JOHNSTON COUNTY

‘HIDE THE MONEY’

Recording puts school officials in bad light over taxpayer money

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SMITHFIELD – A newly surfaced audio recording reportedly implicates certain Johnston County Public Schools officials in discussions of how to hide $8 million from the Johnston County Board of Commissioners. Officials allegedly implicated in the recording are board of education members Kay Carroll and Lyn Andrews and JCPS’ Chief Financial Officer Stephen Britt.

Superintendent Dr. Eric Bracy also attended the meeting, but was not involved in the discussion, according to the recording. The conversation reportedly took place during a budget workshop meeting in March 2022 in Smithfield, which was not a public meeting and did not include a quorum of the school board. According to the audio, the group appears to allegedly plot to use federal Covid-19 ESSER (Elementary and Secondary School Emergency Relief Fund) line items as a cover for hiding millions of local taxpayer dollars.

This secret holding spot for local tax dollars would allow the school board to exceed a reasonable fund balance of $20 million, previously agreed upon by the Johnston County Board of Education and the Board of Commissioners. It would also keep local taxpayer funds flowing in the upcoming 2022-23 budget request.

Carroll reportedly states in the recording, “If you don’t do that with these county commissioners they are going to continue to say we want that money back. If you are not spending it then you don’t need it and we want it in our account.”

CFO Britt replied, “So what we could do and how we were working to get you as close to that $35 million was to take $8 million dollars out of ESSER and put it back in local and that will keep fund balance floating about $23 million and then that would give you another $8 million.”

Andrews said, “So you still got it. You just put it in a different place.”

Carroll replied, “I don’t care how you word it. Let’s get it to that… But hide your money.”

A video explaining and playing the audio clip was released Monday by school board candidates Kevin Donovan and Michelle Antoine. They state they were the “trusted individuals” board member Ronald Johnson spoke of in his rescinded resignation announcement made in July. Johnson was at the March 2022 meeting and captured and gave the audio recording to the pair. Johnson was placed on unpaid leave from his job at Smithfield Police Department and his professional law enforcement career as a detective was threatened, over what Donovan and Antoine say is political retribution for his continued whistleblowing.

Donovan told the Johnston County Report last week, “In May, I received a phone call from Ronald Johnson asking if I could meet with him immediately. I said sure and left my house not knowing why but met with him anyway. When I met with him, he played several recordings and said I am going to give these to you. If something happens and I can’t release them, I need you to do it. I asked him, ‘Why don’t you release the recordings?’ He replied, ‘I can’t. The people I thought I can trust, I can’t trust them anymore.’ He went on to say ‘my hands are tied and it is about to get worse.’ Ronald told me, ‘this could be dangerous for you, they want to cover this up.’ He would never say who ‘they’ were but I could tell he was legitimately concerned. A short time later, I am being called in, interrogated, and intimidated over recordings to be handed over.”

Interviewed by police

Both Donovan and Antoine said they were questioned by Smithfield Police about any audio recordings they may have.

Donovan alleges someone tried to bribe him to turn against Ronald Johnson. He also said someone emailed his church and asked that he be removed from his volunteer position, a church he attends with his wife and children.

“I knew that if someone is willing to come after a non-official and his family in this county, no one would be safe from officials trying to bury the truth,” Donovan said, adding he wanted to expose the audio tape and what happened to him for “truth and transparency.”

“I believe it is the right thing to do,” he said.

“In this recording, Lyn Andrews, Kay Carroll, and CFO Steven Britt are planning to hide $8 million dollars from the commissioners in order to gain more money. Money has been missing in the past and it appears history is trying to repeat itself if someone doesn’t bring light to the subject. When I met with Ronald (in May), he said board members were meeting behind Dr. Bracy’s back, trying to find ways to move money. He also mentioned that this started in December. The other people and I were hoping Ronald would pull through and be able to release these recordings, but it does not appear that will happen. We have so many needs in the school system. I don’t understand why we would hide money, it just does not make sense,” Donovan said last week.

According to Donovan and Antoine, an attempt to keep secret extra millions in the fund balance was allegedly first discussed by Kay Carroll in a December 2021 informal budget meeting. At that meeting Board member Johnson said he was in opposition to any plan or discussion to hide money. When Johnson heard the plan revived in an informal March 2022 budget meeting, he was able to capture the statements of the meeting participants on an audio file.

The March 2022 audio of the alleged scheme to hide $8 million dollars with full participation by school board members and Chief Financial Officer Stephen Britt not only violates the public trust, but it may have legal implications.

Not the first time?

This is not the first time Carroll has been accused of hiding funds while on the school board. A secret account with local tax dollars was reportedly hidden from commissioners and the public in the 2007-08 fiscal year.

Former Johnston County Commissioner Devan Barbour III in a 2016 article revealed the school board had $40 million in the bank when they asked commissioners in 2007-08 to borrow $30 million to cover construction cost overruns at the Corinth Holders and Cleveland High School campuses.

Barbour stated in 2016, “In 2009…the county finance department began requesting financial information and bank statements from the Board of Education. It became apparent that they had approximately $40 million dollars in reserves. This was alarming because it came on the heels of our having to borrow an additional $30 million to cover the construction of Corinth-Holders and Cleveland High Schools. The Board of Education had estimated the cost to be $30 million each in the Bond Referendum but they actually ended up costing $45 million apiece. First and foremost, this huge amount of money did not belong to the Board of Education or the Board of Commissioners, it belongs to the taxpayers of Johnston County. It was serving no purpose sitting idly in a Johnston County Schools account while the taxpayers were paying approximately $33 million dollars a year in debt service for schools.”

Kay Carroll was the Board of Education chairman during the 2007-08 school year when a First Citizens Bank loan was taken out on behalf of the schools. Dr. Anthony Parker was the superintendent of Johnston County Public Schools from 2003 to 2009, working with Carroll during this critical 2007-08 school year.

Parker was the individual Kay Carroll attempted to bring back to Johnston County as a consultant to help build new schools in 2021. Carroll reportedly used a 2021 closed session meeting to influence the signing of a contract for Parker’s consulting company. The contract was drawn for one-year totaling $180,000 plus expenses. The contract issue was brought to light by board member Ronald Johnson. The contract was never awarded.

Mismanagement of bond money?

Johnston County Board of Education Chairman Todd Sutton in January of 2020 accused Kay Carroll, a then school board candidate and former Board of Education chairman, of taking out a $30 million loan from First Citizens Bank in 2007-08. The loan, according to Sutton, was due to Carroll’s mismanagement of bond money while building Corinth Holders and Cleveland high schools. The loan was to be paid back over 20 years using the county schools North Carolina Education Lottery money.

Carroll issued a response to Sutton’s accusation. He stated it was the Johnston County Board of Commissioners who took out the loan and that Education Lottery money can only be used for construction and debt service.

According to the North Carolina Education Lottery website, Education Lottery money is mostly used for non-instructional support personnel and transportation. “In FY 2018, the majority of NC Education Lottery funding (57%) went to non-instructional support personnel, with 19% going to school construction, 12% to pre-kindergarten, 6% LEA transportation, 4% to need-based college scholarships, and 2% to UNC need-based aid.”

The Johnston County Board of Education held a retreat March 7, 2009, to discuss an opening timeline for the two new high schools. The board reportedly considered a delayed opening of Corinth and Cleveland high campuses to save $2.6 million in operating costs, while the district sat on $40 million in funds. The schools opened without delay in fall of 2010, after the discovery of hidden funds by the Board of Commissioners.

2019 financial trouble

A decade after the 2009 mismanagement of funds, the Johnston County Board of Education was once again in financial trouble. In the fall of 2019, under interim Superintendent Dr. James Causby, Johnston County Public Schools had a fund balance of $880,000 with only $300,000 usable. Just two years prior, the fund balance reportedly sat at over $10 million.

Dr. Causby cut $7 million from the budget, but still the Johnston County schools would have been out of money by spring 2020. School board members asked county commissioners to fund an additional $8.8 million to the school system to finish out the fiscal year. Board members Teresa Grant and Ronald Johnson called for a forensic audit to find any missing funds or wrongdoing with money, versus a wellness audit which would simply find any deficits in funding. A wellness audit was all that was done.

Update

In a Monday video statement, Antoine and Donovan called upon N.C. Auditor Beth Wood to conduct a complete forensic audit of Johnston County Public Schools’ financial records.

Johnston County Commissioner Fred Smith said the school board needs new leadership and a new direction.

“I think it shows the things that I said as a county commissioner in public meetings about we cannot trust the financial figures the school board gave us,” Smith said. “They’re still continuing to want more money. The figures are not reliable with the money they have. Their figures on needs for schools and potential students are not accurate. I brought that to the attention and stood up for that in our county commissioner meetings. I was the lone voice.

“We as commissioners have to be good stewards of taxpayers money and also the school board, to accumulate that money without holding them accountable, allowing the school board to build a high school when our present high schools are not being efficiently utilized. Their projections on students is not accurate because statistics show between home schooling and private schools, all of the new residents don’t go to public schools,” Smith said.

“We’ve got to do a better job of being good stewards of taxpayers money. Our citizens work hard for their money. During these inflationary times we should have cut taxes but when you believe the school board – who does these shenanigans with taxpayers money – you can’t do a good job of taking care of the taxpayers money.”

Smith gave the sole vote against a request by the Johnston County school board to place a $177 million construction bond referendum before voters this November. The bond will be on November’s ballots.

Visit JoCoReport.com's initial story to hear the recording.

Carroll attended the Tuesday meeting of the Board of Education remotely and apologized for his choice of words in the recording when he said the commissioners would want their money back if it isn’t used and to “hide the money.” On Tuesday, he admitted his choice of words were “not the best in the world,” but added they never hid money.

He also offered apologies to Chief Financial Officer Stephen Britt for being part of what he called, “a political mess, a continuation of the past.”

Britt also admitted his words on the recording, but called the story reporting it “defamatory.”

School board member Terri Sessoms said there is a prohibition on the recording of meetings in the district’s ethics policy.

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