Auditor of State’s criminal investigation and special audit of the Loveland City School District

There was insufficient evidence to meet the standards for recommending criminal charges

(Read the District’s public response at the end of this story)

Loveland, Ohio – The Special Investigations Unit of the Ohio Auditor of State has released the results of a criminal investigation and special audit of the Loveland City School District based on “improper spending of public funds”. The investigation began in March 2020, after receiving complaints from a District resident. It was alleged that the District used operating funds in support of a levy campaign. After reviewing information from interviews and preliminary examination of records, a special audit was undertaken by the Auditor.

Background:

Dr. Amy Crouse was Superintendent during this time and Kevin Hawley was the Treasurer. The Board President was Art Jarvis; also on the Board at the time was Eileen Washburn, Ned Portune, Michele Pettit, and Dr. Kathryn Lorenz.

The District engaged in two one-year contracts with Allerton Hill Consulting (AHC), dated March 20, 2018 and March 19, 2019, to “assist with its communication needs and provide a strategic communication marketing and outreach plan”.

The first contract, costing $73,000, included an agreement that AHC would conduct a “satisfaction” survey using a third-party pollster. A second contract cost $60,000 as it did not include an agreement that AHC would conduct a survey.

The District summarily canceled the second contract on November 22, 2019. Among the objectives contained within each of these contracts, was a goal to “offer high-quality, long-term, strategic communications, marketing and outreach plan so the District is successful in future public initiatives”.

“This intimates services provided to aid the passage of a tax levy”, according to the Auditor’s report.

While there was no levy issue during the first contract period, the District did seek to pass ballot initiatives in both November 2019 and March 2020.

The 2019 ballot initiative was to pursue a 16.78-mill combined operating and permanent improvement/bond levy including buying approximately 110-acres of land – part of a property known as Grailville. Proposed was a new campus at Grailville for all Pre-K through fifth-grade students and other District wide facility improvements.

Pursuant to the initial AHC Contract, Fallon Research & Communications, Inc. (Fallon) was hired to conduct a survey in May 2018 of 303 randomly selected residents of the District. This contract cost $13,000 and was inadvertently paid twice by the District: once as part of the AHC contract and a second time directly to Fallon, resulting in a double-payment.

Additionally, the District subsequently hired Fallon to conduct a survey in March 2019 of 301 registered voters at a cost of $15,000. The first survey contained two general questions regarding how the District spends funds received from tax payers, while the second survey contained three questions that appeared to the investigators “partially designed to aid in the passage of a levy”. These questions provided different funding scenarios with detailed millage options to gauge the likelihood of community support if placed on the ballot.

Findings

Based on the special audit procedures and investigation, the Auditor of State confirmed noncompliance as well as a double-payment of survey costs by the District.

The audit report said, “We issued $13,000 in a finding for recovery for illegally spent funds as well as a management recommendation related to noncompliance regarding contracts partially advocating for the passage of a levy”

The full details of the finding for recovery and management recommendation are located in the Appendix below.

Prosecution

At the conclusion of the special audit and investigation, the special audit results were reviewed by an Auditor of State attorney, who determined there was insufficient evidence to meet the standards for recommending criminal charges.

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Loveland City School District’s public response

Joint Statement regarding Ohio Auditor of State finding

“Loveland City School District fully cooperated with the Auditor of State’s office and appreciates their work to ensure accuracy in financial reporting and district processes. The investigation relates to actions taken nearly six years ago under previous district leadership,” Loveland City School District Board of Education President Jonathan Eilert stated.

“The current board and administration have reviewed and discussed the statutory requirements surrounding levies to mitigate future issues. I appreciate the Auditor of State resolving this matter with no penalties towards the district or the previous leadership,” Superintendent Mike Broadwater said.

“The payment in question was resolved, to the district’s benefit, nearly three years ago.  The district has put into place processes and software to protect against errant payments and remains committed to fiscal responsibility,” Treasurer John Espy said.