Misuse of state funds at North Star Charter

by David Safier

[Note: North Star Charter is in Phoenix. I forgot to mention that in the post.]

When I wrote about a hostile takeover of North Star Charter High School which occurred in April of this year, I promised there would be more to follow. There is more, much more, concerning the misuse of school funds for personal gain, funds which are paid to the school by the state. I will probably write about this story in a number of posts, since there is too much information to cover all at once.

The takeover I wrote about earlier took place in April, 2009, when a member of the school's Board, Aldine Dickens, came to the school with paid security guards, at least one of them armed, and conducted a board meeting where the school's President and Director, Kurt Huzar, was removed. The meeting was very probably invalid for a number of reasons, but Dickens changed the school's locks, changed the computer passwords, and took over the school until the end of the year. In late June, Huzar regained control of the school, which recently began its current school year.

The story really begins in February, 2008. At that time, Aldine Dickens was the President and Director of North Star Charter. She decided she wanted to step down from that position and have Kent Huzar replace her in those positions. In the process, she made some financial transactions that were almost certainly illegal for a nonprofit organization.

• Dickens created a Change of Control Agreement that stated she, her husband, Bernard Dickens, and her daughter, Lynda Simmons, would have guaranteed positions with the school in consulting and/or teaching capacities. Her 7 year contract was for $480,000, or approximately $68,000 per year. Bernard Dicken's 5 year contract was for $240,000, or approximately $48,000 per year. Lynda Simmons' 5 year contract was for $120,000, or approximately $24,000 per year.
• The Board agreed to pay Dickens $32,000 as a broker's fee for creating the Change of Control Agreement.
• The Board gave a $10,000 signing bonus to new President and Director Kurt Huzar, and the same amount to his business partner, Donavon Ziegler, who would also sit on the school's Board. (I believe this also happened at the Board meeting, but I'm not certain.)

It's important to remember that charter schools are public schools paid for by state funds, so all the expenditures Dickens wrote into her Change of Control Agreement and the Board voted for came from tax dollars allocated to the school, a nonprofit organization. If these transactions were part of a sales deal for a private company, it's my understanding they would have been legal.

Was Dickens aware that these financial transactions were probable violations of regulations governing nonprofits? I can't peer inside her head to answer that, but if the following allegation is true — and I haven't been able to verify it completely — it would indicate she was aware she was playing fast and loose with the funds.

According to the allegation, the minutes of the February, 2008, Board meeting were altered before they were sent to the State Charter School Board, the agency within the Department of Ed which oversees the state's charter schools, leaving out any mention of the $32,000 broker's fees or the consulting/teaching contracts. I don't know if there are any penalties for purposely misrepresenting the events at a Board meeting to the State Charter Board, but if it's true she purposely left the information out, it indicates she didn't want the State Board to know about, and potentially question, the expenses.

At the beginning of the 2008-2009 school year, when Dickens was being paid as a consultant and teacher, she went on a 3 month cruise. During the time she was gone, she collected her salary even though she neither consulted nor taught. In fact, the school had to hire a substitute teacher to cover her classes.

When the school's lawyer, Deanna Rader, became aware of all these financial dealings and of Dickens' absence during the school year, she let Dickens, Huzar and Ziegler know they were most probably in violation of the "excess benefit transactions" portion of nonprofit law. Rader recommended all three parties refund the money to the school, along with the legally mandated penalty.

My understanding is that Huzar repaid the $10,000 to the school along with the penalty but neither Dickens nor Ziegler have done the same. However, I have no proof that this is accurate.

I'm not going to try and connect the dots between the actions at the February, 2008, Board meeting and the takeover of the school by Dickens in April, 2009, though it's reasonably clear the takeover was a direct result of repercussions from the actions taken at the 2008 Board meeting.

Like the recent revelations about serious problems with the state tuition tax credit program and the STOs that collect and dispense the tax credit money, this story is indicative of the kinds of misuse of taxpayer money that can occur when there is too little regulation and oversight. This kind of profiteering is certainly not going on at all charter schools, but it's clear some charter school directors are more interested in the money to be made from their schools than the education they give to their students. It is an indication that legislators need to rewrite charter school laws so the state takes more responsibility for the financial and educational integrity of the schools paid for by the taxpayers.

This story is far too complex for a blogger like me to dig into with
the thoroughness it deserves. Newspapers with their staff, personal
contacts and other resources need to look into this. They can cover the
story more thoroughly than I can hope to.

If anyone has anything to add to this story, or to correct about the way I've presented the facts, please feel free to comment. If anyone wants to contact me directly, you can email me at safier@schooltales.net.