- The Washington Times - Friday, December 20, 2002

D.C. auditors have outlined questionable financial practices by officials of a charter school that may close soon for lack of funding.
In their audit of Jos-Arz Therapeutic Public Charter School for D.C. school board members, auditors noted:
A $7 million overpayment from the city to the school based on an overestimate of the school's enrollment. The school may have to reimburse the money, which was part of an $8 million city grant.
The school's use of up to $6 million of the $8 million city grant as collateral for a line of credit for the school's landlord to add an extension to the building. The city has no legal rights to the building, located at 220 Taylor St. NE.
nA five-year, $700,000 noncompetitive contract to a company owned and founded by the school's president, Gwendolyn Kimbrough. Her company, American Therapeutic Services Inc., provides transportation and drug-screening services for the school. Jos-Arz officials have entered several contracts worth more than $25,000 without the school board's required approval.
nA $72,000 monthly overpayment on the building's lease, which is set to increase each year to incorporate expansion costs. The school's landlord is Community Research Inc., a company on whose board Mrs. Kimbrough had served and her husband, Rollie, currently serves as a nonvoting president.
The auditors presented their outline to the board Wednesday during a meeting at which the panel was to decide whether to issue a "letter of good standing" to the school. No action was taken.
The complete audit is due next month, auditors from the Office of the Chief Financial Officer and the comptroller's office said. They added that they had seen nothing so far that could be considered criminal behavior.
The Jos-Arz building is under a 45-year lease to the school system, after which it will revert to the school for $1. Currently, the school is $500,000 in arrears.
The school board has long been concerned about charges of improper spending at Jos-Arz. For the past year, school board members have delayed issuing a "letter of good standing" Jos-Arz needs to float a $16 million bond approved by the D.C. Council in March.
The board voted to put off a decision on granting approval until after the audit is complete.
The motion the board voted to delay is only conditional approval; the board agreed to issue the letter only if school officials agree to lease or sell the building to the city should the school be forced to close.
School board members said they were reluctant to make a decision before the completion of an audit. The majority of the board said they recognize the school's uniqueness and service to the city.
It is necessary, some add, to protect the $13.5 million to $15 million the city already has invested in the school.
"There are too many red flags," said board member William Lockridge. "We are not in the business of robbing Peter to pay Paul."
Board members also said they are concerned about projections by school system officials of an annual deficit at Jos-Arz that is projected at $2.3 million in fiscal 2002 and $2.8 million in fiscal 2003. Only one other charter school has a deficit of $268,000, board officials said.

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