[T]he State Board of Education will send a team to Compass School to review the small private school’s finances. The IRS recently yanked the Compass School’s tax-exempt status for failing to file the necessary paperwork.
Compass officials have already come before the state board once, in April, to explain why officials neglected to submit the school’s Form 990 – a federal tax return for nonprofits – for three years in a row. And they returned last week to update board members on the progress they had made to make sure such a mistake never happened again.
“Our board agrees and takes your concerns about our financial processes very seriously, and the resulting effect on our capacity as a serious matter,” the co-chair of Compass’ board of trustees, Roxane Blake, told state board members.
The school has since filed the proper paperwork and had its tax-exempt status reinstated, she noted. It has also recruited a former trustee with financial expertise back on the board, retained a CPA, and drafted a new board manual that better outlines oversight responsibilities, Blake said.
State board members told Compass officials they were encouraged by the school’s efforts, but they also told them they weren’t quite ready to let them off the hook.
A new law passed last year gives the state board expanded powers to look into a private school’s finances when red flags appear. If they don’t like what they find, the state board can ultimately revoke the school’s “approved” status, which the school needs in order to receive publicly-funded tuition students. Compass receives nearly half of its annual operating revenues – roughly $450,000 a year – through state-funded vouchers.
State board members voted Wednesday to send a review team to the Westminster school to take a closer look. Several state board members emphasized that they were particularly concerned about Compass’ governing board, which they said appeared, at first glance, unaware of its basic oversight responsibilities.
State board vice-chair John Carroll noted that most of the school’s trustees had some sort of personal connection to Compass. The school needs to be recruiting more widely, if it wants a board with a healthy mix of expertise, he said.
“You haven’t created the governance organization that is suited to taking on the responsibilities that you now have. That has the institutional heft to it to overcome individual foibles, tragedies, circumstances,” he said.
State board member Peter Peltz said he’d missed the prior state board meeting but had reviewed the tape with an eye to what the public would think.
“It did not look good, in terms of just, I’d say, sloppiness. And there’s federal and state money involved in this, and the fiduciary role of a board is absolutely critical,” he said.
Another state board member, John O’Keefe, said he is hoping that the board will find “things are heading in the right direction and we don’t have to do anything else.”
“But if we don’t vote today to do (a review), I think we could be the board that turned a blind eye to something,” O’Keefe said.
Other board members said they believed the school was making a good-faith effort to improve financial practices.
“I don’t think anybody here can not sense that these people came in somewhat chastened and certainly eager, not just to make this go away, but to address the root issues,” Carroll said.
