On a Monday morning last month, Alan Faircloth was tidying up what remained of Stone Path Academy, the Moretown school that he owned.
Faircloth had run the program since 2012: first out of his home in Calais, and then, for the past six years, in a cluster of white buildings on a hillside a few hundred feet from the Winooski River. Stone Path Academy — one of a handful of for-profit schools operating in Vermont — had educated roughly a dozen students in grades six through 12 with intellectual disabilities, autism, and other mental and emotional challenges.
Stone Path had closed at the end of June, and now Faircloth was dealing with the detritus left from a decade of education. Vacuum-sealed animal corpses for dissection sat in a crate alongside microscopes; boxes of art supplies were stacked on a table; skis leaned against a wall. Months earlier, a school employee had posted on Front Porch Forum seeking a home for the school’s pets: a bearded dragon, geckos, guinea pigs.
“We had a pretty righteous program,” Faircloth said.
So why did it close? Faircloth’s answer was simple: He wanted to retire. A bid to sell the school had not panned out, and a career working in special education had been emotionally and physically draining, especially at the height of the Covid-19 pandemic, he said.
But behind the scenes, Stone Path had also attracted the attention of state officials.
Documents obtained through public records requests showed a range of sometimes alarming details at the school, including an unapproved landscaping program, students working for cash, and concerns that revenue, which consisted of taxpayer money from public school districts, was being mishandled.
A spokesperson for the Agency of Education said that officials there “did not ultimately find that SPA or Mr. Faircloth violated any regulation or law for which we are responsible.”
But the revelations — which include documents showing that Faircloth withdrew thousands of taxpayer dollars from the school for his own use — raise questions about state oversight of a system that allows private schools to turn a profit from public money when serving some of Vermont’s most vulnerable residents.
‘I have a lot of heart burn’
When a student needs special education services that are beyond the abilities of their district’s public schools, district administrators can pay their tuition — with taxpayer dollars — to a private therapeutic school.
Stone Path was one such school. With a student body of roughly a dozen, Stone Path served students who had few other places to go: some were in foster care or had experienced homelessness, and some had been abused, according to Faircloth.
In July 2021, Stone Path was in a state of transition: Kelly Bushey, a former special services director at Washington Central Supervisory Union, took over as the school’s CEO. Bushey also hoped to purchase the school from Faircloth.
But, according to internal Agency of Education emails, Bushey’s bid for the school turned up an array of details that worried state officials.
Some of their fears centered around the school’s programming. Stone Path had added a landscaping component to its curriculum — essentially, teaching students to operate farming and landscaping equipment — after the state’s most recent review of the school in 2018, meaning that regulators had not signed off on it.
The prospect of students operating heavy equipment appeared to concern state officials, according to internal emails.
“I have a lot of heart burn regarding landscaping and student/community member safety,” J. Deborah Ormsbee, an independent school program coordinator with the Agency of Education, wrote in an October 2021 email to colleagues.
Ormsbee referred a reporter to agency spokesperson Ted Fisher.
“The Agency takes student safety extremely seriously,” Fisher said in an email to VTDigger, but concerns “that students were at risk were not ultimately substantiated.”
Faircloth said that the program was similar to those at tech and career centers, and that the school followed strict safety procedures. No student had ever been injured, he said.
Since taking over as CEO, Bushey had also ended certain school practices. One of those was paying students, in cash, to work during school hours.
That was not permitted, “as this is against child labor laws and the VT Dept of Taxes regulations,” Bushey wrote to Faircloth in November 2021, in communications that she also forwarded to state officials. “Students also reported that they were purchasing marijuana and nicotine products with the cash they were receiving from Stone Path.”
Earlier this year, Bushey declined to comment and referred a reporter to an attorney representing Stone Path. More recent efforts to contact her were unsuccessful.
Fisher, the agency spokesperson, said that “there is nothing inherently illegal” about paying students to work during school “as long as the school and the students are in compliance with any and all applicable labor and workplace safety laws.”
Students were paid to clean bathrooms, wash dishes, sweep floors and care for the school’s animals, Faircloth said, and they always kept timecards.
The school was “just teaching them how to work,” Faircloth said. “I didn't do it maliciously. It wasn't like I was trying to take advantage of somebody.”
‘I’m a private businessman’
But it was the school’s financial practices that appeared most concerning to state officials. In August 2021, Secretary of Education Dan French informed the school that he was “appointing a review team to conduct an investigation of Stone Path Academy.”
The agency had gotten complaints that the school had possibly used “designated funds for nondesignated purposes and information which places in doubt the school’s ability to make payroll obligations when due,” French wrote.
It’s not clear exactly what French was referring to. But earlier that month, Ormsbee, the agency staffer, wrote to colleagues that Stone Path had a “history of problems,” including “serious fiscal non-compliance and questionable financial practices.” The school had generated multiple complaints from parents and public schools, she wrote.
The school’s most recent annual tuition rate — $123,000 per student, according to an agency email — was “based on flawed financial information” and had incorporated expenses that were “specifically not allowed,” Ormsbee wrote in a September 2021 email to Bushey.
In early December, Bushey sent 2021 financial records from Stone Path to the agency. Those records showed, among other figures, a loss of $269,670 labeled “Shareholder Draw.”
The school had a net operating income loss of approximately $62,000 from Jan. 1 to Dec. 6 of 2021, according to those records.
“Had this withdrawal not occurred the net income would be approximately the same as this time period last year,” Bushey wrote to state officials.
Faircloth, the school’s only shareholder, acknowledged that he had personally pulled out the money in 2021. Some of the cash was used to pay taxes, he said, adding that he had reinvested some money back into the school.
Overall, the withdrawal had netted him about $175,000, he said, some of which might also have to go towards tax payments.
Faircloth also made a salary of roughly $80,000, he said. A balance sheet submitted to the state estimated that the school’s real estate had approximately another $300,000 worth of equity as of December 2021. All of the school’s revenue, Faircloth said, came from district tuition payments.
The school was also a beneficiary of a federal program meant to help businesses keep staff employed following the Covid-19 lockdowns in early 2020. It received roughly $160,000 from the Paycheck Protection Program that was ultimately forgiven. The school operated remotely during the pandemic, and Faircloth said he did not believe enrollment had decreased at all.
“I’m a private businessman. I own Stone Path 100%,” Faircloth said. “Once I make the profit, I can write myself a dividend check.”
Asked about the ethics of such a withdrawal — which consisted of taxpayer money from local school districts — Faircloth noted that governments often contracted out public services to private firms, such as school bus companies and private prisons.
“In my very core, I am a public school teacher,” he said. “But then at the same time, I do believe in capitalism. I'm working 100-hour workweeks. I'm taking kids home, I'm feeding them, I’m making sure they have a roof.”
In 2021, the same year that he withdrew the money from the school, Faircloth bought a house in Key West, Florida. The sale price of the house was $690,000, according to property records and real estate websites.
The money withdrawn from the school did not pay for the house, Faircloth said.
“I got it sitting in the bank. That’s my retirement,” he said. “It's not like I took it and went to Vegas and gambled it all away.”
Fisher, the Agency of Education spokesperson, said that the state agency “is not the appropriate entity to make determinations about whether the transaction was legal.”
State rules “dictate how to approve the rate charged by an approved therapeutic independent school; uses of a business’s revenue are not governed by the rules,” he said.
Asked if he had made other shareholder draws over the years, Faircloth declined to comment.
‘Fraud, waste, and abuse’
As of February 2022, Vermont was home to 10 other approved private schools — meaning, private schools eligible for public tuition payments — that, like Stone Path, did not have nonprofit status and operated as for-profit schools, according to the Agency of Education.
Of those, all but one offer a therapeutic program, or programming for students with disabilities or “emotional or behavior challenges,” according to Fisher. Some of those schools also serve general education students as well.
Public tuition for students enrolled in general education at Vermont private schools is generally capped at a certain amount — roughly $17,000 per middle and high school student in the 2022-23 school year.
But for students with disabilities, public tuition dollars are subject to different rules and limitations. The upshot is that independent schools can charge public school districts more to educate kids who receive special education services.
Last year, as the Agency of Education was scrutinizing Stone Path, a Board of Education subcommittee was drafting updates to the rules governing how independent schools could use their money. That process — which was required by a 2018 law, Act 173 — essentially gave state officials the opportunity to rewrite the rules that Stone Path and other independent schools were required to follow.
But Fisher, the agency spokesperson, said that it had decided not to inform the Board of Education of its concerns about the school or Faircloth’s shareholder draw while the subcommittee was drafting the new rules.
“It would have been difficult to share this information in a way that would be transparent, fair to all parties, and not misinform the public,” Fisher said.
Those rules were given final approval this spring and some are already in effect. Others are scheduled to take effect in the summer of 2023, including one requiring therapeutic schools to submit more detailed financial information to the Agency of Education. Schools are to submit their expenses for a series of categories, including salaries, “travel/transportation,” and “general operating.”
“The rate for each therapeutic independent school shall be no more than the costs that are reasonably related to the level of services provided by the school,” the new rules say.
In comments submitted in November 2021, Clare O’Shaughnessy, a former staff attorney for the Agency of Education who was among those scrutinizing Stone Path, urged the board to “establish a reasonable cap on profits for schools.”
Writing as a “Concerned Vermont Taxpayer,” O’Shaughnessy argued that the new rules would “not make any effort to protect the Vermont taxpayer and the education fund from fraud, waste, and abuse.”
“These rules should state how much profit is reasonable for a for profit institution to earn from public funds,” she wrote.
O’Shaughnessy, who no longer works for the agency, declined to comment.
Asked if the new rules would allow a shareholder draw like Faircloth’s, Fisher, the agency spokesperson, answered simply, “Yes.”
‘This is certainly one for the books’
From Faircloth’s perspective, he was running a school that served kids who had no other options. Though his methods may have been unorthodox, he said, they were effective: He relayed stories of students lighting up with joy while using landscaping equipment for the first time, or calling him in tears after the school went remote during Covid-19, asking to return to in-person class.
The day-to-day tasks of running a small school were far removed from the bureaucracy of state government, he said, especially when it came to the population of students that Stone Path served. When students needed — and were given — such individualized attention, he said, one person did not have the capacity to both work with kids and pay attention to the minutiae of state regulations.
“You can't do what the Agency (of Education) needs and what the kids need. You can do one or the other,” he said. “If I'm out here wrangling kids all day, I don't have time to be, like, checking these little boxes.”
Faircloth emphasized, repeatedly, that he cared deeply for his students.
“I gave them a roof when they needed a roof. Made sure they had food when they needed food, heat when they needed heat. Shoes when they needed shoes. Clothed them. We did it all,” he said. “And we made a lot of difference.”
That view was shared — at least in previous years — by an Agency of Education staffer, Brian Morgan, who wrote a glowing 2018 report about Stone Path, two years after the school opened.
“The youngsters there are well-served with compassion and understanding of their needs,” Morgan wrote. “Students gradually build their self-esteem and self-confidence and do so joyfully. The vibe of Stone Path Academy speaks for itself.”
Mill Moore, the executive director of the Vermont Independent Schools Association, agreed. Based on what he knew of the school and his own visits, Moore said, the school’s program was highly successful.
“They were doing amazing things with those kids at Stone Path,” he said.
After Bushey decided against buying the school, Stone Path administrators never submitted the proper paperwork to continue operating.
In late December 2021, Sean Toohey, an attorney for Stone Path, made state officials an offer: The school would shut at the end of the school year, after which administrators would help find other placements for its students.
Faircloth would have no “further involvement in day-to-day operations” at Stone Path, Toohey wrote, but “will continue to make decisions concerning the assets” of the school. Meanwhile, the agency would agree not to “open or continue any investigation into alleged past financial or compliance issues concerning Stone Path Academy and/or Alan Faircloth.”
State officials turned down that proposal. But the whole process appeared to rankle at least one agency staffer.
“This is certainly one for the books!” Patricia Pallas Gray, an independent schools consultant with the Agency of Education, wrote to colleagues after officials received the attorney’s letter. “I cannot figure out how legally (the Agency) can negotiate with an independent school in such a manner.”
The agency should have reached out to the Board of Education, which oversees private schools, “when we knew that things were going awry,” Gray wrote.
Gray could not be reached for comment by phone or email.
‘We can’t always close the gap’
In the end, the Agency of Education decided not to conduct a formal investigation into the school.
“Ultimately, AOE’s initial concerns were not substantiated by evidence, once additional review was conducted,” said Fisher, the agency spokesperson. He provided few details about how exactly officials determined that Stone Path was following the rules but said that “a site visit was not ultimately conducted.”
The governmental body’s jurisdiction is limited, Fisher emphasized: The Agency of Education can only investigate and enforce the rules within its purview, and he could not comment on “whether or not Stone Path acted appropriately in other areas.”
The agency is “staffed by competent, caring professionals, who work hard to see best practice implemented in all cases,” he said. “Unfortunately, we can't always close the gap between best practice, and what’s possible in the context of legal compliance.”
He said he could not comment on whether any issues had been referred to law enforcement or other areas of state government. But when asked about the school, Rory Thibault, the Washington County state’s attorney, said that his office “was given courtesy notification of a matter - of a potential criminal matter - and at this time no formal criminal case had been referred to our office for prosecution."
That notification happened in January, Thibault said, and the matter “did not involve issues of student behavior or risk to the students.”
Agency officials agreed to let Stone Path keep operating, under Bushey’s leadership, until the end of June, but required the school to send monthly reports to the state, documenting any changes in enrollment, staffing, or programming. That deal still needed the green light from the state Board of Education, however.
The “therapeutic schools that Barre works with currently have wait lists,” Stacy Anderson, the director of special services for the Barre Unified Union School District, told board members. “All of them.”
Before the board took a vote on the plan, Oliver Olsen, the board chair, asked agency officials and Toohey, Stone Path’s attorney, if there were any concerns about student safety or complaints about the school.
“Is there anything out there that the Board should know before we consider this action?” Olsen said.
“Not to my knowledge,” French, the Secretary of Education, replied.
“No, there are not any issues such as that,” Toohey said.
The board voted unanimously to sign off on the agency’s plan.
Olsen said in an interview that the board was not “privy to a lot of detail (about the school), but we were privy to enough that there was concern.” Nevertheless, he said, board members were swayed by the arguments of the public schools’ special educators.
“They essentially said that they didn't have the ability to serve the students and that they didn't have a place to send them,” Olsen said. “And that's the only reason why we kept the school open.”
‘We just had a unique thing going on’
When Stone Path closed at the end of June, some of its students graduated, while others had to find different placements or return to their home districts.
At some point, Bushey had decided not to buy the school, and by the fall of 2021, the relationship between her and Faircloth appears to have deteriorated.
In late October, Faircloth accused Bushey of “lying and deceiving (him) for months,” according to an excerpt of an email Bushey sent the state. Bushey, in turn, accused Faircloth of retaliation.
“I sincerely believe that you have and continue to be hostile towards me, isolate me, take job tasks from me, curtail my duties, over-ride my decision making, and take decision making authority from me,” Bushey wrote in November, “all because I have continuously reported (Stone Path) non-compliance and violations to you in an effort to perform my job as the CEO.”
She also blamed the discord partially on her desire not to buy the school.
Faircloth speculated that, if the dispute with Bushey hadn’t happened, Stone Path might still be open. Before the school had closed, he had told state officials that he hoped to convert it to a 501(c)3. That move “reflects my beliefs that a school should operate as a non-profit,” he wrote to agency officials in January 2021.
“There's still other special ed programs that can absorb the overflow,” Faircloth said in an interview. But at Stone Path, “I think we just had a unique thing going on.”
Alan Keays contributed to this report.
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