An Indiana State Board of Accounts audit has cited Gary Community School Corp. Superintendent Cheryl Pruitt for collecting $30,000 in bonuses without documented school board approval.
The 11-page report, released Wednesday, stated Pruitt received $30,000 in bonuses in March 2016. A clause under her three-year contract between July 1, 2012, and June 30, 2015, provided for a $10,000 bonus per year under a “Growth Incentive Plan and Bonus to be agreed upon by the Board and the Superintendent,” it stated.
“No documentation that the School Board agreed upon or approved the amounts or the timing of the payments of the Growth Incentive Plan and Bonuses was presented for audit,” the report said.
The report asks Pruitt to repay the money. Auditors forwarded the report to the Indiana attorney general and Lake County prosecutor’s office. State auditors notified Pruitt of their findings Sept. 20.
Pruitt said Friday she believed proper procedures were followed for the bonus payouts.
“From my understanding, (the board) went through several meetings, including executive session meetings,” she said.
Pruitt said she turned in all goals to the board and went through evaluations, which would have had to be signed off by the board, the state-appointed fiscal manager and the school district’s attorney.
“If something was missed and I owe the money, I have no problem with paying it back” if it was found to be paid in error, she said.
Pruitt said she had not been contacted by the Indiana attorney general’s office or Lake County prosecutor about the matter.
When asked to clarify whether she would repay the money as requested, Pruitt said the state would need to first speak with her attorney, whom she initially declined to identify.
She then called back, saying Gary attorney Clorius Lay was representing her case. Lay, a Calumet Township board member, is also a member of the fiscal advisory board to the district’s emergency manager, a volunteer role.
In a written response, school board President Rosie Washington disputed the findings.
“(If) the board had not paid Superintendent Cheryl Pruitt the $30,000 bonus agreed upon, then the board would have illegally ‘breached’ her contract,” Washington wrote.
Pruitt’s 2012 contract could not be found on the district’s website. However, a search of past documents from 2012 also did not include Pruitt’s contract. Those documents did contain a 2016 addendum to her contract and an extension through June 2019. No mention of bonus incentives appeared in the addendum.
In the addendum, the board agreed to pay Pruitt a $136,000 base salary, plus an $18,500 annual annuity. She also received a $1,000 monthly vehicle allowance for the business use of her own vehicle.
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Lay also filed a lawsuit in October to stop the state-appointed emergency manager from meeting individually with elected school board members, stating that it violates the state’s Open Door Law. A Lake County judge recently gave the emergency manager an extension until January to respond to Lay’s complaint.
Lay said Friday he believed that Pruitt had documentation of benchmarks to be met, but the state was missing documentation that the board formally approved the bonuses to be paid in a public meeting.
“There’s no criminal liability here,” Lay said.
“Dr. Pruitt didn’t do anything, of course, but accept the money,” he said. “She worked. Her evaluations were outstanding. She basically had earned the bonus.”
School board Trustee Carlos Tolliver said he inquired into what paperwork the board considered before Pruitt’s bonus payments were paid when he joined the board in January 2017.
“I was advised that no plan was available for that review,” he said.
Tolliver said he did not believe Pruitt should have been paid the bonus due to the district’s growing debt, lack of financial oversight and poor academic record.
In 2014, the Indiana Department of Education, under Democrat Glenda Ritz, designated Gary as a high-risk district, the lone one in the state. The state stripped Gary of control over its Title I money, and Ritz sent staff members to the district to try to rectify lingering problems, especially in special education.
“One could certainly argue, that were it possible, if the superintendent review was based on performance,” Tolliver wrote to the state Nov. 4, “perhaps a ‘refund’ rather than a ‘bonus’ may have been more appropriate?”
Along with the school board, the state should also share some responsibility for its role in oversight over the district’s finances, he said.
A state law enacted earlier this year stripped Pruitt and the school board of its authority and installed a state-appointed emergency management team led by Peggy Hinckley, a retired superintendent and Gary native.
“I believe the board approved the raise. However, there was no accompanying documentation of the performance bonus metrics,” Hinckley said via text. “Dr. Pruitt remains under contract as superintendent by action of the board in Dec. 16 through June 2019.”
In September, Hinckley said her accounting team discovered the district had “no internal controls for anything” and continued to struggle to dig out of a $108 million financial hole.
“Our fiscal house is in disarray,” Hinckley told the Distressed Unit Appeal Board in Indianapolis.
She said the district has operated on an antiquated payroll system that dates back 30 years. Many of its functions are done manually, she said.
A two-year audit examining the district’s books between July 1, 2014, and June 30, 2016, released earlier this month found Gary made little progress tackling the district’s financial disarray, even under a state-appointed fiscal manager.
The state cited extensive missing records and noted that a systemic absence of internal controls over most accounting procedures made it difficult to gauge an accurate picture of the district’s finances.
Many of the findings echoed those found in the prior 2012-2014 audit, released in 2015, which led Indiana State Board of Accounts state examiner Paul Joyce to question whether the district could continue as a going concern given its financial liabilities. It cited the school board for failing to meet “responsibilities to taxpayers” by ensuring “adequate budgeting, accurate accounting and informative reporting of all financial transactions and the establishment of sound business practices for effective and efficient operation of all schools.”
In her written response, Hinckley accepted nearly all of the audit’s findings and agreed to submit a plan to the state to fix cited issues by January.
Freelance reporter Carole Carlson contributed.
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