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Buffalo Schools, former charter spar over accounting of leftover money

A charter school advocate is firing back amid questions about what happened to the money when the school closed more than five years ago.

Steven Polowitz, the attorney who represented Pinnacle Charter School when it was shut down in 2013, said the charter returned more than $1.3 million to Buffalo Public Schools – five times the amount that the district said it actually received.

“They didn’t even look at their own records to see what happened,” Polowitz said. “They should be more careful about what they throw out to be facts and figures before they do an internal investigation on what they received from the school.”

The school district still isn't buying it. District officials recently asked state lawmakers for legislation that requires an independent receiver to step in once a charter school is shut down by the state.

Charters are independently run but publicly funded, so they are supposed to turn over any assets to the school district where their students reside. The district, however, thinks the law lacks teeth to guarantee that this happens.

In the case of Pinnacle, district officials pointed to a financial audit from June 2013 that showed the charter on Ash Street had $3.1 million in cash, but returned only $262,000 to the school system last November.

Polowitz provided a different accounting.

Pinnacle paid out roughly $1.2 million in expenses to vendors, the teacher retirement system and for other professional services to close out the school, Polowitz said.

The charter’s board of trustees also agreed to a severance package totaling $538,000 for Pinnacle teachers.

That left about $262,000 paid to Buffalo Public Schools and another $12,000 to other districts that had kids attending Pinnacle.

But, Polowitz said, Pinnacle had also returned to the district a $1.1 million payment for operating expenses after finding out the school would be shut down.

The sum of those payments, Polowitz said, would account for the total $3.1 million.

"The fact that these guys are throwing out false allegations when a simple check of their own records would clear up these questions speaks to a level of incompetence that, after all these years, is hardly surprising," said Polowitz, who is one of the founders of Tapestry Charter School. "The district's accountability around the management of its dollars suggests where the real need for a receiver lies."

That explanation still doesn’t sit well with the school district.

Where's the money? More accountability sought when charter schools close

Yes, that payment for Pinnacle operating expenses was returned to the district, said Geoffrey Pritchard, chief financial officer for the Buffalo Public Schools.

But, Pritchard said, that money was initially paid to Pinnacle in July 2013 – for the next school year – and shouldn’t have shown up as cash on the charter's books during the June audit.

“If their attorney is claiming they counted that as cash on their books on June 30, 2013, before it was received, he may wish to check his records again and/or publicly release the checkbook,” Pritchard said. “Recording $1.1 million as cash in the bank prior to receipt could be considered fraud.”

The discrepancy is all the more reason for added oversight upon closure of a charter, Pritchard said.

Polowitz, meanwhile, said there’s already plenty of accountability in the system with the disbursement of funds being reviewed by the state Board of Regents and the state Attorney General's Office prior to a judge signing off.

That's one of the reasons it took so long for the district to receive a final check, he said.

This won't be the last time this issue comes up.

Polowitz also represents Oracle Charter School, which closed last year.

”We’re in the process now of figuring out what’s going to be left after taking care of existing obligations,” Polowitz said.

Meanwhile, officials at Aloma D. Johnson Charter School on Jewett Parkway, which previously announced it will close in June, said the charter has been holding regular conference calls with the State Education Department in preparation for closing.

"The state has a guide booklet with 51 tasks that a closing school must attend to," said Ken Kruly, financial controller at Aloma. “Every single task that is required of us up to this point has been addressed, and a plan is in place to complete the other tasks over the next several months.

“When the process is totally complete, which we anticipate will be by the end of 2019, we will hand over any remaining funds in the process required by law and state regulations,” Kruly said.

Aloma D. Johnson Charter School will close, citing financial struggles

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