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EXCLUSIVE: SCOCA owes Ohio schools $1.6 million

Jona Ison
USA Today Network-Ohio
South Central Ohio Computer Association (SCOCA) is facing a state and federal investigation, in part, for withholding federal subsidies from member schools.

Schools across southern Ohio were likely shorted more than $1.6 million in reimbursements by their technology provider, prompting a federal investigation of the South Central Ohio Computer Association.

The missing reimbursements come as many districts continue to struggle with their own budgets. About a third of the SCOCA districts have gone to voters for a levy at least once in the past five years.

SCOCA, based in Pike County, is under federal investigation at least in part for that failure. The discovery earlier this year also led to the halting of a merger between SCOCA and Marion-based META Solutions, both of which are owned by many of the school districts for which they provide technology services.

A USA Today Network-Ohio investigation of at least 1,300 pages of public records revealed SCOCA still owes some districts money for up to four years of federal reimbursements. The shortfall prompted some districts to refuse to pay SCOCA for its services.

SCOCA’s school owners weren’t the only ones being stiffed, but SCOCA continued racking up charges for overnight trips to Columbus, 75 minutes away, and thousands of dollars for furniture while not paying the bill. Problems eventually led to a tense meeting in May 2015 where at least one person accused SCOCA's director of breaking the law.

Scioto Valley Local Schools Superintendent Todd Burkitt apparently offered support at the meeting, prompting an appreciative email from then-director Shawn Clemmons. He noted that while he doesn't “mind a good open conversation or criticism but cannot handle it when other accuse me of doing something illegal etc.”

SCOCA's member districts have been advised to refer comment to their attorney. SCOCA’s board declined comment through its attorney, who asserted the law does not require the board to answer any questions.

EXCLUSIVE: Records show financial disarray at SCOCA

Clemmons, who spent 20 years as the executive director at SCOCA, disputes issues raised by META and contends the SCOCA merger was dropped because of META’s own internal financial issues, which led to a $3.1 million cut earlier this year.

“Everything was discussed from our end, I believe. But as I go back, I think a lot of things were not discussed with us … I don’t know if you get buyer’s remorse or I think it was just maybe more than they could handle,” Clemmons said.

Clemmons was hired by META in December, but fired two months later amid what has been described repeatedly as undisclosed liabilities. Subsequently, his wife, daughter and son-in-law also were among 13 regular employees of SCOCA in 2015 who have been cut since META took on SCOCA’s staff.

No one has contacted Clemmons about SCOCA since, he said, including state auditors and federal investigators.

Where is the money?

An email written by META executive Jimmy Battrell three days after Clemmons was fired mentioned e-rate as a key reason for halting the merger “to distance ourselves from an issue with Erate, which could effect everyone.”

Mike Carder, who was META’s CEO until earlier this year, has said they knew of some bills but didn’t know about some schools being owed up to four years of e-rate.

E-rate provides partial reimbursements to schools and libraries for some technology costs as part of a universal internet access program started in the late 1990s. The money for the reimbursements comes from consumer fees tacked onto telephone bills. The program has long been viewed as ripe for fraud, waste and abuse due to oversight concerns, according to federal reports to Congress.

Both SCOCA and META are among 19 information technology centers created by Ohio law to provide technology services, such as internet connection, to schools. Member schools technically own the centers and their officials, often superintendents, sit on the boards overseeing them.

Shawn Clemmons, former director of SCOCA

Clemmons contends schools aren't owed for multiple years, but records show they are, and that a handful of payments made in 2015 were for 2011 and 2012 liabilities. Clemmons said he was unaware of those payments, and he knew only that the payments were a year behind when services were provided by SCOCA because of when entities can file for the subsidy.

“Our schools were well aware this was not an issue with SCOCA, too much,” Clemmons said.

In March, META Solutions began collecting information on the e-rate issue and officials reported they are still working to determine how much is owed.

So far, 30 districts submitted information with at least six reporting specific amounts owed of a combined $538,353 and another $1.1 million is estimated owed for fiscal years 2013 through 2016 based on previous e-rate amounts reviewed by the USA Today Network-Ohio. During that same time, 27 districts reported receiving $1.7 million in e-rate reimbursements or credits.

Waverly City Schools alone reported being owed about $229,296. However, some schools, like Adena Local Schools, reported receiving subsidy payments except for fiscal year 2016, which just ended in June. About 47 percent of the estimated $1.6 million owed is for fiscal year 2016, and according to an online federal e-rate database only about $700,000 of $2.8 million requested by SCOCA has been authorized for disbursement.

Chicken or egg?

It could be argued that part of SCOCA’s problem was schools and other customers weren’t timely paying their bills. According to an April subcontract agreement between SCOCA and META Solutions, SCOCA was owed $800,000 for services.

“We ran a very tight budget. We had some districts you would send an invoice and it was paid immediately. We had a lot of outstanding accounts receivable. We had a lot of slow-pay districts, and by being the customer and the owner, maybe they felt when going through their bills, to put it off to the side,” Clemmons said.

A May 2015 email written by Clemmons to districts noted SCOCA consistently had between $700,000 and $1 million owed to it with at least 70 percent more than a month past due.

Questions delay education service merger for META

In the case of the schools, which represent 80 percent of the total money owed, the question becomes who was stiffing who?

By April 2015, the board had become aware there were issues. In an April 17, 2015, email, Wheelersburg Superintendent Mark Knapp asked a series of financial questions saying the previous board meeting had “left me uncomfortable with the state of SCOCA’s finances.”

Knapp also asked about e-rate reimbursements, which SCOCA filed on behalf of the schools. The e-rate process at SCOCA — whether they essentially credited customers or issued checks — had changed on at least two occasions, including once in January 2015. However, no policies or contracts included details on how SCOCA would handle e-rate reimbursements.

“You can always look back and say, yes, it (having something in writing) would have been a benefit,” Clemmons said.

What now?

A March 22 email from Birkhimer to SCOCA districts outlined a new e-rate process that eliminates SCOCA’s involvement. Each district will now file for its own subsidy and the federal payment will go directly to the district.

A federal investigation into e-rate is ongoing while a special audit of SCOCA, requested by META leadership, is wrapping up. In the meantime, SCOCA remains its own entity, but officially has no employees, just a subcontract with META that was signed April 26 and is set to run through June 30, 2017.

SCOCA is required to pay any bills for services prior to 2016 and address e-rate issues. SCOCA schools are paying the same core fee as usual, $23.75, instead of META’s lower fee so the additional amount can be used to address the liabilities.

Records, mostly emails, indicate many of the overdue bills have been paid, but also reveal a few others have surfaced along the way.

This week was the first meeting of a reconciliation committee made up of representatives from SCOCA and META to monitor SCOCA’s finances and liabilities. Although its creation was part of the contract signed in April, an inaugural meeting was delayed in part due to conflicting schedules, said Wade Lucas, META’s interim CEO. They are still getting a handle on the finances, he said.

If everything is settled by the end of the subcontract, SCOCA will officially merge with META.

jison@Gannett.com

Twitter: @JonaIson