based on the coordinates provided in Harmony Pinewood's application, however, the distance between its DLP and Thrifty Specialty Produce is, in fact, 0.51 miles when rounded up to the nearest hundredth of a mile, as Brian Waterfield, testifying at hearing on behalf of Harmony Pinewood, admitted. According to Mr. Waterfield, Harmony Pinewood had intended to enter "28.041219" rather than "28.041319" as the latitude coordinate for its DLP but made a typographical error. He claimed that if the latitude had been entered correctly as "28.041219," then the distances shown in Harmony Pinewood's application would be correct. HTG Oak Valley protests the award of 3.5 Grocery Store proximity points to Harmony Pinewood's application, asserting that the score was based on an erroneously reported distance of one-half mile. HTG Oak Valley urges that this error be treated as a minor irregularity; that the distance in question be corrected to 0.51 miles in accordance with the RFA's directions concerning rounding; and that Harmony Pinewood's Grocery Store- related proximity points be reduced to 3.0 to conform to the revised DLP-to-service distance. This would bring Harmony Pinewood's total proximity score down to 8.5, rendering Harmony Pinewood ineligible for the Proximity Funding Preference. FHFC agrees with HTG Oak Valley. Harmony Pinewood contends that the error in its application was not in the reported distance but rather in the DLP latitude coordinate. Harmony Pinewood urges that this error be treated as a minor irregularity; that the latitude in question be corrected to 28.041219 in accordance with the applicant's intent; and that the initial scoring decision to award Harmony Pinewood 3.5 Grocery Store-related proximity points be upheld. The problem with Harmony Pinewood's position is that no one reviewing the information provided within the application could discover the alleged typographical error in the DLP latitude coordinate except Harmony Pinewood itself. In contrast, any party using the coordinates stated in the application could attempt to verify the accuracy of the reported distance between Harmony Pinewood's DLP and Thrifty Specialty Produce. Taking this a step further, the longitude and latitude coordinates of a DLP constitute the numerical expression of a subjective decision on the part of the applicant, a value judgment which is not falsifiable, despite the apparent exactitude of the figures. This is because the DLP is, by definition, "a single point selected by the Applicant on the proposed Development site that is located within 100 feet of a residential building existing or to be constructed as part of the proposed Development." Fla. Admin. Code R. 67-48.002(34) (emphasis added). There are, in other words, no right or wrong DLPs, only compliant and noncompliant DLPs. Harmony Pinewood's DLP, as described in its application, satisfies rule 67-48.002(34), and thus is a responsive, conforming, compliant DLP; there is nothing facially or inherently irregular about it. The selection of a DLP is, moreover, a competitive decision because the chosen location directly affects the number of proximity points to which an application may be entitled. It is a decision that makes an application more or less competitive relative to the other applications. In this respect, selecting a DLP is analogous to deciding upon a price to bid on a contract. Imagine a second-ranked bidder claiming that it had meant to bid $28,041,219 instead of $28,041,319, where $100 would make the difference between winning and losing. Unless there were clear evidence in the bid that the lower price had been intended, there would be no practical distinction whatsoever between "correcting" the supposed clerical error and "amending" the bid based on extrinsic evidence submitted post decision. The latter is clearly prohibited. See § 120.57(3)(f), Fla. Stat; cf. Fla. Admin. Code R. 67-60.009(4). Because post-deadline amendments to an application based on extrinsic evidence are impermissible, an applicant's subjective competitive decisions must be deemed both final as of the application deadline, and fully expressed within the four corners of the application. Thus, it should be rare for an alleged error in the expression of a competitive decision to be deemed a minor irregularity. To make such a finding of minor irregularity in an exceptional situation, two necessary (but perhaps not sufficient) conditions would have to be met: (i) the alleged error would need to be reasonably apparent to anyone on the face of the application and (ii) the intended statement, free of error, would need to be unmistakably expressed somewhere in the application. So, for an example, recall the previous hypothetical but assume, as additional facts, that the bid price of $28,041,319 is necessarily the product of a unit price ("a") times a certain number of units ("b"), and that both a and b are clearly stated in the bid. If a × b = $28,041,219 instead of $28,041,319, then someone other than the applicant would be able to discover the mathematical or clerical error in the bottom-line price quote, and it would be fairly clear from the face of the bid that $28,041,219 was the intended price. Such an error might be correctible in the agency's discretion.4/ That is not the situation here. The coordinates of Harmony Pinewood's DLP appear only once in its application. Because of the rounding involved, moreover, the "true" coordinates cannot be derived from the stated distance of miles. Unlike the product of a times b, which can be only one number, there are multiple DLP longitude-latitude pairs that correspond to the stated distance of 0.50 miles——or, at a minimum, the evidence fails to rule out such diversity. The only way for anyone besides Harmony Pinewood to know that the DLP latitude "should have been" 28.041219 is to hear it from Harmony Pinewood. Under these circumstances, the undersigned determines that the DLP coordinates in Harmony Pinewood's application must be considered the true and correct, full and final expression of the applicant's decision to select that particular location for its DLP. Therefore, the irregularity in Harmony Pinewood's application is not the stated DLP latitude; it is the stated distance between the DLP and the Grocery Store, which should be miles instead of 0.50 miles. Because the RFA requires an award of 3.0 proximity points for a distance of 0.51 miles, and because the distance irregularity does not otherwise render Harmony Pinewood's application nonresponsive, the correct, and only nonarbitrary, solution to the problem is for FHFC to reduce the number of Grocery Store proximity points awarded to Harmony Pinewood's application, from 3.5 as intended, to 3.0. Fountains. Fountains submitted an application requesting an allocation of housing credits for a proposed 120-unit housing development in Flagler County. FHFC determined that Fountains was eligible for an award of housing credits but did not preliminarily select the Fountains application for funding. HTG Oak Valley protests FHFC's intended decision to deem Fountains eligible for funding, alleging that Fountains' application is materially nonresponsive——and thus should be rejected as ineligible——for failing clearly to state that an amount of equity sufficient to cover the anticipated development costs would be invested in the project prior to construction completion. The RFA requires that an applicant must submit, as part of its application, a Development Cost Pro Forma detailing both the anticipated costs of the proposed development as well as the anticipated funding sources for the proposed development. In order to demonstrate adequate funding, the Total Construction Sources (including equity proceeds/capital contributions and loans), as shown in the pro forma, must equal or exceed the Total Development Costs reflected therein. During the scoring process, if a funding source is not considered or is adjusted downward, then Total Development Costs might wind up exceeding Total Construction Sources, in which event the applicant is said to suffer from a construction funding shortfall (deficit). If an applicant has a funding shortfall, it is ineligible for funding. The Development Cost Pro Forma does not allow applicants to include in their Total Construction Sources any equity proceeds to be paid after construction completion. Instead, the applicant must state only the amount of "Equity Proceeds Paid Prior to Completion of Construction." The pro forma defines "Prior to Completion of Construction" as "Prior to Receipt of a Final Certificate of Occupancy." The RFA requires, as well, that an equity proposal letter be included as an attachment to the application. For a housing credit equity proposal to be counted as a source of financing, it must meet the following criteria: Be executed by the equity provider; Include specific reference to the Applicant as the beneficiary of the equity proceeds; State the proposed amount of equity to be paid prior to construction completion; State the anticipated Eligible Housing Credit Request Amount; State the anticipated dollar amount of Housing Credit allocation to be purchased; and State the anticipated total amount of equity to be provided. (Emphasis added). As Attachment 14 to its application, Fountains submitted an equity proposal letter from RBC Capital Markets ("RBC") executed by David J. Urban (the "Equity Proposal"). In relevant part, the Equity Proposal states: Anticipated Total Equity to be provided: $15,510,849* Equity Proceeds Paid Prior to or simultaneous to closing the construction financing: $2,481,736* (min. 15%) Equity Proceeds to be Paid Prior to Construction Completion: $8,686,075 Pay-In Schedule: Funds available for Capital Contributions #1: $2,481,736* be paid prior to or simultaneously with the closing of the construction financing. Funds available for Capital Contribution #2 $2,326,627* prior to construction completion. Funds available for Capital Contribution #3 $3,877,712* concurrent with permanent loan closing. Equity Proceeds Paid at Lease Up $5,428,797* Equity Proceeds Paid at 8609 $1,395,977* *All numbers rounded to nearest dollar. The Pay-In Schedule in the Equity Proposal refers to "permanent loan closing" as the moment when Capital Contribution #3 will be made "available." The Equity Proposal does not, however, define or discuss permanent loan closing, and, to the point, does not specify when it is expected to occur. Of potential relevance in this regard is a letter from JP Morgan Chase Bank, N.A. (the "Chase Letter"), which is included as Attachment 16 to Fountains' application. Unlike the Equity Proposal, the Chase Letter, if not the last word on the subject, at least sheds some light on the timing of the crucial milestone, i.e., "permanent loan closing." Although the Chase Letter is full of escape clauses and does "not represent a commitment" or "an offer to commit," the document nevertheless outlines the terms for the closing of the proposed construction and permanent loans. The proposed terms call for the payment of a $10,000 Conversion Fee at permanent loan closing and impose preconditions for the conversion from the construction loan to the permanent loan, which include a requirement that there have been "90% economic and physical occupancy for 90 days." No evidence was presented as to the meaning of this language, but the term "physical occupancy" is clear and unambiguous——and it plainly happens after receipt of a final certificate of occupancy, which, under the RFA, is the end point of the construction phase. HTG Oak Valley argues that the Pay-In Schedule casts doubt on whether the entire amount stated in the Equity Proposal's line-item entry for "Equity Proceeds to be Paid Prior to Construction Completion" ($8,686,075) will be paid before the final certificate of occupancy is issued. According to HTG Oak Valley, the Pay-In Schedule shows that the third capital contribution will be paid after construction completion because the second capital contribution, which is the earlier of the two, is due to occur "prior to construction completion." Thus, HTG Oak Valley contends that Fountains' construction financing sources should be reduced by $3,877,712, thereby creating a construction financing shortfall and rendering the Fountains application ineligible for funding. HTG Oak Valley finds support for its position in an unlikely place, namely, FHFC's intended rejection of the application that The Vistas at Fountainhead Limited Partnership ("Vistas") submitted in response to Request for Applications 2019-105 ("RFA 2019-105"). That proposed agency action is relevant because Vistas had attached to its application an equity proposal letter from RBC whose terms and conditions——other than the dollar amounts and (obviously) the applicant's name——are identical to those of the Equity Proposal for Fountains. During the evaluation of applications under RFA 2019-105, which took place at around the same time as the review of applications pursuant to the RFA at issue here, FHFC's scorer determined that Capital Contribution #3 should be excluded from the amount of equity proceeds to be paid prior to construction completion, with the result that the Vistas application was deemed ineligible for funding due to a funding shortfall. The Vistas and Fountains applications, competing in separate solicitations, were scored by different FHFC staff members. The evaluator who scored the financial section of Vistas' application sought advice concerning her interpretation of the Equity Proposal, discussing the matter with FHFC's Director of Multifamily Programs and legal counsel at a reconciliation meeting that occurred before the Review Committee convened; this evaluator encountered no resistance to her plan of making a downward adjustment to Vistas' equity funding. The evaluator of the Fountains application did not likewise discuss her scoring rationale and thus received no input or guidance from FHFC's management. Ultimately, however, because each scoring determination belongs to the Review Committee member herself or himself, inconsistent or conflicting results are possible, as these cases demonstrate. Once in litigation, FHFC discovered that it had reached opposite scoring conclusions based on the same material facts. In these proceedings and in the Vistas Protest, FHFC has stressed its desire to take a consistent approach to the identical Equity Proposals. To that end, in the Vistas Protest, FHFC has reversed course and argued that, contrary to its intended action, the Equity Proposal provided by Vistas fully satisfies the requirements of RFA 2019-105; there is no funding shortfall; and Vistas' application is eligible and should be selected for funding. Deeming Vistas' application eligible would achieve consistency, of course, by giving favorable treatment to the applications of both Fountains and Vistas, which are similarly situated as to the Equity Proposal. Naturally, HTG Oak Valley urges that consistency be found the other way around, through the rejection of both applications. In support of its decision to change positions on Vistas' Equity Proposal, FHFC relies upon the following premises, which are equally applicable to the determination of Fountains' substantial interests: (i) the Equity Proposal plainly specifies, in the line-item entry for "Equity Proceeds to be Paid Prior to Construction Completion," the amount to be paid prior to construction completion; (ii) permanent loan closing does not necessarily have to occur after construction completion; and (iii) the information contained in the Pay-In Schedule is not information that is required by RFA 2019-105 (or the RFA at issue in this case). The disputes arising from the scoring of the Equity Proposal are solvable as matters of law and therefore will be addressed below.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Housing Finance Corporation enter a final order rescinding the intended award to Harrison Parc due to ineligibility; finding HTG Spring and Fountains ineligible for funding; and reducing Harmony Pinewood's proximity points to 8.5, which requires the cancelation of its Proximity Funding Preference. It is further RECOMMENDED that, as a result of the foregoing final actions, HTG Oak Valley be selected for funding under RFA 2018-110 and Wildwood Preserve Senior Living (not a party to this litigation) be deselected for funding. DONE AND ENTERED this 16th day of July, 2019, in Tallahassee, Leon County, Florida. S JOHN G. VAN LANINGHAM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 16th day of July, 2019.
The Issue The issue in this case is whether Petitioner has just cause to suspend Respondent from work without pay and to terminate his employment.
Findings Of Fact Respondent Richard Rahey “Respondent" or "Mr. Rahey" was employed by the Palm Beach County School District "Petitioner" or the “District” as a school monitor and behavior intervention associate at Benoist Farms Elementary School (Benoist) during the 2008-2009 school year. He also served as a parent liaison and the President of the Parent Teacher Organization (the "PTO"). In January 2009, District Police began an investigation of bank accounts associated with Benoist when a check that was sent by an organization that subsidizes after school care was not received by the director of Benoist's after school program. Detective Robert Walton found that the check in the amount of $2,314.47 was deposited in an account at a different bank from the one used for Benoist school accounts. Only Mr. Rahey had access to the other account called the "Benoist Farms Elementary PTO" account (the "PTO account"). When asked about the check intended for the after school program, Mr. Rahey said he found it in his school mailbox, so he deposited it. Detective Walton had investigated Mr. Rahey for PTO bank account irregularities in 2005. At that time, Mr. Rahey was an employee and PTO President at Seminole Trails Elementary School ("Seminole Trails"). Although the evidence was insufficient to refer the matter for criminal prosecution, Mr. Rahey was found to have failed "to safeguard money designated for children." A letter of reprimand dated June 15, 2005, warned him as follows: You are directed to familiarize yourself with the established procedures and protocol for handling funds and deposits. You are further reminded that the district's best practices with regard to the collection and deposit of money must be followed. You are advised that any future failure to follow the aforementioned direction will result in further disciplinary action up to and including termination. Detective Walton had more reasons to investigate Mr. Rahey's finances further after finding in public records that Mr. Rahey's home was in foreclosure and that he had filed for bankruptcy. At Detective Walton's request, a subpoena was issued for records from the PTO account and from Mr. Rahey's personal bank account. A number of checks from the PTO account were written to Sam's Club, so Detective Walton requested and received an itemized printout of purchases made using a tax- exempt Benoist PTO Sam's Club membership. When Detective Walton examined the accounts and purchases, he found what appeared to be unauthorized and unexplained purchases, and checks made to cash that totaled in excess of $3,600.00 over a period of time from January 2008 to April 2009. When questioned in May 2009, Mr. Rahey told Detective Walton that he did not remember or was not sure about some of the purchases. He insisted, however, that they were legitimate expenditures for the school, but his records were insufficient to support his claims. Mr. Rahey only had his handwritten ledger to show the purposes of the expenditures. During the questioning, he also acknowledged that Detective Walton had told him in 2005 that the same kind of record-keeping was inadequate for a school organization. This time Detective Walton determined that there was sufficient evidence to refer the case for criminal prosecution.1 Dr. Ruth Ann Miller was the Principal at Benoist. Detective Walton questioned her about certain items, including a PTO account check written for a "microwave for Dr. Miller." Dr. Miller had not authorized Mr. Rahey to buy a microwave and did not have the microwave. When she confronted Mr. Rahey, he initially denied having used funds from the account for his personal use. The District provided Mr. Rahey a copy of the Detective Walton's investigative report and invited Mr. Rahey to attend a Pre-disciplinary Meeting that was held on October 2, 2009, which he did. At the meeting and during the hearing, Mr. Rahey admitted his mistakes, apologized, and blamed his actions on his difficult financial situation as a single parent whose former spouse had stopped paying child support. Superintendent Arthur C. Johnson, by letter dated February 12, 2010, notified Mr. Rahey that he would recommend to the Board at its meeting on March 3, 2010, that he be suspended without pay and that his employment be terminated. As grounds for his action, the Superintendent listed conversion of District funds and/or property, ethical misconduct, failure to exercise best professional judgment, failure to properly control District funds, falsification of documentation, and theft. The following specific policies and statutes were also cited: School Board Policies 1.013 - Responsibilities of School District Personnel and Staff; 2.32 - Personal Business on School Time; 2.16 - Fund Raising Activities by School; 3.27 - Suspension and Dismissal of Employees; and Florida Statutes Section 817.034(4)(a)3. - Organized Fraud; and Section 812.014 - Grand Theft. As a result of budget cuts at Benoist, Mr. Rahey transferred to Bear Lakes Middle School where he was employed as a school monitor until he was dismissed from employment in April 2010. He has continued to serve as a volunteer parent liaison and business partner coordinator at Bear Lakes Middle School where he has the full support of the principal, Dr. Anthony Lockhart. His effectiveness has been compromised. Dr. Lockhart, for example, monitors Mr. Rahey's activities to make sure that he does not handle any money. Although he has confessed to committing the violations of policy and the crimes as charged, Mr. Rahey maintains that his employment should not be terminated because he has done so many worthwhile things to assist the schools. He has increased the number of volunteers and business partners at Bear Lakes. He was instrumental in having one business partner donate $10,000.00 for computers. Over the ten years that he has worked for and volunteered in District schools, Mr. Rahey has received excellent evaluations. He has been volunteer of the year once and has been nominated employee of the year four times. Mr. Rahey helped solicit school supplies and uniforms for new students in the District who were evacuated from Haiti following the earthquake. He has received absolution from his church pastor.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Board enter a final order that suspends Respondent from employment without pay and terminates his employment with the District. DONE AND ENTERED this 10th day of November, 2010, in Tallahassee, Leon County, Florida. S ELEANOR M. HUNTER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 10th day of November, 2010.
