Vancouver private school's finances questioned
Founder denies allegations, resigns amid controversy
Wednesday, July 4, 2012
A private school in Vancouver has been rocked by allegations of financial mismanagement made against its founders. Parents also are upset over what they see as a tepid response to the allegations by the newly installed school board.
An accounting firm retained by the board found problems with the school's bookkeeping, but the school's founder says the allegations are without merit and based on an incomplete report.
The Cascadia School, which this year taught 85 students on a small campus at 10606 N.E. 14th St., is a Montessori elementary and middle school.
Montessori schools differ from the public school model in that they have students of different ages in one classroom, so that younger kids can learn from older students. Students are able to choose activities from within a set range of options and work in long blocks of time instead of 50-minute lessons, according to information from the American Montessori Society.
Parents pay $8,700 in tuition and $250-$600 in fees per year at Cascadia, according to the school's website.
During the 2010-11 school year, some parents started asking where the money from tuition and fundraising events was going, as they didn't see it spent the way they thought it would be, said Michael Ceriello, a parent who was part of a fundraising group.
But when staff consulted the school's financial ledgers to answer those questions, they found that the books were "absolutely in disarray," said Dan Benge, a parent who sits on the school's newly formed finance committee.
"It was hard to determine anything," Benge said. "When parents made accusations, we couldn't tell one way or another."
A new board
The school was founded by David and Cynthia Drakos in 1994. David Drakos has taught in Montessori schools for 30 years and came to Cas
cadia from the Franciscan Montessori Earth School in Portland, according to his online biography. He served dual roles at Cascadia: elementary teacher and top administrator.
Cynthia Drakos also taught at the Portland school. She describes herself as a "roving" administrator at Cascadia in her bio.
The nonprofit always had a governing board, but it was comprised of parents who'd been appointed by the Drakoses and never met regularly, said Susan Taylor, current president of the nonprofit school's governing board and a school administrator.
That changed early this year, when a new school board was appointed in response to the sloppily kept ledgers. The new board's first action was to relieve the Drakoses from all financial and administrative duties, Taylor said.
To get to the bottom of the school's financial standing and to ease parents' concerns about mismanagement, the board in March hired Acuity Group, a Vancouver forensic accounting firm, to look at the school's finances since July 2010.
Acuity's job was to "perform certain limited procedures to determine whether or not there were appearances of financial mismanagement" at the school, Tiffany Couch, head of the accounting firm, wrote in a statement that Taylor emailed to parents last month.
The board dedicated $3,000 to the job. Fully picking apart the books, accounts and receipts for that period could have cost up to $30,000, said Benge, the finance committee parent.
The board received Acuity's report on May 2.
The report starts out with this summary:
"It is our opinion that Cascade [sic] School's current financial situation is a result of gross mismanagement and potential misappropriation of funds. A total of $175,000 in questionable expenditures have been identified."
According to public tax documents filed by the nonprofit, Cascadia's revenue for the 20-month period in question was a little less than $1.5 million. The school spent more than it took in each year between 2008-2010, according to the tax documents. And its spending wasn't documented precisely, according to the Acuity report, which The Columbian obtained from another source.
"There is no tracking of expenditures within the program," Couch wrote in the report. "The school's lack of basic financial statements is truly out of the ordinary."
Out of the $175,000 in questionable expenditures, about $46,000 are payroll draws, i.e. checks made out to the Drakoses outside of the regular paycheck runs. Other employees got advances, too, but theirs were eventually balanced out in their paychecks, according to the report. The Drakoses' advances rarely were reported to the accountant who handled payroll, Couch wrote.
The payroll account for the examined period starts with a balance of about $44,000, which appear to be draws taken by the Drakoses before July 2010, according to the report.
There also were payments totaling nearly $70,000 made on multiple credit cards, even though the school board only knew of one card issued to the school in the Drakoses' names, according to the report.
The forensic accountants also noticed a lack of cash deposits to the school's accounts, Couch wrote. Most schools receive cash from lunch money, field trips and fundraisers, which show up in a separate item on deposit slips.
"We were truly surprised by the lack of cash and currency deposits made by the school," Couch wrote.
The school bounced more than 50 checks in the time period under examination, which resulted in overdraft fees of $3,500, Couch wrote.
"This is a sign of serious mismanagement of funds," she wrote.
In a board meeting on May 22, a group of parents told the board they would file a criminal complaint with police against the Drakoses, according to a meeting summary sent out in an email later that night.
Parents at the meeting also demanded that the Drakoses be fired immediately. The board replied that removing the Drakoses from the classroom so close to the end of the school year would cause "upheaval" to the students. The board would not make any staffing changes in light of the pending resignation of David and Cynthia Drakos, the email says.
As of June 14, David and Cynthia Drakos were no longer employed at the school they founded.
David Drakos told The Columbian that he and his wife "parted ways amicably" with the school. He admitted to being "overwhelmed" with his multiple roles at the school for "the last year or so." But he dismissed the accountant's report, saying that it was "incomplete" due to the school's lack of money for a full investigation.
Drakos said he and his wife signed a separation agreement with the school, under which the parties would not hold each other liable and would not make derogatory statements about each other.
Parents called police last month, but were told they are not legally considered the victims in this case, said Kim Kapp, spokeswoman for the Vancouver Police Department.
Only the school could file a complaint against the Drakoses, Kapp said. And the school board told police it did not want to pursue a complaint, she said.
"They're not providing us information about the loss or anything," Kapp said. "This is not something we can force the school to do."
But that's not what the board told parents in the e-mailed summary of the May meeting.
"President Susan Taylor notified local authorities about the results from the independent financial investigation," the email read.
Benge, the parent on the school's finance committee, told The Columbian that "there's not enough here to press charges."
The additional money it would cost to get a full report would be better spent keeping the school running, he said.
"We want (the Drakoses' resignation) to be the resolution," Taylor said. "We want the focus to be on the excellence of the school."
Some parents pulled their kids out of the school in response to the allegations against Drakos, said Ceriello, the parent involved with the fundraising group. It's impossible to say how many left for that reason. Enrollment at the school already had been declining during the recession, Taylor said.
At its peak, Cascadia had about 130 students. In June, it had 85. So far, about 50 students are signed up for the next school year, Taylor said.
Among the students not returning are Ceriello's. He, his wife and their three children moved here from Minnesota. Finding the right Montessori school played a big role in deciding which part of the Portland metro area they would move to. They finally bought a house three blocks from Cascadia School, Ceriello said.
Next year, all three of his children will attend the Childpeace Montessori School in Portland, he said. He'll spend a lot of time shuttling everyone back and forth.
"This has a huge impact on us," Ceriello said. "And from the child's perspective, everyone's friends are getting fragmented. It's really tough on the kids."