The Issue The issue is whether, pursuant to section 1002.33(8)(a)2., 3., and 4., and (c), Florida Statutes (2019), Petitioner has proved violations of law and other good cause to immediately terminate a charter school agreement with Respondent dated February 27, 2018, due to the immediate and serious danger to the health, safety, and/or welfare of the students of Lincoln Memorial Academy, Inc. ("LMA" or "Respondent").
Findings Of Fact LMA converted to a charter school from Lincoln Memorial Middle School by receiving a majority vote of the parents and a majority vote of the teachers by an election pursuant to Florida Administrative Code Rule 6A-6.0787 (Ballot Process for Teacher and Parent Voting for Charter School Conversion Status). On August 22, 2017, the School Board approved Lincoln Memorial Middle School's application for conversion charter school status, which allowed Lincoln Memorial Middle School to become LMA. In February 2018, the School Board and LMA entered into a charter school contract memorializing the agreed-upon terms between the School Board and LMA with the School Board acting as LMA's sponsor. Then Governing Board Chair Edward Viltz and Governing Board Secretary Cornelle Maxfield signed the Contract on LMA's behalf. LMA officially began its operations on July 1, 2018, with the 2018-2019 school year being LMA's first year as a conversion charter school. As a conversion charter school, LMA technically remained a public school within the School District, but LMA's day-to-day operations ran independently from the School District. LMA had its own Governing Board completely separate from the School Board. Pursuant to the Contract (discussed in more detail below) and applicable statutes, LMA's Governing Board was dominantly and/or solely responsible for LMA's operations—-not the School District or School Board. In fact, according to LMA Founder and CEO Eddie Cantrel Hundley, this level of autonomy afforded to charter schools was one of the benefits of converting. Further, although LMA could have opted into several of the School District's services, including, but not limited to, the School District's food services program and transportation, LMA chose to independently render such services. The Contract under which LMA operated is a model state contract that Florida school districts and charter schools must use per Florida law. It sets forth LMA's obligations with respect to various topics, including, but not limited to, governance, hiring and screening of employees, financial management, federal funding, and other matters of compliance, in addition to circumstances upon which either party may choose not to renew or terminate the contract. Pursuant to the Contract, LMA's governance was regarded to be in accordance with its by-laws. Therefore, the general direction and management of LMA's affairs was required to be vested in the Governing Board. All meetings and communications involving members of the Governing Board were to be held in compliance with Florida's Sunshine Law. The Governing Board and principal were charged with specific duties and responsibilities: The Governing Board's primary role will be to set policy, provide financial oversight, annually adopt and maintain an operating budget, exercise continuing oversight over the school's operations, and communicate the vision of the school to community members. It shall be the Governing Board's duty to keep a complete record of all its actions and corporate affairs and supervise all officers and agents of the school and to see that their duties are properly formed. The Governing Board will serve as the sole responsible fiscal agent for setting the policies guiding finance and operation. School policies are decided by the Governing Board, and the principal ensures that those policies are implemented. The Governing Board shall exercise continuing oversight over school operations and will be held accountable to its students, parents/guardians, and the community at large, through a continuous cycle of planning, evaluation, and reporting as set forth in section 1002.33. The Governing Board will be responsible for the over-all policy decision making of the school, including the annual approval of the budget. The Governing Board shall perform the duties set forth in section 1002.345, including monitoring any financial corrective action plan or financial recovery plan. Additionally, the Contract stated that LMA would be a public employer and would participate in the FRS, that upon nomination and "prior to appointment to the Governing Board," a member must undergo a background screening in accordance with section 1002.33(12)(g), and that LMA must allow reasonable access to its facilities and records to duly authorized School District representatives. Regarding the employment of teachers and other staff, LMA was responsible for selecting its own personnel. However, in selecting its own personnel, LMA was required to employ only teachers certified pursuant to chapter 1012. LMA was to (1) refrain from employing any individual to provide instructional services or to serve as a teacher's aide whose certification or licensure as an educator is suspended or revoked by the State of Florida or any other state; and (2) refrain from knowingly employing an individual who has resigned from a school or school district in lieu of disciplinary action with respect to child welfare or safety or who has been dismissed for just cause by any school or school district with respect to child welfare or safety or who is under current suspension from any school or school district. Further, the Contract states that the school shall implement policies and procedures for background screening of all prospective employees, volunteers, and mentors and the school shall require all employees and members of the Governing Board to be fingerprinted. The results of all background investigations and fingerprinting "will be reported in writing to the Superintendent and/or his/her designee[;] . . . [n]o school employee or member of the Governing Board may be on campus with students until his/her fingerprints are processed and cleared"; and "the School shall ensure that it complies with all fingerprinting and background check requirements." Regarding financial management, the Governing Board shall be responsible for the operation and fiscal management of LMA, and the school must submit a monthly financial statement to the Sponsor (the School District) no later than the last day of the month being reported. LMA agreed to provide the School District, upon request, proof of sufficient funds or a letter of credit to assure prompt payment of operating expenses associated with the school, including, but not limited to, teacher and other staff salaries and benefits. Regarding federal funding, the School Board agreed to reimburse LMA on a monthly basis "for all invoices submitted by the School for federal funds." Regarding the renewal or termination of the Contract, the Contract's terms closely mimic terms of the applicable statute, section 1002.33. Specifically, the School Board may choose not to renew or terminate the charter for reasons set forth in section 1002.33(8) including, but not limited to, failure to meet generally accepted standards of fiscal management, violation of law, and other good cause shown. The Contract further provides that the School shall have 30 days from written notice of default to cure, "absent any circumstances permitting immediate termination." There is no requirement that the Sponsor issue written notice to the school before it immediately terminates a charter for reasons that pose a serious and immediate danger to the health, safety, and welfare of the students. LMA's Fiscal Mismanagement was an Immediate and Serious Danger to the Students' Health, Safety, and Welfare Pursuant to the Contract and applicable statute, LMA was responsible for submitting monthly financial reports. On or about May 15, 2019, School District Chief Financial Officer ("CFO") Heather Jenkins learned that LMA's January, February, and March 2019 financials showed a negative fund balance—meaning that LMA's expenditures exceeded their revenues. When the School District received LMA's monthly fund balance for April 2019, it again showed a negative fund balance. By this time, LMA's net deficit totaled $235,438.00. LMA's negative fund balance triggered LMA and the School District's statutory obligation to report LMA's financial situation to the Florida Department of Education, pursuant to section 1002.345(b). Pursuant to statute, if the School District and LMA were unable to reach a consensus on a corrective action plan within 30 days, intervention would be necessary by the Florida Commissioner of Education. § 1002.345(1)(d), Fla. Stat. LMA and the School District had until June 28, 2019, to reach a consensus on a corrective action plan. As the School District began receiving monthly financials showing LMA's negative fund balance, the School District also began receiving notices from various sources reporting that LMA was delinquent on certain payments, including, but not limited to, the Florida Department of Management Services regarding LMA's failure to make payments on behalf of its employees to the FRS; LMA employees reporting LMA's failure to make payroll; and LMA's failure to pay Best and Brightest bonuses to teachers, who had been awarded those bonuses by the State. The School District made repeated attempts to reach a consensus on a corrective action plan with LMA by having numerous meetings with LMA's CFO Cornelle Maxfield and providing feedback on LMA's proposed corrective action plan. Each time, Ms. Jenkins identified numerous issues with LMA's proposed corrective action plan, including, but not limited to LMA's failure to segregate federal funds because such funds cannot be used to balance the budget. Each time, Ms. Jenkins also requested the documentation and information necessary to develop a corrective action plan, including requests for a detailed budget, support for revenue increases estimated by LMA, documentation supporting LMA's cash flow analysis and documentation evidencing payment of payroll taxes, workers' compensation, FRS, all utilities, and Best and Brightest bonus payments. Each time, LMA failed to provide the requested documentation or correct the issues identified. The School District also continued to remind LMA that the next School Board meeting was scheduled for July 23, 2019, and that the School District hoped to have a recommendation for LMA's solvency at that time. Even so, LMA repeatedly failed or refused to respond to these requests. As a result, LMA and the School District were unable to reach a consensus on a corrective action plan. LMA's financial mismanagement and the danger this mismanagement posed to the students' health, safety, and/or welfare rendered it unable to adequately provide the most basic services for its students, including food and water. The testimony and evidence presented by the School Board on this issue remains undisputed that LMA could not pay the invoices and debts identified below, as they came due. Further, LMA offered no evidence to rebut the severity of LMA's financial mismanagement and its inability to protect the health, safety, and welfare of its students. Given LMA's inability to protect student health, safety, and welfare, the School Board had substantial bases to immediately terminate the Contract pursuant to section 1002.33(8)(c). Within two days of the issuance of the initial Notice of Immediate Termination, the School Board requested the assistance of Carr, Riggs, & Ingram, LLC ("CRI"), to complete a forensic audit of LMA's documents, data, and other information. Although the School Board already possessed significant information at the time of termination showing that LMA's financial mismanagement posed an immediate and serious danger to student health, safety, and/or welfare, LMA's refusal to cooperate and produce financial records resulted in the School Board not knowing the full extent of LMA's debt. CRI's task was to fully review the revenues and expenses of LMA to determine whether all funds due to LMA had been received and properly spent by the charter school. CRI completed its Forensic Investigation Report ("CRI Report"), dated August 23, 2019. However, although LMA attempted to justify why documents had not been provided to CRI, as will be discussed at length later in this Final Order, at the time of the hearing, the School Board still could not fathom the true extent of LMA's debt, since LMA had not produced the required financial records despite numerous requests from the School Board and Orders from the undersigned. Therefore, CRI explained that the CRI Report was based on findings as of August 23, 2019, because they still lacked information to paint a complete picture of LMA's finances. As of August 23, 2019, LMA's outstanding liabilities totaled $1,539,476.29. This amount includes $780,127.43 in unpaid invoices/liabilities, $499,636.23 in debt funding, and $259,712.63 in payroll owed. As of August 3, 2019, LMA's operating account had a negative balance of $526.97. Of the $780,127.43 owed in unpaid invoices and liabilities, LMA owed $373,852.01 to the IRS. A review of available employee payroll records showed that taxes were deducted from employee gross pay, but were not always remitted to the IRS. When asked about these payments at deposition, both Ms. Maxfield and Mr. Hundley chose to assert their Fifth Amendment rights and refused to answer the questions. Mr. Hundley did not attempt to offer testimony at hearing regarding the unpaid payroll taxes. Ms. Maxfield was not called by LMA to testify at hearing. The CRI Report also revealed that LMA owes $81,917.45 to the FRS. Beginning as early as March 2019, the Florida Department of Management notified both LMA and the School Board of LMA's failure to pay statutory dues pursuant to section 121.78, Florida Statutes, which requires that contributions made to FRS shall be paid by the employer, including the employee contributions, to the Division of Retirement by electronic funds transfer no later than the fifth working day of the month immediately following the month during which the payroll period ended. The statute further provides that employers, who fail to timely provide contributions and accompanying payroll data, shall be assessed a delinquent fee and/or be required to reimburse each member's account for market losses resulting from late contributions. § 121.78(3)(a)-(c), Fla. Stat. Despite LMA's failure to remit FRS payments, FRS contributions were deducted from employee gross pay throughout the 2018-2019 school year. When asked about these payments at deposition, both Ms. Maxfield and Mr. Hundley chose to assert their Fifth Amendment rights. As of August 23, 2019, LMA owed $76,118.88 to Humana for employee's health insurance coverage. Although payments to Humana remained unpaid at the time of the hearing, LMA did deduct contributions for Humana insurance coverage from employee gross pay throughout the 2018-2019 school year. When asked about these payments at deposition, both Ms. Maxfield and Mr. Hundley chose to assert their Fifth Amendment rights. At the time of hearing, LMA also owed a total of $74,306.76 to various technology service vendors that LMA relied upon for the provision of internet, voice services, and support for equipment used by students. For example, LMA owed $43,542.00 to Indian River Networks for various services, including, but not limited to, webhosting; network management site support; helpdesk services for faculty, staff, and board members; technology support services for student computers; monthly site visits; and onsite emergency services. LMA owed Spectrum Business a total of $539.90 for internet and voice services. When asked about Indian River Networks at deposition, Ms. Maxfield chose to assert her Fifth Amendment right. With respect to educational services for its students, LMA owes $35,895.00 to Children's Therapy Solutions, Inc. Child Therapy Solutions, Inc., provided speech language pathology services to LMA students. Because LMA was not eligible for any direct funding pursuant to the Individuals with Disabilities Education Act ("IDEA") for the 2018-2019 school year, LMA's Exceptional Student Education ("ESE") funding came through its monthly Florida Education Finance Program ("FEFP") payments from the School District. As evidenced by the unpaid invoices from Children's Therapy Solutions, Inc., LMA did not properly allocate these funds. In addition to the foregoing vendors, LMA failed to pay teacher recruitment and retention awards earned in the form of Best and Brightest bonuses. On or about March 26, 2019, LMA received $19,531.74 from the State of Florida pursuant to the Best and Brightest program. LMA possessed a list of the employees, who were entitled to receive these funds. In fact, on May 30, 2019, Ms. Jenkins e-mailed Ms. Maxfield, notifying her that two Best and Brightest recipients contacted the School District because they had not received their Best and Brightest checks. When asked about these payments at deposition, both Ms. Maxfield and Mr. Hundley chose to assert their Fifth Amendment rights. LMA failed to properly pay its employees. It owes approximately $259,712.63 in unpaid salaries. When asked about these payments at deposition, Ms. Maxfield and Mr. Hundley chose to assert their Fifth Amendment rights. When asked at that same deposition whether she continued to be paid when LMA was unable to pay their other employees, Ms. Maxfield chose to assert her Fifth Amendment right. Payroll records show that LMA paid Ms. Maxfield through July 15, 2019. Payroll records show that Mr. Hundley received a salary of $175,000.00, while Ms. Maxfield received a salary of $92,500.00 for the 2018-2019 school year. In addition to their base salaries, Mr. Hundley was paid an additional $32,150.00 and Ms. Maxfield was paid an additional $31,300.00 prior to LMA's opening on July 1, 2018, ostensibly for work performed in advance of the school year. LMA also paid Mr. Hundley an additional $2,450 per month and Ms. Maxfield an additional $1,150 per month for expenses during the 2018-2019 school year and 2019 summer. Neither of these additional monthly payments, allegedly for "expenses," required documentation of how the additional compensation was spent. This equates to $29,400.00 annually in addition to Mr. Hundley's $175,000.00, and $13,800.00 annually in addition to Ms. Maxfield's $92,500.00. Mr. Hundley's salary was nearly double what he previously received as principal of Lincoln Memorial Middle School, where he earned $105,560.00. When asked at their depositions about these salaries and expenses and the purposes of the additional compensation labeled "expenses," Mr. Hundley and Ms. Maxfield asserted their Fifth Amendment rights. To obtain additional funding to continue operations, LMA was issued promissory notes by third parties and employees and sold receivables prior to and throughout the 2018-2019 school year to raise additional capital. As of August 23, 2019, LMA owed approximately $499,636.26 to numerous promissory note holders in addition to the $780,127.43 owed in unpaid invoices and liabilities. With respect to its sales of receivables, LMA entered into purchase agreements with several holders, including Charter School Capital, Pearl Capital Funding, CFG Merchant Solutions, and ROC Funding Group. By entering into these agreements, LMA authorized some of these holders to make daily deductions from LMA's bank account. For example, bank statements show that there was a daily debit of $1,479.00 by CFG Merchant Solutions, a daily debit of $725.00 by ROC Funding Group, and a daily debit of $1,499.00 by Pearl Capital Funding. This equates to $18,515.00 each Monday through Friday workweek. Further, on July 15, 2019, Mr. Hundley signed an ACH Debit form, additionally allowing Pearl Capital to debit $7,495.00 from LMA's operating checking account. When asked about these promissory notes and loans at their depositions, Ms. Maxfield and Mr. Hundley chose to assert their Fifth Amendment rights. These facts went unrebutted by LMA at hearing. LMA also allowed its insurance for student athletes to lapse while LMA students were on campus participating in student athletics. Although outrage was expressed by Mr. Hundley that such an accusation was made, no credible evidence was offered into the record to rebut this fact. Instead, at his deposition, Mr. Hundley asserted his Fifth Amendment right, when asked whether Ms. Maxfield kept him apprised of outstanding invoices related to student health, safety, and welfare. As a school within the School District, LMA was required to offer insurance to its student athletes. Maintenance of insurance for student athletes ensures that the student athletes are able to pay any necessary medical bills and, therefore, furthers the health, safety, and welfare of LMA's student athletes. As such, this failure to maintain coverage alone constitutes a danger to student health, safety, and/or welfare. The School Board disbursed all funds owed to LMA, which amounted to a total of $4,095,973.08 in federal, state, and local funding. Funding disbursed by the School Board to LMA included $150,256.00 for Title I, $133,067.16 for the 21st Century program, and $19,531.74 for Best and Brightest bonuses. When asked at her deposition whether the School Board paid all FEFP payments to LMA in a timely manner, rather than responding to such a direct and verifiable question as that, Ms. Maxfield asserted her Fifth Amendment right. When asked whether LMA timely received Title I funds, Ms. Maxfield asserted her Fifth Amendment right. When asked whether LMA timely received all allocations from the School Board, she asserted her Fifth Amendment right. When asked whether the School Board ever withheld funds from LMA to which LMA was entitled, she asserted her Fifth Amendment right. When asked if LMA timely received all 21st Century program funding owed, she asserted her Fifth Amendment right. When asked whether LMA timely received all federal, state, and local funding distributed through the School Board, Ms. Maxfield asserted her Fifth Amendment right. Ms. Maxfield, as LMA's highly compensated CFO, was in the best position to know what the state of the finances were of LMA, yet refused throughout the hearing process to provide documentation or testimony to clarify the issues raised by the School Board in its Notice of Immediate Termination. After the close of the hearing, the School Board received for the first time a copy of an agreement signed on July 1, 2019, by Mr. Hundley on behalf of Total Life Prep, LLC ("TLP"), and Ms. Dawson on behalf of LMA. In the agreement, LMA agrees to pay TLP an annual fee of $275,000.00 in year one, the greater of $500 per student or $280,000.00 in year two, $285,000.000 in year three, $290,000.000 in year four, and $295,000.00 in year five to pay for TLP products. Mr. Hundley is TLP's registered agent. Although this document was clearly responsive to discovery requests, it was never produced to the School Board by LMA. The School Board filed a Motion for Leave to Submit Supplemental Evidence Supporting Petitioner's Proposed Order on September 18, 2019 (a subsequent amended and second amended motion were filed on September 19, 2019, but changed only the paragraph concerning conferring with opposing counsel), including an affidavit from School Board General Counsel Mitchell Teitelbaum, as to when and how he received the document. The School Board was deprived of the opportunity to cross-examine Mr. Hundley, Ms. Maxfield, and Ms. Dawson about this agreement, because it was not produced in discovery. Based upon these facts, and the fact that LMA either concealed or refused to produce such a substantive piece of evidence, the undersigned hereby accepts the document and grants the School Board's motion to include the additional evidence in the record as Petitioner's Exhibit 52 in Binder 3-3. Although LMA, based upon the verified $4 million in state, federal, and local funds it actually received, should have been able to meet its employees' payroll, insurance, and FRS benefits, as well as pay for its students' food deliveries and the water utility bill, LMA decided to enter into an agreement that would require it to pay TLP (and/or Mr. Hundley) approximately $1,425,000.00 over a five-year period. Since the document was not produced, no explanation was given by LMA as to why it sought this additional funding or whether TLP was a company-owned or controlled by Mr. Hundley or any employees of LMA. This contract is indicative of a pattern of behavior by LMA leaders, who continuously made decisions that presented a serious and immediate danger to the health, safety, and/or welfare of LMA students for self-gain. Further, it appears that this agreement was entered into in an attempt to circumvent section 1012.795, by paying Mr. Hundley as TLP rather than as CEO of LMA. Regardless of the fact that LMA could not pay its employees' payroll, insurance, or FRS benefits and could not pay for its students' food deliveries or the water utility bill, the charter school decided to enter into an agreement that would require it to pay TLP (and/or Mr. Hundley) approximately $1,425,000.00 over a five-year period. Regardless of how this agreement is characterized, Mr. Hundley and the Governing Board acted in direct violation of the EPC Order revoking Mr. Hundley's certification as an educator, and were dismissive of the Commissioner of Education's clear warnings to LMA, the EPC's Final Order, the ALJ, and, most recently, the School Board throughout the discovery period. This put the School Board at a distinct disadvantage in preparation for and presenting its case at hearing. Ultimately, by the limited testimony they chose to offer at hearing, LMA has not disputed the fact that it has a debt of at least $1,539,476.29. By invoking their Fifth Amendment rights, Ms. Maxfield, the CFO of LMA, and Mr. Hundley, the CEO of LMA, have not denied their knowledge of the shortfall in funds for the first-year operations of LMA. LMA's actions in seeking outside funding, issuing promissory notes, and withholding payments to teachers and staff, speak far louder than two individuals' refusal under the Fifth Amendment to answer any pertinent questions about LMA's financial picture. LMA has not offered any evidence challenging the fact that its financial mismanagement was a consequence of poor decision-making and inadequate oversight by LMA's Governing Board, CEO and Principal Hundley, and CFO Maxfield. A lengthy discussion will follow below concerning LMA's contention that all their woes were the result of the School Board not directly intervening in the day-to-day operations of LMA, an independent charter school. However, regardless of such a claim by LMA, the poor decision-making by the leaders of LMA directly interfered with LMA's ability to ensure student health, safety, and welfare. Accordingly, and in the absence of any evidence to the contrary, the School Board had substantial basis to immediately terminate LMA's charter pursuant to section 1002.33(8)(c). LMA's Failure to Adequately Comply with Nutritional and Recordkeeping Requirements and Inability to Pay Invoices for Food Services was a Danger to Student Health, Welfare and/or Safety The Contract requires LMA to provide food services to its students consistent with applicable law and to comply with federal requirements for free and reduced meal service. If the charter school chooses to participate in the NFSP, the Contract additionally requires that the charter school follow all applicable federal rules and regulations. Records of all property acquired with federal funds must be maintained. Although the Contract expressly states that the school is entitled to receive all funds provided by the federal and state government for its food service program, it also expressly states that the School Board "shall provide no administrative support for the School's food service program." LMA chose to independently run its food services program. LMA also chose to participate in the NFSP and had its own agreement with the Florida Department of Agriculture and Consumer Services ("Florida Department of Agriculture") regarding implementation of the NFSP. Because LMA had its own agreement with the Florida Department of Agriculture, it would have been inappropriate for the School Board to become involved unless LMA specifically requested the School Board's involvement. By participating in the NFSP, LMA was able to serve 100 percent of its students a free breakfast, lunch, and snack on a daily basis. The NFSP provides federal funding in the form of reimbursement to schools for the purpose of providing free and/or reduced priced lunches for students. As a reimbursement program, funding is issued based on the content of the meals served. To be reimbursable, the meals must comply with certain nutritional standards. Such standards include the meal pattern requirements issued by the United States Department of Agriculture. For example, according to the meal pattern, a reimbursable lunch must include two full components and a fruit or vegetable. Additionally, during the 2018-2019 school year, all grains served had to be whole grain. If a meal does not meet these requirements, it is not reimbursable. Unlike other sources of federal, state, and local funding that is disbursed by the School Board, the Florida Department of Agriculture directly issued reimbursement to LMA. During the 2018-2019 school year, LMA received $390,277.46 in NFSP reimbursements. Of the $390,277.46, approximately $173,381.93 was spent on food-related expenses. Of the food related expenses, $162,828.90 was paid to U.S. Foods, Inc., and Borden Dairy, while $10,553.03 was spent at local grocery stores, such as Sam's Club, Publix, and Aldi. Of the total $390,277.46 received, CRI was able to account for $268,339.71 spent on food services expenses, leaving $121,937.75 in excess reimbursement. When asked at deposition whether he knew where NFSP funds were deposited, Mr. Hundley asserted his Fifth Amendment right. When asked whether he had any knowledge regarding how NFSP funds were utilized, Mr. Hundley asserted his Fifth Amendment right. When asked whether he had knowledge regarding how LMA spent the excess reimbursement from NFSP, Mr. Hundley asserted his Fifth Amendment right. LMA received another $40,402.01 in NFSP funding for May 2019 and $17,250.43 for June 2019. As of August 3, 2019, LMA's operating account was $526.97 in the negative. LMA currently owes U.S. Foods, Inc., $18,900.59 and Borden Dairy $3,704.59. How LMA spent this excess $121,937.75 remains unknown. To receive this reimbursement, LMA was required to send the number of reimbursable meals served to the Florida Department of Agriculture on a monthly basis. All reimbursable meals must be accounted for. One way to account for and substantiate the reimbursable meals served is through the maintenance of food production records. Production records detail what is served on a particular day and serve as backup documentation showing that the school followed the U.S. Department of Agriculture's meal pattern with respect to meals claimed for reimbursement. The Florida Department of Agriculture conducts an administrative review of records belonging to schools participating in the NFSP every three years. When such a review is done, the Florida Department of Agriculture generally reviews the production records to substantiate the meals claimed for reimbursement and to ensure that the meals claimed followed the meal patterns. Copies of any child nutritional labels or other nutritional information for products served may also be required. In light of these administrative reviews, participating schools are required to maintain these records for a period of five years. If a school's claims for reimbursement cannot be substantiated, the Florida Department of Agriculture may request repayments of the funds previously distributed. The Florida Department of Agriculture may also suspend or terminate its services pursuant to the NFSP. Despite numerous requests by the School Board, LMA has not produced any food production records. And following its termination of LMA's charter, the School Board (with the assistance of CRI) was only able to recover one week's worth of LMA's production records for the 2018-2019 school year. Director of Food and Nutrition for the School District, Regina Thoma, explained that LMA's Cafeteria Manager, Angela Enrisma, told her that she no longer had access to the production records or the software that held the production records. Ms. Enrisma also told Ms. Thoma that CFO Maxfield took the paper production records. Ms. Enrisma similarly testified during her deposition that she kept the production records in a box in her office, and that Ms. Enrisma gave Ms. Maxfield the box of productions on the last day of school. Ms. Enrisma additionally testified that she did not make electronic copies of the production records and that she did not know where the production records were presently located. Despite the fact that LMA's qualified representative Christopher Norwood advised the undersigned that he would ask Ms. Maxfield to produce the box of production records, neither Ms. Maxfield nor anyone else at LMA has produced those records. The location of LMA's production records remains unknown, as is whether these records remain accessible digitally, or even exist. LMA has also failed to rebut the fact that, in the absence of such records, LMA would be liable for penalties for failing to preserve these records, including, but not limited to, repaying funds already received totaling $390,277.46 and suspension or termination of the NFSP program. During the hearing, the School Board requested that the undersigned apply an adverse inference with respect to LMA's failure to comply with the law if LMA failed to produce the requested production records. In response, the undersigned stated that "either these records exist, or they have been destroyed or misplaced or lost. And if they're destroyed, misplaced, or lost, then the inference will be that no such records exist." The undersigned further advised that "there have to be records . . . [a]nd if there aren't records, the inference I make is that the records have been destroyed or hidden." In the conclusions of law to follow, a ruling on the use of adverse or negative inferences will be made concerning both this issue and the invoking of the Fifth Amendment by the CEO and CFO of LMA on all questions relating to the fact and location of LMA funds that remain unaccounted for. The location of these records--aside from the one week CRI (not LMA) was able to find--remains unknown. As will be discussed below, the defense from LMA that the School Board took over the school and had access to all records that existed on the day control was assumed, does not absolve LMA from protecting records either electronically or with back-up copies. Concerning the food service program at LMA, the undersigned must infer that the production records do not exist, were hidden, destroyed and/or were lost and that, consequently, LMA failed to comply with applicable law, rules, and regulations pursuant to the NFSP. As noted previously, LMA served 100 percent of its students a free breakfast, lunch, and snack on a daily basis using funds received from the NFSP. Many students were dependent upon these meals as their only daily nourishment. To the extent that students relied upon the provision of free meals given pursuant to the NFSP, discontinuation of this service would clearly pose a danger to the students' health, safety, and/or welfare. Given LMA's failure to comply with NFSP's requirements, the School Board had substantial basis to immediately terminate the Contract pursuant to section 1002.33(8)(c). Moreover, school was scheduled to start within just a few weeks of the July 23, 2019, School Board meeting. As proof of another lack of attention to detail, LMA has not produced any records showing that it properly screened student meals for allergens. For example, the School District uses software that notifies cafeteria employees when a student has an allergy. Once the software notifies the cafeteria employee of a student's allergy, the employee checks the student's tray to make sure the student does not have any products containing the allergen. Such precautions are implemented because food allergies can be life threatening. LMA refused or failed to produce any records showing that it implemented a similar process or otherwise screened for allergens when serving student meals. LMA also did not offer any rebuttal evidence during the course of discovery or during the hearing showing that LMA screened for allergens. As already noted, the undersigned acknowledged during the hearing that in the absence of records or rational explanation, LMA would be unable to rebut issues raised by the School Board in its Notices of Immediate Termination. The undersigned further advised that, in the absence of requested records or rebuttal evidence, the undersigned would infer that these records did not exist or were hidden and/or destroyed. Accordingly, in the absence of any records or rebuttal evidence, the undersigned finds that LMA failed to properly screen student meals for allergens. Given the serious and potentially life-threatening nature of allergies, any failure to screen student meals for allergens clearly poses a danger to student health, safety, and/or welfare. In the case of a school that boldly claims it was formed to do better by its community, such lack of institutional control is disheartening at best. Accordingly, LMA had substantial basis to immediately terminate LMA's charter pursuant to section 1002.33(8)(c). LMA was not able to pay for its food deliveries. A case in point involves U.S. Foods, a mainline food distributor that provides food service, food, and related supplies to restaurants, schools, and other institutions. Schools, especially those that participate in the NFSP, use mainline distributors, such as U.S. Foods, Inc., because their products include child nutrition labels. Child nutrition labels contain information specifically used to assist in complying with the U.S. Department of Agriculture's meal patterns. Without child nutrition labels, it is much more difficult, although not impossible, to ensure that meals meet the meal pattern and are, therefore, reimbursable. Throughout the 2018-2019 school year, LMA had issues paying U.S. Foods, Inc., for its food deliveries. On May 8, 2019, U.S. Foods, Inc., stopped making deliveries to LMA altogether due to nonpayment. LMA currently owes U.S. Foods, Inc., $18,900.59. Borden Dairy was LMA's milk provider. Borden Dairy stopped delivering to LMA on May 24, 2019, due to nonpayment. LMA currently owes Borden Dairy $3,704.59. After U.S. Foods, Inc., and Borden Dairy stopped making these deliveries, Ms. Enrisma, began purchasing foods from local grocery stores, including, but not limited to, Sam's Club, Aldi, Winn Dixie, and Publix. Products purchased from Sam's Club, Aldi, Winn Dixie, and Publix do not have child nutrition labels. At least three receipts, one for purchases made at Sam's Club and two for purchases made at Winn Dixie, contained food items that do not meet the U.S. Department of Agriculture's meal patterns. If LMA served students any items that did not meet meal pattern requirements, such meals would not be reimbursable pursuant to the NFSP. Notably, LMA sought reimbursement for meals pursuant to the NFSP after U.S. Foods, Inc., stopped making deliveries to LMA. When asked at deposition whether he was aware that LMA purchased food from Publix and Aldi to be served to LMA students, Mr. Hundley asserted his Fifth Amendment right. Ms. Thoma visited LMA for the first time since the July 23, 2019, termination of LMA's charter on July 29, 2019. When she arrived, Ms. Enrisma expressed relief because school was starting in two weeks and she was not sure how they were going to feed the students. LMA failed to offer any rebuttal to the following: (1) LMA's financial mismanagement resulted in U.S. Foods, Inc., ceasing services due to nonpayment; (2) the discontinuation of these deliveries resulted in LMA's cafeteria manager purchasing products from local grocery stores that did not have child nutrition labels; (3) products purchased from these local grocery stores did not meet NFSP's meal patterns; (4) these products were not screened for allergens; and (5) despite all of this, the food was served to students. Further, LMA has failed to offer any evidence or rebut the fact that LMA's inability to provide free and nutritional meals to its students posed a serious and immediate danger to student health, safety, and/or welfare. For example, it remains undisputed that upon Ms. Thoma's arrival at the school, LMA's own cafeteria manager expressed that she was unsure how she was going to feed the students moving forward. It is also undisputed that LMA students depended upon LMA's provision of these meals. In light of the foregoing, the School Board had substantial basis to immediately terminate the Contract pursuant to section 1002.33(8)(c). Perhaps the most inexplicable failure to pay issue in this case involved LMA's water utility bill. On or about July 22, 2019, LMA received a water shut-off notification from the City of Palmetto, Florida ("City"), due to an unpaid balance of $3,216.67. In the notice, the City indicated that LMA's payment was 45 days past due and that the payment must be made by 5:00 p.m. on July 29, 2019. The City further indicated that it would shut off LMA's water on July 30, 2019, if LMA failed to make this payment. On July 10, 2019, just twelve days earlier, LMA had received $281,229.85 in FEFP funds. By August 3, 2019, LMA's operating account had a negative balance of $526.97. Notably, this was not LMA's first water shut-off notice from the City. On or about June 17, 2019, LMA received a water shut-off notification due to an unpaid balance of $12,439.23. The notice advised that the City would turn off LMA's water if payment was not made. Mr. Hundley testified that he was aware that LMA received water shut-off notices in both June and July. Accordingly, it is undisputed that LMA received notices from the City threatening to turn off LMA's water due to nonpayment. Further, LMA began receiving notices from the City regarding their failure to pay the water bill as far back as April 2019. For example, the City records state that on April 1, 2019, Ms. Maxfield admitted to a City representative that LMA has not paid "in a while" and that she would make payment that day. However, she did not pay that day. The City representative called her three more times and left a voicemail. The following day, the City representative again attempted to contact Ms. Maxfield. Ms. Maxfield indicated that "state funds are slow coming in." When the City representative attempted to follow up later that day, the City representative was informed that Ms. Maxfield was gone for the day. On April 3, 2019, the City representative was unable to reach Ms. Maxfield, but did speak with Mr. Hundley. Mr. Hundley informed the City representative that, "Lincoln Memorial have exhausted their reserves and that is why they haven't paid for the last four months." The City representative subsequently made numerous attempts to create a payment plan, but Mr. Hundley and Ms. Maxfield--"the only ones that can help"--were consistently unavailable. It is undisputed that a school cannot operate without running water. It is also undisputed that LMA's failure to have running water would pose a serious and immediate danger to the students' health, safety, and welfare. Even Christine Dawson, chair of LMA's Governing Board, admitted that protecting student safety means ensuring students have adequate access to water. The failure of LMA to ensure the school was able to provide such a basic necessity as running water further demonstrates that the School Board had substantial basis to immediately terminate the Contract pursuant to section 1002.33(8)(c). LMA's Failure to Background Screen Employees was an Immediate and Serious Danger to the Health, Safety, and Welfare of Charter School Students The Contract sets forth the processes that LMA must follow with respect to background screening and fingerprinting its employees. As discussed previously, the Contract expressly states that the school shall implement policies and procedures for background screening of all prospective employees, volunteers, and mentors, and the school shall require all employees to be fingerprinted. The Contract further provides that the results of all background investigations and fingerprinting "will be reported in writing to the Superintendent and/or his/her designee"; that "[n]o school employee or member of the Governing Board may be on campus with students until his/her fingerprints are processed and cleared"; and that "the School shall ensure that it complies with all fingerprinting and background check requirements." "Cleared" means that any criminal history that shows up as a result of such background screening is reviewed. LMA was solely responsible for hiring and background screening its personnel. The School Board was not responsible for interviewing, hiring, selecting, or background screening LMA employees. The terms of the Contract mimic Florida statutory law requiring that instructional personnel, non-instructional personnel, and governing board members undergo a Level 2 background screening prior to hire, pursuant to section 1012.32(2). If the results of a background screening reveal that an individual has been arrested for and/or charged with certain offenses, the law forbids the school from employing the individual. Examples of such offenses include felony theft in excess of $3,000.00. See §§ 1012.315(1)(z) and 435.04(2)(cc), Fla. Stat. LMA contracted with DeAnna King and her company, King HR Services, LLC ("King"), to operate LMA's human resources ("HR") department. Pursuant to King's contract with LMA, the company was hired to provide "complete employee support," recruit employees, and implement policies and procedures for background screening of employees, volunteers, and mentors. The School Board was not a party to LMA's contract with King. Despite King's contractual duties to properly background screen and fingerprint employees prior to hire, LMA never shared the Contract with Ms. King. Despite this, Ms. King testified that she was familiar with Florida statutory law and legal requirements regarding employment of school employees, including sections 453.04 and 1012.32, Florida Statutes. Ms. King also testified that she understood that employees must undergo a Level 2 background screening before setting foot on campus, that she needed to submit fingerprints to the Florida Department of Law Enforcement ("FDLE") to adequately complete a Level 2 background screening, and that an offer of employment at a school is conditional pending the results of a Level 2 background screening. Following the School Board's immediate termination of LMA's charter, the School District was required to validate that LMA had properly subjected LMA employees to a Level 2 background screening. During the validation process, the School District discovered that LMA did not have fingerprint results or clearance letters on file for 13 of LMA's employees. Pursuant to the Contract, clearance letters should have been on file for each of these individuals prior to their beginning employment with LMA. Among the individuals listed were CFO Maxfield and a "security official" named John Walker. LMA initially hired John Walker on July 30, 2018. Once properly screened by the School District, Mr. Walker's background results revealed that he was arrested for felony grand theft in the third degree in February 2016, and was re-arrested for violating his probation for grand theft on July 10, 2018, less than two weeks before LMA hired him. Based on these results, the School District would not have cleared him to work at LMA. In fact, absent any evidence of disposition, the statute forbids it. See §§ 435.04(2)(cc) and 1012.315(1)(z), Fla. Stat. Ms. King admitted that she never received the fingerprinting results for any LMA employees. Ms. King also admitted that she allowed the 13 employees identified by the School District to start working at LMA, but never reviewed their background screening results. When asked at deposition whether she understood the background screening process, Ms. Maxfield, who supervised Ms. King, asserted her Fifth Amendment right. When asked whether she was aware that LMA allowed employees to work that did not pass their background screening, Ms. Maxfield asserted her Fifth Amendment right. When asked to describe LMA's hiring process, Ms. Maxfield asserted her Fifth Amendment right. When asked whether Ms. Maxfield was responsible for overseeing the background clearance process, Ms. Maxfield asserted her Fifth Amendment right. As evidenced by the foregoing, LMA has failed to offer any evidence rebutting the fact that LMA allowed individuals to start working at the school prior to reviewing their background screening results or receiving clearance letters from the School District; that Ms. King never reviewed the fingerprint results for any employees, including the 13 employees identified by the School District, before allowing them to work at LMA; that the School District would not have cleared at least one of these individuals, John Walker, to work at LMA; and that failure to subject individuals to a Level 2 background screening prior to employment poses an immediate and serious danger to student health, safety, and welfare. The very purpose of background screening is to protect students and ensure their safety. LMA's failure to adequately protect its students and ensure their safety further supports the fact that the School Board had substantial basis to immediately terminate the Contract pursuant to section 1002.33(8)(c). Eddie Cantrel Hundley's Presence on Campus, with Permission of LMA's Governing Board, Constituted an Immediate and Serious Danger to the Student's Health, Safety, and Welfare Eddie Cantrel Hundley served as LMA's founder, principal, and CEO for the 2018-2019 school year. Mr. Hundley's employment agreement described his responsibilities as principal to include managing and overseeing all of the day-to-day operations of the school, which encompassed effective management of all functions, including, but not limited to: facilities, transportation, staff, faculty, food service, safety and security. With respect to his role as CEO, Mr. Hundley described his job responsibilities to include maintaining a "visible and accessible presence to the school's families and the local communities"; "supervising and directing the corporation's day- to-day activities and affairs"; and executing all decisions approved by the Governing Board. According to Mr. Hundley, he was "always" CEO. Although he appeared to be reluctant to admit this when testifying at hearing, as CEO, "the buck stopped" with Mr. Hundley. No others supervised Mr. Hundley, except for LMA's Governing Board. Also, no other individuals directly reported to the Governing Board, except Mr. Hundley. According to Mr. Hundley, as both CEO and principal, he was responsible for ensuring that the appropriate people were hired for the appropriate roles. LMA Governing Board Chair, Christine Dawson, testified that Mr. Hundley only acted as principal "when necessary" since the role of principal was not required. Ms. Dawson further explained that Mr. Hundley's role as principal was only necessary when "the district needed to require that a principal be at their meetings" or when the district, media, school, and board "recognized and noted" Mr. Hundley as principal. When asked about Mr. Hundley's duties as principal, Ms. Maxfield asserted her Fifth Amendment right. When asked about Mr. Hundley's duties as CEO, Ms. Maxfield asserted her Fifth Amendment right. When asked whether Mr. Hundley worked at the school each day when he was not CEO or principal, Ms. Maxfield asserted her Fifth Amendment right. When asked whether Mr. Hundley came to school each day, Ms. Maxfield asserted her Fifth Amendment right. On March 8, 2019, ALJ Lynne A. Quimby-Pennock issued a Recommended Order to the EPC (DOAH Case No. 18-5733PL), recommending that Mr. Hundley's educator's certificate be revoked for a period of five years pursuant to section 1012.795(1), thereby denying him the right to teach or otherwise be employed by a district school board or public school in any capacity requiring direct contact with students. Judge Quimby-Pennock recommended revocation due to Mr. Hundley's decision to give a positive reference in his official capacity as principal to another school district in support of a former employee, who was under investigation for having an inappropriate relationship with a minor. With respect to her findings of fact, Judge Quimby- Pennock concluded that, at the time Mr. Hundley gave the reference, which included Mr. Hundley answering "no" to the question of whether he had any reason to believe that the individual should not work with children, Mr. Hundley was aware of three different investigations into the employee, all involving allegations of inappropriate conduct with a student. Ms. Dawson testified that in response to the Recommended Order, the Governing Board decided on April 24, 2019, to remove Mr. Hundley's title as principal. The Governing Board also allegedly decided that Mr. Hundley would only have "supervised access" to students moving forward, meaning that Mr. Hundley would "not be alone with students." However, no one exceeded Mr. Hundley's rank at the school, and no one was assigned to accompany or supervise Mr. Hundley's interactions with students. The Governing Board placed no real restrictions on Mr. Hundley. Although Mr. Hundley's title as principal was eliminated, he remained CEO. The Governing Board did not remove or change Mr. Hundley's duties or restrict Mr. Hundley's ability to walk around campus or speak with students. Mr. Hundley also continued to use his same office on campus. Mr. Hundley found no reason to move his office. On May 13, 2019, the EPC issued a Final Order adopting Judge Quimby-Pennock's Recommended Order, including the revocation of Mr. Hundley's educator's certificate for a period of five years pursuant to section 1012.795(1). Even though the Governing Board members received the EPC's Final Order, they did not take any additional action with respect to Mr. Hundley's role as CEO or with respect to Mr. Hundley's presence on campus with students. On or about May 30, 2019, Ms. Dawson received a letter from Chief Randy Kosec, Jr., of the Florida Department of Education's Office of Professional Practices Services. In that letter, Chief Kosec notified Ms. Dawson of the EPC's revocation of Mr. Hundley's educator's certificate and asked if Mr. Hundley was still employed by or working on behalf of LMA. In the event that the answer was yes, Chief Kosec asked Ms. Dawson to explain Mr. Hundley's duties and how those duties could be carried out without Mr. Hundley having direct contact with students. Ms. Dawson waited until nearly a month later to respond to Chief Kosec's May 30 letter. When Ms. Dawson did finally respond on June 25, 2019, she explained that the Governing Board decided at its last board meeting that Mr. Hundley would no longer serve as principal, but would continue to serve as CEO/Founder of LMA. According to Ms. Dawson, LMA's last board meeting was held on April 24, 2019. Ms. Dawson further explained that Mr. Hundley's "executive functions," included "senior level leadership and oversight, strategic planning, program selection, and development of partnerships and resources beneficial to LMA." Mr. Hundley did not limit his future activities to these designated areas of responsibility. Subsequent to April 24, 2019, and throughout the month of June, Mr. Hundley continued to go to LMA's campus approximately three-four days per week to perform his duties as CEO. Video surveillance introduced into evidence shows Mr. Hundley in the cafeteria, while students are present, on June 18, 2019, throwing a ball with students in the cafeteria on June 20, 2019, and speaking with students in the gym on June 24, 2019. When asked whether LMA paid Mr. Hundley in June for work performed at LMA, Mr. Hundley asserted his Fifth Amendment right. LMA students were present on LMA's campus in both June and July of 2019 to take classes for credit recovery and as a part of the 21st Century Community Learning Centers Program ("21st Century"). The 21st Century is a program that supports the creation of community learning centers to provide academic enrichment opportunities, "particularly students who attend high- poverty and low-performing schools." Programs must include remedial educational activities and academic enrichment learning programs, mathematics and science education activities, tutoring services, and recreational activities. The state awards eligible entities funds to carry out 21st Century programing. LMA was the recipient of such funds, and had over 100 students enrolled during the 2019 summer months. On or about July 2, 2019, Chief Kosec responded to Ms. Dawson's June 25 letter, stating that he understood that Mr. Hundley would be serving as CEO/Founder of LMA, but that Ms. Dawson's response failed to explain how Mr. Hundley could carry out his duties without direct contact with students "which would mean that he would not be on campus at times when students are present, especially the function of 'senior level leadership and oversight.'" Ms. Dawson never responded. On July 16, 2019, Florida Commissioner of Education Richard Corcoran e-mailed Ms. Dawson and others, including, but not limited to, Governing Board members James Ward, C.J. Czaia, School District Superintendent Cynthia Saunders, and School Board General Counsel Mitchell Teitelbaum, to discuss his concerns regarding Mr. Hundley's ongoing presence on LMA's campus. In that letter, Commissioner Corcoran summarized the ruling of the EPC and the restrictions imposed upon Mr. Hundley as the result of the five-year revocation received by Mr. Hundley. The Commissioner stated that Mr. Hundley's actions giving rise to the revocation "had in fact jeopardized the healthy [sic], safety, and welfare of students. . . . As a result of the actions taken by the EPC, Mr. Hundley cannot legally perform the duties of a school administrator." If he cared as much about LMA and its students as he professes to, this language alone should have resulted in Mr. Hundley removing himself from any active administrative duties with LMA. When asked what action, if any, was taken in response to Commissioner Corcoran's July 16 correspondence, Ms. Dawson testified that "[t]he action taken happened on April 24th," when the Governing Board removed Mr. Hundley's title as principal and "addressed the direct contact with students, our interpretation of it, through our research and the law." The School Board argued that, notwithstanding the Governing Board's alleged interpretation of law, the plain meaning of the applicable statute is clear. An administrator whose educator's license is revoked cannot be employed in any capacity requiring direct contact with students for the duration of the revocation period, pursuant to section 1012.795. The Florida Department of Education has additionally interpreted this statute to mean that an individual cannot be employed in a position that would require him to be on campus while students are present. Despite the law's clear language and the Commissioner of Education's letter quoting the same, Mr. Hundley was back on campus the following day, July 17, 2019. In fact, video surveillance on this date shows Mr. Hundley speaking with students and hugging a student in the cafeteria. When asked at his deposition in what capacity he worked in July 2019, Mr. Hundley asserted his Fifth Amendment right. On July 16, 2019, Commissioner Corcoran also e-mailed Superintendent Cynthia Saunders and School Board Chair Dave Miner. Analogous to his July 16 correspondence to the LMA Governing Board, Commissioner Corcoran expressed extreme concern regarding Mr. Hundley's presence on campus. After receiving Commissioner Corcoran's detailed letter expressing his concerns with Mr. Hundley being on the LMA campus following the revocation of his certification, Superintendent Cynthia Saunders, School Board Member Reverend James Golden, and School Board General Counsel Mitchell Teitelbaum met with two of LMA's Governing Board members, individually, to ask that they remove Mr. Hundley from campus. The Governing Board did not cooperate. On July 22, 2019, Mr. Hundley sent an e-mail to LMA staff with the subject title, "moving forward." The e-mail included an attachment, which stated: After careful consideration and appreciation for the events of the past several years and with specific interest in obtaining the peaceful resolution of the issue of my leadership at LMA, I am stepping down from my position as Principal, effective immediately. . . . The revocation of my licensee [sic] was an action taken by an overreaching law judge that is being exploited by a biased school district and misinformed commissioner of education. Our own LMA Board disagreed with their erroneous findings in consideration of a state statute and kept their confidence in me as I remained in place in my role at LMA. . . . Rest assured, I will continue to provide the needed guidance and direction to the school leadership to ensure the progress of our mission of providing the best possible teaching and learning experience for all students . . . . Prior to that date, despite the testimony that the Governing Board had removed Mr. Hundley as principal of LMA on April 24, 2019, LMA staff was unaware of any changes with respect to Mr. Hundley's role as CEO or principal. Mr. Hundley's last day on campus was July 24, 2019, the same day that the School Board issued its Notice of Immediate Termination pursuant to section 1002.33(8)(c). It is undisputed that Mr. Hundley continued to come to campus until the School Board terminated the charter. It is undisputed that Mr. Hundley remained CEO even after issuance of the May 13, 2019, EPC Order, since even his e-mail of July 22, 2019, "stepping down" as principal after having been removed from the post by the Governing Board on April 24, 2019, did not include a statement that he was stepping down as CEO. It is undisputed that students were on campus for the 21st Century program and for credit recovery during the summer months. It is undisputed that Mr. Hundley continued to have direct contact with students while on campus. Finally, even if Mr. Hundley did nothing to harm any student while on campus after his certification was revoked by the EPC, it is undisputed that his presence on campus, by operation of law, posed a danger to the students' health, safety, and/or welfare, due to the revocation of his educator's certificate. This evidence remains unrebutted due primarily to his refusal to testify to the essential elements leading to the Notice of Immediate Termination. Respondent Failed to Rebut Any of the Foregoing Evidence and Failed to Otherwise Prove Any of the Allegations Asserted in its Defense On July 23, 2019, the School Board held its regularly scheduled School Board Workshop ("Workshop"). The Workshop had an agenda item for the discussion of the financial condition of LMA. During the Workshop, Mitchell Teitelbaum addressed the School Board regarding the immediate and serious danger to the health, safety, and welfare of LMA students, including the concern related to Mr. Hundley's continued presence on campus despite the Final Order of the EPC revoking his educator's certificate pursuant to section 1012.795. Tammy Taylor, director of finance, and CFO Heather Jenkins addressed the dire financial condition of LMA. During the Workshop, Mr. Teitelbaum presented multiple documents to the School Board regarding LMA's continuous failure to cooperate with the School Board and refusal to provide essential information necessary to ensure that the health, safety, and welfare of its students were being met. During the Workshop, 13 members of the public signed up for the public comment portion of the meeting, and approximately 12 community members spoke in support of LMA. At the end of the Workshop, School Board Member Scott Hopes requested that Chairman Dave Miner amend that evening's School Board meeting agenda to address whether the School Board should assume the responsibility of the continuing operation of LMA and immediately terminate its charter. Later that same day, July 23, 2019, the School Board hosted its regularly scheduled meeting. At the beginning of the meeting, School Board Member Hopes moved to amend the agenda to include the issue of LMA. School Board Member Golden seconded the motion. The amended agenda was adopted unanimously. During the public comment portion of the School Board meeting, 41 members of the public signed up to participate, including a teacher from LMA who spoke about her 2018-2019 employment contract and unpaid wages. Approximately 23 members of the public spoke in support of LMA. Notably, Ms. Maxfield spoke in support of LMA, and Mr. Hundley was in the audience. At the conclusion of the public comments, Chairman Miner opened the discussion on the LMA topic. The School Board discussed the immediate and serious danger to the health, safety, and welfare of LMA students. School Board Member Hopes made the following motion: Approval of the Manatee County School Board to: Terminate the Charter of Lincoln Memorial Academy immediately in accordance with section 1002.33(8)(c), Florida Statutes, and section 1(d) of the Charter between the School Board of Manatee County and Lincoln Memorial Academy, Inc., d/b/a Lincoln Memorial Academy; Take over the operational control of Lincoln Memorial Academy Charter School and assume and continue the operation of the Charter School; Forthwith appoint an appropriate person to act as Interim Principal of the Charter School after requesting the School District administration to provide, if available, the names of appropriate candidates with their qualifications who are willing to serve as Principal; Direct the School District Administration to take steps to immediately secure all Lincoln Memorial Academy Charter School property; Take steps to prepare the Charter School to timely open for the 2019-2020 school year with appropriate staff, supplies and equipment; Authorize a forensic audit of the finances and property of the school. The School Board voted on the motion made by School Board Member Hopes, adopting the motion four to one, with James Golden, Scott Hopes, Gina Messenger, and Dave Miner approving the motion, and Charles Kennedy rejecting the motion. The day after the School Board meeting, on July 24, 2019, the School Board issued a written Notice of Immediate Termination. The School Board then issued an Amended Notice of Immediate Termination on August 5, 2019. As previously addressed, the Contract only allows LMA 30 days from written notice of a breach to cure "absent any circumstances permitting immediate termination." Under circumstances presenting grounds for immediate termination, such as a serious and immediate danger to the health, safety, and/or welfare of the students, the Contract does not require the Sponsor to issue written notice to the school before it immediately terminates a charter. However, even if Petitioner had an obligation to provide LMA notice and an opportunity to cure, as LMA argued at hearing, Petitioner adequately provided such notice. For example, following numerous meetings with Ms. Maxfield and unfulfilled requests for documentation and information, School District CFO Heather Jenkins notified Ms. Maxfield on May 29, 2019, that LMA was in a deteriorating financial condition pursuant to section 1002.345 and as a result, both LMA and the School District had a statutory obligation to reach a consensus on a corrective action plan by June 28, 2019. Ms. Jenkins followed up on both June 10, 2019, and June 21, 2019, with additional requests for information and documentation and proposed revisions to LMA's corrective action plan. LMA failed to adequately respond or otherwise address the issues identified by Ms. Jenkins. On or about July 8, 2019, Ms. Jenkins summarized her numerous attempts to work with LMA in a Notice of Non-Compliance addressed to LMA's Governing Board. This notice included a copy of each attempt by the School Board to work with LMA to reach a consensus on a corrective action plan, demonstrating that LMA knew long before receipt of this July 8, 2019, notice that it had a statutory obligation to develop a corrective action plan with the School Board. Regardless, however, and consistent with Petitioner's overall contention that additional notice was not required prior to immediate termination, section 1002.345(5) provides that "[t]his subsection does not affect a sponsor's authority to terminate or not renew a charter pursuant to s. 1002.33(8)." During this same time frame, the School District also issued LMA numerous notices of noncompliance and/or contractual breach regarding a variety of other related topics. For example, on April 1, 2019, Director of District Support Frank Pistella notified Ms. Maxfield that the School District had received a letter from the Florida Department of Management Services, Division of Retirement, stating that LMA had not paid FRS contributions for two months. On June 25, 2019, Ms. Jenkins e-mailed Ms. Maxfield to notify her that the School District received an alert that LMA failed to make payroll despite the fact that LMA cashed its final 2019 Referendum Disbursement in the amount of $61,288.75 and its June FEFP disbursement in the amount of $261,009.97. Ms. Jenkins requested confirmation and documentation that LMA fully paid all employment contracts and confirmation that LMA fully paid FRS payments due to employees. Ms. Jenkins also sent this e-mail to Mr. Hundley, Ms. Dawson, and other members of the Governing Board. On or about July 3, 2019, Dr. Pistella notified LMA's Governing Board members of their failure to comply with sections 121.78 and 1002.33(9)(k)2. Specifically, section 1002.33(9)(k) requires the governing body of a charter school to annually report its progress to the Sponsor and the Commissioner of Education. Section 1002.33(9)(k) additionally requires the charter school to report its financial status, "which must include revenues and expenditures at a level of detail that allows for analysis of the charter school's ability to meet financial obligations and timely repayment of debt. In the July 3, 2019, letter, Dr. Pistella not only quoted the statutory language, but also listed every single time that the School District requested proof of LMA's FRS payments and included attachments evidencing the same. On or about July 16, 2019, Dr. Pistella sent the LMA Governing Board and Mr. Hundley a letter summarizing each and every time the School District attempted to notify LMA of statutory and contractual breach and/or requested unfulfilled requests for information between April 1, 2019, and July 12, 2019. This July 16, 2019, correspondence served as a cumulative notice and summary of all prior correspondence with LMA regarding these issues. This letter also included every prior notice cited therein as an attachment. The School Board again sent this correspondence, and all of its attachments, to LMA as an exhibit to the Notice of Immediate Termination sent to LMA on July 24, 2019. LMA received this correspondence and was notified of all prior attempts by the School Board to notify LMA of its statutory and contractual violations not once, not twice, but at least three times. LMA does not dispute that it received the foregoing notices. And more importantly, LMA has not offered any evidence rebutting the fact that the circumstances identified above as grounds for Petitioner's immediate termination of LMA, i.e., Mr. Hundley's ongoing presence on campus, LMA's financial mismanagement, LMA's inability to pay for food deliveries, LMA's inability to pay the water bill, and LMA's failure to properly background screen employees, posed an immediate and serious danger to LMA students. Regardless of whether notice was issued, substantial basis existed to terminate LMA's charter pursuant to section 1002.33(8)(c). As evidenced by the plain terms of section 1002.33(8)(c) and the Contract, opportunity to cure is not afforded under these circumstances. During the hearing and his deposition, Mr. Hundley did not dispute the fact that LMA is in significant debt, but suggested that Petitioner was to blame with respect to LMA's current financial state and current inability to ensure the health, safety, and welfare of its students. For example, Mr. Hundley testified that LMA did not receive Title I funds when it should have and that LMA should have received "at least" $283,000.00 in Title I funds, with a per pupil allocation of at least $800. According to Mr. Hundley, this alleged delay of LMA's receipt of Title I funds and receipt of less Title I funds than initially projected, impacted LMA because "[w]hen you need to extend [sic] funds before you can get them back, if you don't have a sizeable reserve, that can become problematic if those funds are not being reimbursed on [sic] a timely manner and you're having to pay them out continuously.” Mr. Hundley's contentions that LMA's current financial state and current inability to ensure the health, safety, and welfare of its students is a result of any act or omission by the School Board, are not supported by any evidence in the record. To the contrary, the undisputed evidence shows that the School District paid LMA a total of $4,095,973.08 in federal, state, and local funding. Included in the $4,095,973.08 is the $3,096,731.26 in FEFP funding that LMA received between July 2018 and July 2019, with the last payment of $281,229.85 being issued on or about July 10, 2019. The $4,095,973.08 total also includes $150,256.00 in Title I funds. Title I is a federal program designed to mitigate the impact of poverty on students. The application for Title I funds is district-wide, meaning one application is submitted on behalf of the entire School District. Poverty rankings are based on a school's Community Eligibility Provision ("CEP") classification or free and reduced lunch applications. The amount of funds distributed to each school depends upon two factors: (1) the number of enrolled students and (2) the school's poverty level pursuant to a "rank and serve" system. "Rank and serve" means that the School District cannot give a school with a lower poverty level more funds than a school with a higher poverty level. As such, it is not only the school's poverty that matters, but also the school's poverty level in relation to the poverty of other schools. Accordingly, the amount of Title I funds issued may fluctuate from year to year. While FEFP funds, and other state and local funding, can be used to run a school's core program, federal funding, such as Title I funds can only be used "to supplement, not supplant." As such, Title I funds can be used for supplemental materials, supplemental positions, parent involvement, and after-school programs. Whether a school is properly using Title I funds for supplementing, rather than supplanting, depends upon whether the school can operate without relying on the Title I funds. The school must be able to run its program even in the absence of Title I funds. As a result of the charter school conversion, LMA was considered a new school; it was no longer Lincoln Memorial Middle School. As a new school, the Department of Education assigned LMA a master school ID number. Because LMA was a new school, it had to establish its eligibility as a Title I school, despite any prior history as Lincoln Memorial Middle School. As a new school, the allocation set forth in LMA's application was based upon projections for the 2018-2019 school year. Accordingly, the School District assigned LMA a "K Code," signifying that LMA was projected to be a Title I school, but that LMA's eligibility could not be proven until their receipt of Survey 2 data in October 2018. Once received, the Survey 2 data would then replace the initial projections with actual numbers. Title I applications are generally approved between September and December. In the meantime, LMA was permitted to submit requests for reimbursement to the School District based upon the projected allocation. The School District worked with LMA on an individual basis to assist in planning, purchasing, and reimbursement with respect to Title I funds. In correspondence and meetings with LMA, the School District repeatedly reminded LMA that its initial application for Title I funds was based on projections and that LMA's projections would be updated with the October 2018 Survey 2 data. In September 2018, the Department of Education notified the School District and LMA that LMA must revise its application by removing the 1.6 multiplier generally assigned to CEP schools because it was a new school. The School District admitted its error in previously informing LMA that the multiplier would apply. With the multiplier removed, LMA's per pupil allocation changed from a projection of $283,000.00 to $117,000.00. Despite the $117,000.00 allocation, the School District used other funds to increase LMA's total allocation to $150,256.00, the most the School District could give pursuant to the rank and serve system. Although Mr. Hundley disagreed with the amount of Title I funds LMA was entitled to receive, he did not disagree with the fact that Title I funds can only supplement, not supplant. When asked how Title I funds can be used during his deposition, Mr. Hundley answered: "It can be used to supplement. It cannot be used to supplant. It can be used for certain materials." When asked a similar question during the hearing, Mr. Hundley again admitted that LMA could not rely on Title I funds for core costs and expenses, yet his testimony consisted in part of the statement that "I was absolutely relying on Title I funds to run my school." As evidenced by the foregoing testimony, Mr. Hundley admits that LMA could not use Title I funds for core costs and expenses while also admitting that he was relying on Title I funds to do just that. Yet, Mr. Hundley, who has 20 years of experience working in Title I schools and is "the most senior Title I principal in Manatee County," continues to suggest that LMA's receipt of $150,256.00 versus the $283,000.00 initially projected in Title I funds caused LMA's financial woes and related failure to ensure student health, safety, and welfare. While the difference between $283,000.00 and $150,256.00 is a significant amount ($132,744.00), it is less than 10 percent of the LMA shortfall discovered by CRI of more than $1.5 million. This suggestion that the reduced amount of Title I funds caused the downfall of LMA is both completely unreasonable and completely unsupported by any evidence or facts. Neither Mr. Hundley nor anyone else at LMA has explained, or even attempted to explain, how LMA could prevent the serious and immediate danger posed to the health, safety, and welfare of its students by being unable to meet its financial obligations for its utilities, food, insurance, and salaries of its teachers by such a large amount. LMA's CFO, Ms. Maxfield, the individual charged with overseeing LMA's budget and financials, also failed to provide any evidence in support of Mr. Hundley's suggestion that LMA's current financial situation is a result of any failure by the School District to properly disburse funds to LMA. Rather, when asked a series of financial questions on her deposition, Ms. Maxfield, in every instance, asserted her Fifth Amendment right. When asked whether LMA timely received Title I funds, Ms. Maxfield asserted her Fifth Amendment right. When asked whether LMA timely received all allocations from the School District, she asserted her Fifth Amendment right. When asked whether the School District ever withheld funds from LMA to which LMA was entitled, Ms. Maxfield asserted her Fifth Amendment right. When asked whether LMA timely received all federal, state, and local funding distributed through Manatee County, Ms. Maxfield asserted her Fifth Amendment right. When Mr. Hundley further contends that the School District's alleged rezoning of LMA impacted LMA's funding, such contention also misses the mark. During the hearing, Mr. Hundley testified that "zoning changes, as well as other actions" negatively impacted LMA's enrollment, and that this enrollment, in turn, impacted LMA's financial viability. However, when asked whether it was Mr. Hundley's testimony that he could zone children to LMA as a school of choice, he answered, "no." When asked whether Mr. Hundley understood that students who desire to go to LMA would affirmatively have to choose to go there as a school of choice, Mr. Hundley answered, "[a]s a charter school, yes, they can choose to go to LMA." As admitted by Mr. Hundley, enrollment by students at LMA is based on the affirmative choice of students and parents, not upon zoning. Mr. Hundley's contention regarding zoning restrictions is without merit. As evidenced by the foregoing, LMA has received all funds to which it is entitled. LMA's financial deterioration and the debilitating effects of that deterioration on LMA's ability to ensure student health, safety, and welfare are the result of poor decision making, large payments to its administrators, and misuse of funds by LMA leadership, not the result of any failure by the School District or any other entity to disburse funds. These facts remain unrebutted. LMA Attempted to Paint a Wholly Different Picture of the Events Leading to the Notice of Immediate Termination of the Charter School With its CEO/principal, Mr. Hundley, and its CFO, Ms. Maxfield, invoking their Fifth Amendment rights against self- incrimination hundreds of times in their depositions, LMA was left with an impaired case in trying to give its defense to the immediate termination of the charter. By invoking the Fifth Amendment on any matters regarding LMA's expenditures, payment of payroll taxes, FRS contributions, unpaid invoices to food and educational vendors, payment of earned Best and Brightest awards by hard-working teachers, and even payment of the water utility bill, LMA focused only on its position of the reason LMA was created. LMA attempted repeatedly to place blame for any issues raised in the Notice of Immediate Termination on the School District, accepting no responsibility whatsoever. The hearing room was filled throughout the proceedings with concerned LMA parents, teachers, and staff, none of whom were identified by name or called to testify on any issues, let alone those relevant to whether LMA should lose its charter. Ostensibly, the respectful and close-listening audience was there to support the fact that the charter school was created by a groundswell of concerned parents and community members, who wanted a better education for their children and neighbors than they believed was previously being offered at Lincoln Memorial Middle School. The undersigned has no reason to doubt their sincerity and desire to want the best possible education for the students, but LMA did not take advantage of this resource to support its case. None of the parents, teachers or staff, with the exception of LMA's head custodian, Mr. Saul Johnson, its HR vendor through its leader Ms. King, and Mr. Hundley testified. With the limitations on their knowledge of the essential facts leading to the immediate termination (Mr. Johnson and Ms. King) and the limitation of what Mr. Hundley would testify about once he repeatedly invoked his Fifth Amendment right, the picture of a high-functioning charter school painted by LMA was incomplete, at best. The substance of Mr. Johnson's testimony was that the School District, prior to the creation of LMA, allowed persons having "no contact with students" restrictions to be in buildings where students could be found during the school day. This testimony was offered, presumably, to support the fact that Mr. Hundley should be allowed on campus during the 21st Century program, regardless of the fact his certification as an educator had been revoked by the EPC. The testimony offered by Mr. Johnson, while earnest and factual to the best of his knowledge, is not relevant to the issues in this matter. Mr. Hundley's contact appeared, via video and photographs admitted into evidence, to be direct and substantial when he entered LMA while the summer program was underway. Mr. Johnson's testimony that a staff member may have been on some part of campus where students could be present was based wholly on hearsay and without knowledge of the restrictions, if any, imposed on that specific individual. Even if true and accurate, the staff member discussed by Mr. Johnson was neither in a supervisory role, nor in a role that required direct contact with students. The gentleman described was a custodian. The testimony is discredited as inadmissible hearsay. Further, testimony offered by Mr. Hundley, although limited by his asserting his Fifth Amendment right, conflicted with that given by LMA's Governing Board chair, Ms. Christine Dawson. Ms. Dawson and Mr. Hundley contradicted each other and themselves when attempting to answer simple questions, such as when the Governing Board removed Mr. Hundley's title as principal. Specifically, Ms. Dawson testified that Mr. Hundley's job title changed following a Governing Board meeting on April 24, 2019, while Mr. Hundley testified that his job title changed in mid-June. As found previously, Mr. Hundley notified the staff at LMA that he was "stepping down" as principal on July 16, 2019. To further compound the lack of consistent testimony regarding when Mr. Hundley's responsibilities as principal ceased, Ms. Maxfield simply asserted her Fifth Amendment right when asked about the subject at deposition. Even when Mr. Hundley "formally" renounced his title as principal, he notified the LMA staff that he would "continue to provide the needed guidance and direction to the school leadership." When asked at her deposition about Mr. Hundley's responsibilities as CEO as opposed to principal, Ms. Maxfield again asserted her Fifth Amendment right. The facts presented by Mr. Hundley, Ms. Dawson, and the reasonable inferences drawn from Ms. Maxfield's asserting the Fifth Amendment when asked about Mr. Hundley's duties compel the undersigned to conclude that Mr. Hundley acted dishonestly towards LMA's staff, the very parents he testified stood behind him as the individual to bring Lincoln Memorial Middle School to a place of prominence in the educational system of Manatee County as LMA, School District personnel, and in these proceedings. One fact rings true here regarding Mr. Hundley: the undersigned believes that the parents, staff, and community served by LMA put their faith in him to lead them to better educational opportunities for their children and neighbors. His actions in more than doubling his salary and expense account when compared with his previous experience in Manatee County, in hiring Ms. Maxfield at a high salary and with an expense account, in hiring an HR vendor with whom he has a personal relationship, and in not taking any responsibility for the whereabouts of more than a $1.5 million shortfall out of an annual allocation of slightly more than $4 million, as significantly proven by the CRI Report, leave the undersigned with only one conclusion. Namely, while Mr. Hundley's motives in helping found LMA may have started as pure, they quickly became about the riches he could accumulate at the expense of the education, health, safety, and welfare of LMA's students and their families, as well as the staff, who bought into the college preparatory program he promised to provide them. At the center of LMA's case at hearing lies the pointing of fingers at the School District. Repeatedly throughout LMA's presentation of its case, their Qualified Representative, Mr. Norwood, asked School District personnel how many times they had visited LMA during the first year of its operations; why had they not visited more frequently, especially those who testified they had never visited the campus since that was not part of their job duties; and, above all, why the School District did not intervene and attempt to take over or counsel LMA's staff on the School District's concerns. Moreover, Mr. Norwood asked witnesses for the School District why they did not send more "Notice Letters of Breach of Contract," every time a real or perceived shortcoming on the part of LMA was made known to the School District. The response was invariably from the School District witnesses was that they repeatedly attempted to have serious questions answered concerning payroll taxes, FRS contributions, payment of allocated funds for Best and Brightest award winners, and why the water utility bills were constantly in arrears. LMA refused every request to respond to these issues, leading, ultimately, to the School District, after the vote by the School Board, to proceed with the most drastic measure (and the only one remaining) imaginable, issuing a Notice of Immediate Termination of LMA's charter. The testimony presented by both parties to this proceeding leads the undersigned to the conclusion that no tools were left for the School District in dealing with a charter school that failed to address their repeated efforts at gathering information. Another factor that has not gone unnoticed by the undersigned in the course of these expedited proceedings is that LMA's pattern of refusing to respond to requests for information made by the School District during discovery has continued into these proceedings. The undersigned can only imagine Petitioner's frustration with the constant refusal of LMA to provide the documents requested during discovery, with the common refrain of "you already have the documents because you (the School District) seized all of LMA's records, computers and laptops, leaving us (the former staff) with nothing to provide you." However, this cry by LMA fails to ring true. No HR company, CFO, school principal, or school CEO, in this 21st century digital age, can continuously be deemed credible when asserting that no backup, whether hard copy, DVD, thumb drives, or in the Cloud, exists. When forensic accountants and long-time public officials cannot find all of the necessary records to continue the operation of the school, just two days after being taken over by the School District, to answer the questions about payroll taxes, FRS contributions, Best and Brightest awards, food service menus and purchases, and utilities payments, someone is hiding the ball. No evidence was presented through testimony, and certainly not through documentation, that LMA provided the complete records of their activities in this first year of the charter school's operations. The presumption here must be that the complete records were destroyed, lost, or intentionally withheld from production by LMA to the School District. Even with limited records available, however, the School District has made a strong case for immediately terminating the charter. When the two principal leaders of LMA refused to answer most of the questions posed to them in deposition on the grounds their answers might tend to incriminate them, no conclusion can be reached by the undersigned other than that those records have been kept from the view of the School District intentionally and improperly. Therefore, following the issuance of this Final Order, the undersigned will reserve jurisdiction on the issue of sanctions for refusal or failure by LMA to provide all the documents in its or its vendors' possession. A hearing will be held solely on the issue of the appropriate sanctions to be imposed. The parties will be given the opportunity to state they intend to rely on the previous motions and responses filed regarding sanctions, or, in the case of LMA, to offer additional reasons for not complying with the reasonable discovery requests, even when given the opportunity to continue to do so after the hearing. LMA will also be permitted to provide any defenses and mitigating factors, as permitted by law, concerning their ability to pay any monetary sanctions that might be awarded by the undersigned. To summarize, the facts, corroborating evidence, and corroborating testimony offered by Petitioner in support of its decision to immediately terminate LMA's charter remain unrebutted and undisputed. Testimony by itself without any records is not sufficient. Moreover, the testimony provided by LMA is, largely, not credible. LMA has failed to produce any records or documentation corroborating or supporting the inconsistent, evasive, and ultimately non-credible testimony of its witnesses.
The Issue The issue is whether Respondent's policy relative to the applicability of the maximum class-size statute to charter schools is a rule as defined in Section 120.52(16), Florida Statutes, which has not been adopted as required by Section 120.54, Florida Statutes.1/
Findings Of Fact Petitioners own and/or operate eight charter schools in Florida. They have been "substantially affected" by Respondent's maximum class-size policies at every level of implementation. Respondent's regulatory scheme requires charter schools to submit information and to comply with statutory class-size levels. Respondent's determination of non-compliance triggers penalties and adverse consequences for charter schools. Respondent has a comprehensive data management system for public school reporting and accountability. The system includes detailed definitions and reporting requirements on many facets of public education, including information on students, teachers, and public school facilities. This information has been incorporated by reference into Florida Administrative Code Rule 6A-1.0014, as database manuals. For example, the manuals contain a detailed student element using the Florida Inventory of School Houses (FISH) and a Classroom Identification Number, which creates an identifier for every classroom in every building and facility in the school district. Charter schools that do not have a "FISH" number may have one generated. Respondent uses a computational algorithm to calculate class size. The algorithm uses data elements and correlations to create classroom ratios. Many of the data elements are required by statute and/or existing rules for all public schools, including charter schools. For each school that does not meet class-size compliance requirements, a portion of funds attributed to that school will be transferred from operational funding to capital outlay funds. The amount transferred is equal to the full-time equivalent funds for the number of students over the cap. Respondent makes the initial transfer calculation, which is then replicated and approved by the State Board of Education, the Florida Education Finance Allocation Committee, and the Legislative Budget Committee. In November of 2007, Respondent calculated class size on the individual classroom level for all public schools, including charter schools. Respondent utilized data from the October student membership survey, which consists of data collected by the Respondent from public schools. The algorithm used by Respondent to calculate class size, including the data collected in November 2007, was not adopted as a rule until after the commencement of this proceeding. Class-size compliance forms, mandated by Respondent for use by charter schools that are determined by Respondent not to be in compliance with the maximum class-size act, have also not been adopted by any formal rulemaking process. Respondent's policies include an informal process for "appealing" adverse determinations. The informal appeal process has not been adopted as a rule. Respondent has published several Technical Assistance Papers, including TAP Nos: FY2005-04 and FY2006-01, applying the maximum class-size act and a computational class-size algorithm to charter schools. These papers were not adopted through the formal rulemaking process. Respondent withdrew TAP Nos: FY2005-04 and FY2006-01 by memorandum dated May 22, 2008. However, Respondent still maintains its policy that the maximum class-size act applies to Florida charter schools. In 2007, charter schools reported data and received data from Respondent regarding initial class-size figures. Some charter schools appealed the class-size calculations and the resulting transfer of operational funds to the State Board of Education. Cape Coral Charter School submitted information to Respondent, leading to a downward adjustment in the funds to be transferred to capital outlay. However, Cape Coral Charter School lost funds in part because of Respondent's initial determination that Cape Coral Charter School had failed to comply with the maximum class-size act. Respondent also formally determined in February 2008, that Cape Coral Charter School was ineligible to offer a voluntary pre-kindergarten program because of its 2007 determination that Cape Coral Charter School was not in compliance with the class-size strictures. The Florida Education Finance Program Appropriation Allocation Conference verified the transfer of capital outlay categorical funds as recommended by the Commissioner of Education on January 17, 2008. The Commissioner of Education recommended transfers in funds based upon class-size compliance to the State Board of Education, which approved the transfers on February 4, 2008. On February 21, 2008, the Legislative Budget Committee approved the transfer calculations. Florida Administrative Code Rule 6A-1.0014 incorporates by reference the database manual that Respondent uses to collect data from public schools on teachers, students and classroom space. The amendment to the rule, which became effective November 26, 2008, consists of an additional page in the database manual (Appendix AA). Appendix AA sets forth Respondent's class-size algorithm, which has been in use for several years. Appendix AA does not address the applicability of the maximum class-size act to Florida charter schools.
Findings Of Fact On February 15, 1980, the Petitioner held a current, valid Florida Teaching Certificate, was employed by the Duval School Board, and held tenure under the Duval County Teacher Tenure Act. The Petitioner was charged by the School Board with violating the provisions of Sections DKHA, DKHB and JHC of the Duval County School Board Policy Manual; and policies set out at Pages 12, 30, 37, 40 and 43 of the Operational Manual for Internal Accounts Activity Fund of the Duval County School Board. By Order entered March 17, 1980, the Petitioner was found guilty of all of the charges, and was discharged as a teacher in the school system. [Petitioner's Exhibits 2 and 4] Section DKHA of the Policy Manual establishes procedures for collecting and depositing money that is taken in connection with school activities. Section DKHB establishes procedures for disbursement of funds by classes or clubs at the schools. Section JHC sets procedures for charging admission to entertainment functions sponsored by schools or allied organizations. The polices set out at Pages 12, 30, 37, 40 and 43 of the Operational Manual set more specific guidelines and procedures to be followed in taking and collecting money in connection with school activities. [Petitioner's Exhibit 1] The Duval County School Board Policy Manual, including those sections at issue in this proceeding, were adopted by the School Board after a public hearing was conducted on December 16, 1974. Notice of a public hearing was published in the legal notice section of the Florida Times-Union newspaper in its issues of December 6, 7 and 8, 1974. The manual was not filed with the Department of State, and was not published in either the Florida Administrative Weekly, or the Florida Administrative Code. No citations of authority for the various policies are set out in the manual. [Petitioner's Exhibit 3, testimony of Larry J. Paulk] The Operational Manual for Internal Accounts Activity Fund, including the pages thereof at issue in this proceeding, were adopted by the School Board at a meeting on June 1, 1974. No notice was published, no public hearing was conducted, and no effort was made to promulgate the manual as a rule. The School Board construed the policies as guidelines which implemented rules, rather than as rules. [Testimony of Larry J. Paulk] Sections DKHA, DKHB and JHC of the Duval County School Board Policy Manual; and Pages 12, 30, 37, 40 and 43 of the Operational Manual for Internal Accounts Activity Fund constitute "rules" as defined in Section 120.52, Florida Statutes. [Petitioner's Exhibit 2]
The Issue Whether Respondent, Hillsborough County School Board (School Board), erred in denying the Petitioner's request to consolidate its two charter contracts into one charter agreement.
Findings Of Fact Trinity School is a Florida corporation that owns and operates two charter schools in Hillsborough County, Florida. The two charter schools are known as Trinity Lower School for Children and Trinity Upper School. Trinity Lower School for Children provides education for 425 students in kindergarten through fitth grade. Trinity Upper School serves 225 students in sixth through eighth grades. The School Board is constitutionally and statutorily charged with the operation and supervision of all K through 12 public schools in Hillsborough County, Florida. Art. IX, § 4(b), Fla. Const.; §§ 1001.32(2) and 1003.02. The two Trinity charter schools are part of the public school system and are sponsored by the School Board. § 1002.33. Trinity School was formed by a group of educators and parents of children who had attended a private Roman Catholic School that was closing. In 1999, Trinity School submitted its application to form a K through eighth grade charter school. Its application was approved by the School Board, and Trinity began operation in 1999. Trinity School's population grew steadily from its inception and in 2003, Trinity School sought to purchase a building across the street from its campus. Ms. O'Dea, the founder, principal, chief executive, and educational officer for Trinity School, explained that Trinity School learned that it would be eligible for additional federal start-up money, if Trinity School divided its charter into two separate charters. By dividing the original charter and creating a new charter school for the middle school, Trinity School was able to obtain at least $450,000.00, in federal start-up funds which was used to help purchase a building across the street from the original school, grow the number of classes, as well as increase the number of programs and teachers. In 2003, Trinity School applied for a charter for the Trinity Upper School, which would serve sixth through eighth grades. The School Board approved the charter for the Upper School, and Trinity School was able to receive the federal start-up money. The Trinity Upper School began operating under its own charter in 2004. Although two separate charters, both Trinity Schools are operated by the same parent corporation, follow the same Bank Street School principles of educational development, and are located in the same location. Further, the record showed through the testimony of Ms. Difranco, Trinity School's director of finance, that the two charter schools "actually function as one school[,] [w]e share buildings; we share a media center; we share staff; we use one accounting system." On April 3, 2008, Trinity School wrote the School Board's representative to request a change in Trinity School's financial reporting to the school district. Trinity School's letter recognized that both schools operated "under the fiscal umbrella of The Tampa School Development Cooperation [sic], but the schools' finances are reported to the district separately." Trinity School advised the School Board representative that combining the schools' financial reports would benefit "both our accounting practices and the school district." On May 15, 2008, Ms. Hodgens, the School Board's supervisor of charter schools, wrote Ms. O'Dea: After consulting with the Department of Education regarding your request to combine Trinity School for Children and Trinity Upper School, the district has been advised that you are able to combine the two schools. I will present your request to the Hillsborough County School Board regarding the combination of the two schools during your schools' contract renewal process. On March 15, 2010, the School Board wrote Ms. O'Dea concerning the renewal of the charters. The School Board informed Ms. O'Dea that "Trinity School for Children/Trinity Upper is scheduled for Contract Renewal Review[,]" and requested that a list of materials be provided for the review. On June 28, 2010, Ms. Hodgens, referencing her earlier letter dated May 15, 2008, wrote Ms. O'Dea concerning Trinity School's request to combine the charters during the contract renewal period. Specifically, Ms. Hodgens wrote: After several conversations with district staff, there is no educational benefit for students by combining the two schools. Due to this fact, the Superintendent will not be making this recommendation to the School Board at the time of your contract renewal. Trinity School and the School Board brought their consolidation dispute before the Department of Education under section 1002.33(6)(h). On March 30, 2011, Dr. Eric Smith, the Florida Commissioner of Education, entered a Mediation Report of Impasse, stating that the parties had reached an impasse and that the matter could not be settled through mediation, pursuant to section 1002.33(6)(h). Ms. Difranco, who has been Trinity Schools' director of finance for the past two years, credibly testified that both schools functioned administratively as one school, but were required to file separate fiscal reports. Furthermore, she credibly testified that creating the two separate fiscal reports for each school, results in Trinity School's accountants and personnel having to perform additional duties of separating the relevant data by school. Ms. Difranco credibly testified that she had conducted a cost analysis comparing the costs of treating the two schools as separate charters with an estimated cost of operating under one charter. According to Ms. Difranco, the savings to Trinity School would be approximately $123,000.00, a year. The largest bulk of the savings would come from a reduction in the administrative fee Trinity School pays to the School Board to administer the charter schools. Ms. Difranco estimated that the administrative fee paid to the School Board would reduce by approximately $65,000.00, a year. The reason for the reduction in administrative fees received by the School Board is the legislature's enactment of section 1002.33(20)(a), Florida Statutes (2011). Section 1002.33(20)(a), in part, changed the formula used to calculate the administrative fee charged to charter schools by district school boards. This change in the formula for funding results in a reduction of the amount of money that the School Board will receive as administrative fees from Trinity School if the two charters are combined into one charter. The School Board, in making its decision about whether or not to grant the request to combine the two charters into one charter, considered the fact that it would receive less money from the administrative fees, if the two charters were combined. Both Trinity Schools have received from the State of Florida "A" ratings and are respected charter schools. Trinity Schools, however, have not been designated as "high-performing" charter schools by the Commissioner of Education, as defined by section 1002.331, Florida Statutes (2011). The reason that Trinity Schools’ two charters do not meet the statutory definition of "high-performing" charter school under section 1002.331 is due to past negative fund balances. The record, however, showed that Trinity Schools are on the verge of eliminating the financial difficulties. Specifically, the testimony showed that in 2009-2010 school year, Trinity Schools had a negative fund balance. However, the testimony showed through Ms. Difranco that for school years 2010-2011, and the current school year 2011-2012, that Trinity Schools have met the fiscal requirements.
Findings Of Fact The hearing officer's findings of fact are hereby approved and adopted. There is competent, substantial evidence to support the the hearing officer's findings of fact. Petitioner takes his vacation between school board meetings or by asking the school board to be excused from attending said meetings. No leave time is actually used for such absences. (Petitioner's Exhibit O) Prior to 1979 the Division had not determined Cooney was an employee being paid from a regular salaries account who was eligible for FRS membership. His actual position and employment status was not questioned until 1980. Following an extensive review of Cooney's position, which had not changed since 1965, the Division determined Cooney was not eligible for FRS membership because he was not filling a regularly, established position. The 1979 rule changes defined "regularly established position", but did not redefine employee.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Division enter a final order declaring Richard W. Cooney eligible for membership in the Florida Retirement System both before and after July 1, 1979. RECOMMENDED this 6th day of September, 1984, in Tallahassee, Florida. J. LAWRENCE JOHNSTON, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 6th day of September, 1984.
The Issue Whether petitioner should be removed from the Florida Retirement System, as of July 1, 1979, on grounds of ineligibility.
Findings Of Fact Petitioner, a licensed attorney, practices law in Clewiston, Hendry County, Florida. Since at least September 1, 1970, he has continuously engaged in the private practice of law in Clewiston. On September 1, 1970, the Glades County School Board ("School Board" or "Board") hired him as the School Board attorney, a position which he continues to hold. This is a part-time position, since the Board has no need for a full-time attorney. The School Board is headquartered at Moore Haven, 16 miles northwest of Clewiston, in neighboring Glades County. The terms and conditions of petitioner's employment with the School Board have remained virtually unchanged since he was originally hired. Each year, the School Board sets his salary consisting of a monthly retainer or salary, plus a fixed amount per hour for any additional professional services or litigation required by the School Board. For the 1979-80 school year, the Board set his salary or retainer--terms which the School Board used interchangeably-- as shown by the Minutes of the July 11, 1979, meeting: 3. SALARY/SCHOOL BOARD ATTORNEY - 1979-80 Chairman Hilliard opened the floor for discussion on the salary for the school board attorney for the 1979-80 school year. After some discussion between the board and Mr. Potter, the board proposed a retainer of $750.00 per month. (annual salary of $9,000.00) plus $50.00 per hour for additional pro fessional services or litigation required by the board. ON MOTION by Sapp, seconded by Johnson, the board approved this pro- posal for school board attorney for the 1979-80 school year. (Vote: Arnold, yes; Johnson, yes; Taylor, yes; Sapp, yes; Hilliard, yes.) His salary is paid from the School Board's regular employee salary account. But as the School Board's attorney, unlike other School Board employees, he does not accrue annual leave, sick leave, or pay during vacations, holidays or illness, though when he is sick or on vacation, there is no adjustment to his salary. He is reimbursed for work-related travel and meals at the rates provided by Section 112.061, Florida Statutes (1983), and is covered by the School Board's group health and life insurance, and Workers' Compensation. Since 1970, the Board has withheld his Social Security contributions from his fixed monthly salary payments; has paid the employer's Social Security contributions on his salary payments; and has annually reported his monthly salary payments on Internal Revenue Service Form W-2. To this extent, the School Board considered him an employee and treated him the same as it treated its other employees. The legal services which he furnished the School Board are described in his employment agreement and the School Board's job description for the position: TYPICAL DUTIES: Attend all regular Board meetings and such special meetings as deemed advisable by Board Chairman or Superintendent. Be available for routine telephone or personal consultations with Board Chairman, Superintendent and Staff members. Perform legal research. Prepare or approve leases or agreements prior to execution by Board. Prepare and prosecute law suits in behalf of Board and defend law suits against Board, including any actions against Superintendent, Staff or other school district employees allegedly arising etc., unless special counsel is deemed necessary by Board Attorney with Board's concurrence. Attend the quarterly seminars/meetings of Florida School Board Attorneys Association; and any other approved by Board. Represent Board and/or Superintendent in personnel matters where appropriate, as well as student discipline matters. School Board meetings, held monthly, last approximately one and one-half hours. Litigation, although described as a typical duty, is considered extra work, and an hourly rate is charged over and above the monthly salary. Petitioner agrees that he would not knowingly accept any new clients which would cause a conflict of interest with his School Board employment. Although he has been free to turn down work assigned by the School Board, he never has--at least through 1976. As explained by Mr. Strope, Superintendent of Schools from 1968 to 1976, although petitioner was free to turn down work, he "shouldn't have." Petitioner is not required to maintain any set office hours, and his monthly salary does not vary with the number of hours' work. He is not furnished office space by the School Board. The majority of his legal work for the Board is performed at his private law office, in Clewiston. The cost of operating his law office is not a budget item in the School Board's budget. Under his employment arrangement with the School Board, he furnishes all personnel, equipment, and facilities needed to perform his services. He is responsible for supervising the secretaries who work in his private office. Occasionally, when he is at School Board headquarters in Moore Haven he will ask a School Board employee to type a document. At his request, however, the School Board will furnish him pencils, legal pads, legal periodicals and stationery. It also pays for his travel; for per diem expenses incurred while attending legal seminars or meetings; and for long distance telephone calls made in connection with his School Board employment. He is neither responsible for, nor supervises, any employee of the School Board. The School Board does not furnish him any legal secretaries or part-time attorney assistants. He has not shown what percentage, or amount, of his working hours are devoted to performing legal services for the School Board, as opposed to legal services which he performs for his other clients. Other than assigning specific legal tasks, the School Board exercises no more control over the means, methods, and manner by which petitioner performs the legal work given him than is ordinarily exercised by any client over an attorney. Because of ethical constraints and the nature of legal work, petitioner must exercise independent professional judgment. Since September 1, 1970 2/, petitioner has been enrolled in the FRS. This was accomplished by his filling out a prescribed form which the School Board then filed with the Division. The Board then began reporting him on its employee rolls. There is no evidence that the initial FRS entry form, filed with the Division, described petitioner's work duties or the nature of his employment with the School Board. Both the Board and the Division enrolled him in the FRS, believing that he was eligible for membership. The Division did not question or investigate the nature of his employment relationship with the Board until 1983. From his initial enrollment until January 1, 1975, when FRS became a non-contributory system, petitioner contributed one-half of the the required FRS contribution, while the School Board contributed the other half. Since January 1, 1975, the School Board has contributed 100 percent of his contributions to FRS. During the 1970s petitioner's membership in the FRS prevented him from participating in any other tax sheltered retirement plan. 3/ Since July 1, 1979, the Division has, by rule, given notice that consultants and other professional persons contracting with public employers are, ordinarily, ineligible for membership in the FRS. All public employers, including the School Board, have been asked to remove such persons from their retirement payrolls. Since at least July 8, 1981, petitioner was on notice that his status as an employee, and his eligibility for continued membership in the FRS, were in question. Both the parties stipulate that part-time electricians, plumbers, painters, combustion engine mechanics, air conditioning mechanics, janitors or sewage plant operators (and even other occupations) employed in 1983 by the Glades County School Board on a year-round salary basis (i.e., at least 10 consecutive months), and paid out of the School Board's regular salary and wage account, would be mandatory members of FRS by statute. (Prehearing Stip., para. E. 6)
Recommendation Based on the foregoing, it is RECOMMENDED: That the Division enter an order removing petitioner from membership in the Florida Retirement System, as of July 1, 1979; and That the Division return to petitioner and the School Board their respective FRS contributions, mistakenly made to his account. DONE and RECOMMENDED this 14th day of February, 1984, in Tallahassee, Florida. R. L. CALEEN, JR. Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 14th day of February, 1984.
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.
