In 2006, Loudon County Director Of Schools Edward Headlee, made the decision not to rehire Loudon High principal, John Bartlett. Bartlett had been LHS's principal for two years. Publicly, Headlee was never very specific why he had decided not to rehire Bartlett. However in a public meeting Headlee stated, "he would consider the results of an audit currently being done on the school’s books." This suggested that there might be some improprieties with funds managed by the school.

Headlee's decision not to rehire Bartlett ignited a fire storm of support for Principal Bartlett from parents, students and community leaders who turned out in mass at a school board meeting to protest Headlee's decision. Ultimately, Headlee reversed his decision and rehired Mr. Bartlett. While Headlee never explained his initial decision, a look at the audit Headlee referred to might shed some light on his first decision.

Each year the BOE gives each of the nine schools a certain amount of money for what they call an "activity fund." An activity fund is essentially a pot of money that can be used for certain expenditures, many decided by the principal. The amount of money each school receives is mostly dependent on the school's enrollment. A school with an enrollment of 500 could expect to receive around $60,000.00 give or take a few thousand. The practice of allowing each school to spend this money with out going through the purchasing department is illegal. Each year, state auditors "write up" Loudon County for the violation, each year county officials vow to end the practice yet each year the violation continues.

OFFICE OF DIRECTOR OF SCHOOLS
FINDING 06.04 PURCHASES WERE NOT
MADE THROUGH THE COUNTY PURCHASING AGENT

During the year, the School Department disbursed funds to the various individual schools’activity accounts and allowed the individual schools to make purchases of equipment and various other items. This practice does not comply with the County Purchasing Law of 1957, Section 5-14-101, et seq., Tennessee Code Annotated, which requires the county purchasing agent to make all purchases for the various county departments.

RECOMMENDATION
All School Department purchases should be made in compliance with state statute.

This method of channeling funds to the individual schools is not provided for in state
statutes. As stated in the finding, the County Purchasing Law of 1957 requires the
purchasing agent to make all purchases for the various county departments.
(Source State Audit)

Apparently, prior to Headlee's decision not to rehire Bartlett, a special state audit of Loudon High School's finances had been ordered for the previous nine months. The audit found 18 violations or possible violations.

1. Salary supplements amounting to $22,157.50 paid directly from school activity funds

2. Activity funds not properly accounted for in school records

3. $2,000 due from Coca–Cola not collected timely

4. Inadequate separation of duties

5. Travel expense claims not found

6. At least $6,571.34 from student activity funds used for staff development

7. Purchase orders incorrectly used

8. No profit analyses for fundraisers, resale items, and vending

9. Fundraiser collection issues

10. Checks cashed using collections

11. No authorization for certain fundraisers

12. Some resale activities had no sales tax remitted; only yearbooks purchased online included sales tax

13. No original collection documents prepared for on–site yearbook sales; no supporting documents retained for advertising sales

14. School pictures and vending commissions posted to a restricted account

15. Ticket reconciliation forms incorrectly used for football, not used at all for some other sports and events

16. Deposits have no check listings; receipt numbers not recorded on deposit slips

17. Basketball change fund apparently increased by using earlier collections

18. IRS Form 1099 not issued

Let me say again, this is not about the actions of one principal but about a system that does not work yet it is never changed. Principal John Bartlett may have said it best in one of his responses to state auditors, "This has been standard operating procedure for Loudon High School for twenty years."

One can only assume that these practices have also been standard operating procedure for the other eight schools in the system. The practice of channeling tens of thousands of dollars through each school is an accident waiting to happen. Principals and teachers and school staff are there to provide education. They shouldn't be required to also act as finance directors.

Click Here For Complete Audit.