A southern Vermont private school reviewed by the State Board of Education after it failed to file its tax returns with the IRS for three years will still be eligible for taxpayer funds.
A review team sent by the board concluded the Compass School is in sufficient financial shape.
“We believe they have righted the ship in terms of governance and ability to manage their financial affairs,” John Carroll, the state board’s chair and a member of the review team, told his fellow board members at a meeting Wednesday.
The state board sent a team to the Westminster middle and high school following a VTDigger report about the school losing its federal tax-exempt status. A new law passed in 2018 gives the board additional oversight powers over independent schools when financial red flags appear.
The school has since had its tax status reinstated by the federal government. A report written by the state board’s review team says the school stopped filing form 990s — a key document for nonprofits — with the IRS after turnover on its board of directors and in the business office led to items falling through the cracks.
“This was a failure of process, and it has served, in turn, as a defining and maturing event for the School. The Review Team believes that going forward the leadership of The Compass School is better and stronger and more proactive,” the report states.
The school has recruited new board members with financial experience, adopted a financial manual, and is in the process of developing a strategic plan, according to the report. It has also hired an accounting firm to prepare and file its annual tax return.
Randi Solin, a co-chair of the Compass board of directors, told state board members on Wednesday the review process had been helpful. As a result, for example, the school’s board had recently established committees and standardized its protocols around both admissions and financial aid to make the processes more consistent and transparent.
“I found this process incredibly informative, actually. It’s been a wonderful spotlight on the areas that needed tightening up,” she said.
The review team included two staff members from the Vermont Department of Financial Regulation, one from the Agency of Education, two state board members, and a representative from the Council of Independent Schools. It reviewed financial documents furnished by the school, conducted a site visit on Aug. 13, and confirmed cash balances with the school’s bank.
The report goes out of its way to call Compass a “good school” that “meets real and important student needs.” But it also expresses some concern about declining enrollments at the already very small school, as well as a growing number of tuition bills owed to Compass going unpaid by parents.
The state board ultimately voted to adopt the review team’s recommendations. But Compass is not entirely off the hook.
Like all independent schools, it must periodically receive reapproval from the state board to maintain its ability to receive public tuition dollars. It is currently undergoing that process, and the review team recommended that its reapproval, if granted, include two additional conditions. Those conditions include that Compass provide the Agency of Education with financial statements covering the new school year, and that it hire a certified public accountant to perform an annual review.
Compass is not the only private school getting a second look under the new oversight law. A specialized school in Brattleboro that serves autistic children, the I.N.S.P.I.R.E. School, has been put on notice by the state board after a former employee’s alleged financial malfeasance led the school to overspend and payroll to bounce.
An accountant hired by I.N.S.P.I.R.E. and two of its trustees came to Wednesday’s meeting to take questions from the board and update members on the school’s progress on getting on solid financial footing. But state board members ultimately held off on taking any action until their September meeting, saying they wanted to speak to the school’s executive director, who had been scheduled to attend the Wednesday meeting. The school officials were also given a new list of financial documents to have at the ready.
One board member, John O’Keefe, who participated in the Compass review, said he was looking to be convinced that the board didn’t need to send a team down to Brattleboro as well.
“The burden is on you to come to the next meeting with statements, written documents, and evidence that causes us not to go to the next level,” he said.
The meeting was the board’s first since Krista Huling, its former chair, stepped down earlier this month over a conflict with her work on former Secretary of Education Rebecca Holcombe’s gubernatorial campaign.
Board members on Wednesday unanimously elected Carroll, the body’s former vice chair, as their new chair at the start of the meeting. Jenna O’Farrell, a former public school principal appointed to the board in April, was unanimously elected vice chair.
