The Office of the State Auditor found that Bridges Academy in Wilkes County falsified student enrollment records, misused charter school money to support a preschool and failed to submit required tax forms in 2019.
State Auditor Beth Wood released the audit of the K-8 school on Wednesday. The school relinquished its charter last summer amid allegations of financial irregularities and what its own board of directors described as “insurmountable financial challenges.”
The state auditor will turn her office’s findings over to the District Attorney’s Office in Prosecutorial District 34. The district includes all of Alleghany, Ashe, Wilkes and Yadkin counties. The findings will also be shared with the Internal Revenue Service and the North Carolina Department of Revenue.
The audit shows that for the 2020-21 school year, Bridges Academy’s director and finance officer falsified student enrollment records by reporting 72 students who were not enrolled in the schools.
The two admitted that they began inflating enrollment eight years earlier, mainly in early grades to avoid detection. Students in grades K-2 aren’t required to take state tests and don’t show up on testing rosters.
Charter schools are public schools but free of many of the rules and regulations traditional public schools must follow. State and federal dollars follow students. Enrollment determines the amount of money a school receives.
Bridges Academy was also found to have used $78,576 in state money intended for the charter school to support the operations of a preschool, despite charging tuition for children to attend the preschool.
“The charter school funding provided by DPI was intended for the education of kindergarten through eighth grade students,” the audit said. “However, at least $78,576 of the funding was used for the operation of the preschool to close the gap between the revenues and expenses.”
In 2019 and 2020, Bridges also failed to report nearly $500,000 in payments to the director, instructional and support staff, the audit found.
That means the IRS likely collected fewer taxes from the organization than was owed.
“The failure to provide and submit accurate tax information appeared to be an effort by Bridges Academy to assist the contractors in avoiding tax and retirement benefit implications while also securing staffing resources for the school,” the audit said.
Here are key recommendations made by the Office of the State Auditor:
- DPI should seek repayment of $404,971 from Bridges Academy, or the Receiver, for the state funds received as a result of the falsified student enrollment records.
- DPI should consider reviewing the enrollment history of Bridges Academy and determine if the school received funding for falsified students in previous years.
- DPI should seek repayment of $78,576 from Bridges Academy, or the Receiver, for state charter school funds that were utilized to support the preschool.
- Bridges Academy, or the Receiver, should seek the assistance of a Certified Public Accountant to prepare and file the required 1099 tax forms for contractors (director, instructional, and support staff).
The state Auditor’s Office launched its investigation after receiving six allegations through its Hotline concerning Bridges Academy.