Missouri State Auditor questions Excelsior Springs School District lease

EXCELSIOR SPRINGS, Mo. - A 41 Action News investigation into the questionable way an Excelsior Springs School Board member received a lease spurs action by Missouri State Auditor Tom Schweich.

The 41 Action News Investigators obtained a letter from Schweich addressed to Excelsior Springs Superintendent John Lacy.

The letter states the auditor was made aware of a contract worth $90,000 to lease a building owned by board member Matt Hartwig and was approved by the school district without prior notice to the public of its interest in leasing the building.

The letter asks six questions:

Did the school board approve a $90,000 building lease agreement owned by a member of the school board?

Was this approval done after public notice as required by state law?

Did the member of the school board who co-owns the building leased by the school district solicit the school district to lease his property?

Did the member of the school board who co-owns the building participate in board discussions, either in open or closed sessions of the board, involving leasing the property?

Did the member of the school board who co-owns the building leased by the school district cast any vote on the issue of whether to approve the district entering into a lease for his property?

Do minutes of the school board, whether in open or closed session, reflect discussion of the lease by the board and record the votes of the board members?

Schweich comments in the letters that his office is in the process of finalizing their 2014 audit plan and the answers to these questions will help him determine how to move forward.

Our investigation found Hartwig is a co-owner of a building the board voted to lease for their TigerPath Alternative program. The program aims to help troubled students.

We found Hartwig's signature on the lease proposal offering the building to the district for $32,000 a year for a term of three years.

Our investigation also found, without public notice or an open bidding process, the school board voted to accept that deal.

41 Action News has made several attempts to have similar questions answered by the district. So far, the district has not responded to our requests for an on-camera interview. However, in e-mails, the superintendent told the 41 Action News Investigators he believes the deal was handled according to board policy.

Lacy told us by e-mail the board policy is the same policy approved by the Missouri School Board Association and is in compliance with Missouri law.

We followed up asking him if he felt the district gave adequate public notice about the transaction. Dr. Lacy told us that the transaction was not finalized and proper public notice would be given before the lease was signed and first payment distributed. Lacy confirmed he received the letter but declined to provide any further comment at this time.

Schweich remarked in his letter to Dr. Lacy that our findings were very similar to his recent audit of the Rockwood School District in Saint Louis County. 

In that situation, a school board member was employed by a construction company that held contracts with the Rockwood School District.

The audit found that board member may have abstained from votes that involved direct payments to his company. However, he inappropriately voted on broader measures that ultimately benefited his company.

The Missouri Ethics Commission also fined that board member $10,000.

The commission declined to comment on the situation involving the Excelsior Springs School District.

However,  the director told us that districts involved in similar matters should examine what potential interests do school board members have that might trigger MO statute 105.458.

That statue reads no member shall  sell, rent or lease any property to the political subdivision or any agency of the political subdivision for consideration in excess of $500 per transaction or $5,000 per annum, or in the case of a school board $5,000 per annum, unless the transaction is made pursuant to an award on a contract let or a sale made after public notice and in the case of property other than real property, competitive bidding, provided that the bid or offer accepted is the lowest received.

The director told us that districts should examine whether members have ownership interests in a company or real estate that would raise the possibility of conflict of interest.

If so, in the case of a potential lease, the school district should examine if they have provided public notice about the board's interest in leasing the property.

Finally, he said if public notice has been made, and the bid or offer is made from a member with an interest that meets the description stated in Missouri law, the district should examine how that bid or offer compares to other bids or offers made to see if it is the lowest offer received.

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