North Carolina Charter School Faces Allegations of Financial Mismanagement and Conflict of Interest Violations

North Carolina Charter School Faces Allegations of Financial Mismanagement and Conflict of Interest Violations | Future Education Magazine


A North Carolina charter school, Children’s Village Academy in Kinston, is under scrutiny for alleged financial mismanagement and conflict of interest violations. Staff from the state Department of Public Instruction presented reports this week, accusing the Charter school of misspending taxpayer dollars, including funds used for a high-ranking federal education official, Peggy Carr, who serves as the school’s board vice chair. Carr is also the commissioner of the National Center for Education Statistics, raising concerns about conflict of interest.

A Series of Financial Transactions

The accusations involve a series of financial transactions, including Carr receiving $155,000 in interest payments on a $188,000 loan she provided to the school 15 years ago. Additional concerns include the Charter school using taxpayer dollars to reimburse Carr for furniture and utility bills for a home she owns and rent to the school during the summer.

As part of the review, the Department of Public Instruction is requiring Children’s Village to repay at least $22,000 in “unallowable costs.” These allegations come at a critical time for the school as it is up for state charter renewal in 2024.

John Eldridge, vice chair of the N.C. Charter Schools Review Board, expressed the importance of these allegations in the charter renewal decision, stating, “There are many questions that still need to be answered, so I’m inquisitive to see how things move forward with any further investigation.”

Shirley McFadden, monitoring and compliance manager for DPI’s school business section, emphasized the need for additional investigation, indicating ongoing discussions with legal counsel on the appropriate course of action.

The School’s Failure to Initiate Timely Payments on the Loan due to Limited Funds

Children’s Village defended itself by stating that it was the school’s failure to initiate timely payments on the loan due to limited funds, not an attempt by Carr to benefit personally. However, the school acknowledges the necessity to implement stronger internal controls with a focus on proper documentation and record-keeping.

The financial challenges faced by Children’s Village Academy over the years are evident, with concerns raised about inadequate documentation of the $188,000 loan provided by Carr in 2008. DPI claims there is a misstatement of the school’s finances due to the lack of proper recording of the loan as a liability.

DPI also questions the $894 per month paid by the Charter school to reimburse Carr for small business loans for buildings used by the school. Allegations include improper voting on contracts related to Carr, highlighting potential conflicts of interest.

Further issues arise regarding the school’s use of $287,000 in federal money for the 21st Century Community Learning Center summer program. DPI identified $5,003 in “unallowable costs,” including reimbursement for furnishings purchased by Carr for a house she partially owns and leases to the school for two months each summer.

Shirley McFadden flagged four invoices related to federal funding for the 21st Century program as “red flag indicators of fraud, waste, or abuse.” Concerns include reimbursements for items unrelated to the services provided, raising suspicions of financial irregularities.

The ongoing investigation poses significant implications for Children’s Village Academy, especially as the Charter school approaches its charter renewal in 2024. The need for transparency, accountability, and addressing potential conflicts of interest will be crucial in determining the school’s future.

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