Do Not Pass Go, Do Not Collect $200

“Based upon our review of receipts and internal documents of NVMI’s recent leadership retreat, there is reason to believe that fraud, misappropriation of funds, or other illegal fiscal practices may have occurred that merit examination.”

– Los Angeles County of Education

The North Valley Military Institute’s (NVMI) Mark Ryan is at the point during a game of Monopoly where he just wants to land on the fully developed Boardwalk space and be put out of his misery. Unfortunately, the “Go To Jail” card is still in the deck. If he pulls it, it may be a while before Dr. Mark Ryan and the rest of his team have rid themselves of their publicly financed private school.

Ryan and the NVMI Board of Trustees have blamed a lot of factors for their $3.6 million in deficit spending during the past school year. According to the charter school, the LAUSD is primarily to blame because it refused to move a public school off of its own campus to grant NVMI all of the space it needed at one location. While increasing costs for food, transportation, insurance, and security were a universal problem during the last year, why was the school unable to accurately predict its costs for special education? Could the school have cut expenses by changing its uniform requirements? Were the costs for legal expenses a product of the school’s use of the judicial system to bully its opponents or defend itself from the result of operational deficiencies?

In a series of chaotic meetings held as the NVMI plummets towards insolvency, the trustees have villainized anyone who will not bail them out, but they have said little about their own role in the failure. As they rubberstamped Ryan’s ever-changing plans, the “Superintendent” spent education funds like a drunken sailor. Surely, the trustees' tacit approval of extravagant graduation ceremony expenses, an LAUSD lobbyist, a lobbying firm in Washington D.C., and $ 450,000 for a company that “DOES NOT provide tax advice, tax filings, or CPA services” to consult on obtaining money from the IRS contributed to the ballooning deficit.

A newly obtained letter from the Los Angeles County Office of Education (LACOE) reveals that Dr. Ryan and other members of NVMI management may be facing much bigger problems. On March 7, 2023, NVMI’s regulators requested that the Fiscal Crisis Management and Assistance Team (FCMAT) conduct “an extraordinary audit” of the charter school. The basis for this request was a “review of receipts and internal documents of NVMI’s recent leadership retreat” that indicated “there is reason to believe that fraud, misappropriation of funds, or other illegal fiscal practices may have occurred”.

The event that triggered the request was a “leadership retreat” for “approximately 63 staff and ‘plus ones’ that was held over five days in Las Vegas.” While the county was not provided with “a detailed accounting ledger,” the partial documentation provided led to a suspicion that NVMI “mismanaged and misappropriated over $90,000 of public funds due

to imprudent fiscal practices, gifting of public funds, and by misappropriating Local Control Funding Formula (LCFF) monies and Elementary and Secondary School Emergency Relief (ESSER) funding.”

Included in the retreat was bus service to Las Vegas, hotel costs, food, and beverages, for both employees and guests. NVMI also paid for “daytime family activities” which apparently included bowling, movies, mini-golf, and a water park”. Staff (and LACOE suspects guests) were provided with tickets to the Tournament of Kings dinner show at the Excalibur, a Righteous Brothers concert, and America’s Got Talent (AGT). For staff members who had to leave pets behind, the school made “animal boarding and care available at NVMI expense.” The county indicates that NVMI “acted imprudently by failing to secure competitive quotes for comparable services from other hotels or conference centers.”

It should be noted that 88.3% of NVMI’s student body is Socioeconomically Disadvantaged, five percent of the students are homeless, and 15.8% are English Language Learners. LACOE suspects that “LCFF [Local Control Funding Formula] monies were used to fund all other associated costs of the retreat, including banquet room rentals, hotel rooms, animal boarding and care, and food and beverages for staff and their guests.” This would mean that state funds were diverted from educating students that are English learners, eligible for free or reduced-price lunch, and/or are foster youth. Instead, the money was used for the benefit of adults.

According to Ryan, the school “used one-time ESSER [Elementary and Secondary School Emergency Relief Fund] dollars for the staff well-being activities”. These funds were supposed to provide assistance to communities hard hit by the effects of the COVID-19 shutdowns and it is hard to imagine that funding vacations to Vegas is a permissible use. If LACOE’s suspicions are correct and by doing so “NVMI committed acts of fraud, misappropriation of funds, and that illegal activities may have occurred,” the school not only must be shut down, the people responsible need to be prosecuted for their crimes. Unfortunately, past experience has shown that this will probably not happen:

____________________________

Carl Petersen is a parent advocate for public education, particularly for students with special education needs. He was elected to the Northridge East Neighborhood Council and is the Education Chair. As a Green Party candidate in LAUSD’s District 2 School Board race, he was endorsed by Network for Public Education (NPE) Action. Dr. Diane Ravitch has called him “a valiant fighter for public schools in Los Angeles.” For links to his blogs, please visit www.ChangeTheLAUSD.com. Opinions are his own.