Fired head of state's largest charter school under scrutiny for spending

WAIPAHU, Hawaii (HawaiiNewsNow) – The fired former head of Hawaii Technology Academy and his vice principal spent about $100,000 in state school funds on travel in one year, and an auditor found that "abuse, waste or fraud" likely occurred at the state's largest charter school.

The state Attorney General's office is investigating and HTA parents are angry about the information that Hawaii News Now discovered.

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Jeff Piontek has been a respected leader in high-tech education and served as head of school for Hawaii Technology Academy since 2008.  Piontek said he was an at-will employee and was fired without cause last December by K12 Inc., the publicly-traded, for-profit education company that provides the school's curriculum.

The school is headquartered in a warehouse-like building off Farrington Highway in Waipahu that shares space with a Kirby dealership, a vet clinic and a Sherwin-Williams paint store.

HTA has more than 900 students statewide who take courses via computer using a special curriculum taught and monitored by teachers online.

"There's so many questions we have as teachers that we're left dealing with at the school here," said HTA elementary teacher Justin Nidgion, who spoke during a contentious meeting of HTA's local school board last Thursday afternoon at Waipahu United Church of Christ, a few blocks from the school. Piontek surprised people by showing up and sitting in the back row, even as parents and teachers at the meeting complained about the spending habits that got him in trouble.

A financial statement obtained by Hawaii News Now shows the school spent $107,860 on travel for administrators in the fiscal year ending July 1, 2011.  Most of that was for airfare, hotel, meals and rental car expenses for Piontek, the fired head of school and his vice principal, Ana Matsumoto, who the school placed on administrative leave in late December, sources said.

During the same one year period, the school's roughly 30 teachers and staff spent $18,016 on travel, most of it to neighbor islands to meet with students and parents and conduct tests.

A recently-completed independent audit found "a significant amount of disbursements initiated by upper management were not adequately reviewed and approved for reasonableness."

"Abuse, waste or fraud is likely to have occurred; however no determination has been made until legal proceedings are concluded," said the audit, completed by Carbonaro DeMichele CPAs, a certified public accountant firm from Wailuku on Maui.

Piontek declined an on-camera interview, but defended the trips he took at school expense, saying they were opportunities to spread the news about the school he headed for more than three years and promote Hawaii as a place of innovative learning. Matsumoto was not available for comment.

Click HERE to read the HTA 2011 audit findings.

Parents of HTA students were outraged when a reporter told them how much money the school's previous administrators spent on travel.

"I think I want my money back.  That's what I think.  I think that's beyond ridiculous.  We went on a family trip, there's five of us, and we didn't spent a fifth of that," said Kathie Kaanga, of Ewa Beach, whose children have attended the school since it was founded four years ago.

Linda Elento of Kaneohe said she was well aware that Piontek traveled frequently, because she would have difficulty setting up personal meetings with him to work out an individual educational plan for her special-needs son.

"We had to look at his schedule, so that's how I knew he'd be in Qatar or England or Europe and he was in Australia.  I remember getting upset at the office once and I said, 'I know he's on the planet somewhere, just get him on the phone,'" Elento said.

Piontek said he booked all of the school's travel, noting "ultimately, everything was my responsibility," but he said, "The board approved all the travel."

When a reporter asked HTA's school board chairman, Hawaiian Airlines executive Louis Saint-Cyr, if the board did approve all of Piontek's and Matusmoto's travel, Saint-Cyr said he could not comment.

The audit also raises serious questions about how the school handled cash under Piontek's leadership.

"We were unable to verify that all cash received by the school was properly recorded and deposited.  Abuse or fraud is likely to have occurred," the auditors said.

School board members said the state attorney general's office is investigating, and sources said its investigators have already questioned former and current school employees.

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"When we did the audit, it was in cooperation as well, with the attorney general's office.  We also have a copy at the charter school office as well," Saint-Cyr told those who attended the local school board meeting Feb. 16, the first public board meeting held since Piontek's firing.

Piontek said he's not worried about being charged with a crime. "There's nothing that I've done that's a criminal offense," Piontek said.

K12, Piontek's former employer, hired former Hawaii Attorney General Mark Bennett to investigate the situation, according to sources familiar with the case.  Piontek confirmed that Bennett questioned him before K12 terminated him.

When HTA first started, employees said the school issued gift cards from Office Depot to some parents to help them buy computer supplies for their kids.

But sources said Piontek used the school credit card to purchase thousands of dollars in gift cards and gift certificates at other outlets, including Chili's restaurants, Marriott hotels, Ala Moana Center and Spafinder, the web site that allows people to book body treatments like massages, facials or pedicures at 7,000 spas around the world.

"I have never gotten or received a gift card from HTA at all.  And I've been in this school for four years," said Kathie Kaanga, the mother of a 6^th and 11^th grader.

"Wow.  I would have loved to maybe have something.  But no, I haven't received any gift certificate like that and I don't see what those places would have to do with a school," said Cheyanne Aglia, the mother of a student who just enrolled last fall.

The audit said this: "Because there was no accounting over the physical custody of assets purchased by the school, we were unable to verify that gift cards, computers, televisions, electronics and various supplies were properly received and used by the school."

The Hawaii Technology Academy board has appointed Leigh Fitzgerald as executive director on a five-month contract, and has begun a search for Piontek's successor.  Fitzgerald will be a candidate for the permanent position, Saint-Cyr said.

Last Thursday, the board voted to create a school ethics policy.

"We will adopt the Hawaii Ethics Commission ethics guide for elected officials, state employees, state board and commission members," Fitzgerald told the board meeting, which was packed with teachers, parents and students.

The board also adopted an auditor's recommendation to increase the frequency of school financial audits from once a year to every three months.

"So that we as the board are getting a review on a regular basis of where the monies are being spent, how they're being spent," said Mark Snyder, of Kauai, the board member who represents the neighbor islands.

Piontek had sole discretion to use the school credit card before he was fired, as long as any purchase did not exceed $10,000, sources said.  Expenses that exceeded $10,000 had to be approved by the board, according to HTA board members.

Last Thursday, the board voted to cancel the credit card and adopted a new policy that any school purchase over $2,500 must be approved by two school officials.

In 2011, the board met five times, but this year the board has decided to meet monthly.  The board has also re-established an audit and financial committee that will meet each month.

Saint-Cyr said board members didn't know about any questionable spending until they received a letter tipping them off to the problems in early December of 2011.

"The board reacted quite quickly.  We didn't let this drag on," he said.

"I'm very proud of how the staff and the board reacted," Saint-Cyr said.  "We're comfortable where we are and where we are going.  This is an opportunity to move the school in the right direction."

Fellow board member Mark Snyder said, "It's important that the public understand that we've been dealing with a quick response to, a very quick response, to a crisis that was presented to us only 11 weeks ago."

Some parents, like Kathie Kaanga, blame the board for lax oversight.

"Why didn't they oversee the school better? And if they didn't, why are they still there? We got rid of Jeff and we got rid of Ana.  But what about them on the board?  If they didn't do their job, why aren't they gone," Kaanga said.

STATE AUDIT CRITICAL OF HTA, OTHER CHARTER SCHOOLS

A scathing state audit released in December of 2011 said some of Hawaii's 31 charter schools have spent money without proper oversight, resulting in "unethical and illegal" spending.

The audit criticized Hawaii Technology Academy, because before he was fired, Piontek was employed by K12 Inc., a for-profit education company that also provides the school's online curriculum.  Under K12's contract with HTA, the company, and not the charter school or its board, employed the head of school.

The audit said the employment of Piontek by a private entity "raises serious management and ethical concerns."

"As a private-sector employee, he (Piontek) is not subject to the ethics code and is ultimately accountable to his company, not the State or his school," the audit said.

At HTA's board meeting on Feb. 16, Saint-Cyr, the board chairman, announced the head of school now answers to the school's board and is an HTA employee, and no longer is an employee of K12.

The audit, released by State Auditor Marion Higa Dec. 15, 2011, said, "Hawaii's charter school system has been operating without any real outside oversight since the first charter school opened in 1995."

The audit focused on Myron B. Thompson Academy in Kakaako as an example of "waste and abuse," finding that the school "excessively" increased salaries.  The audit identified $133,000 in salary overpayments in one year to school employees, in what the audit called "possibly fraudulent" irregular employment and procurement practices.

In December of 2010, an investigation by the Honolulu Star-Advertiser reported Myron B. Thompson Academy's principal Diana Oshiro had several relatives on the payroll, including her sister and three nephews.  Oshiro's sister oversaw the elementary school as vice principal while working full time as a flight attendant at Hawaiian Airlines, the newspaper reported.  One of her nephews served as athletic director, even though the school had no sports teams and he does not teach physical education.

The state audit said in the 2009-2010 school year, charter schools received nearly $50 million in state funding, much of which was spent with little oversight.

The audit cited examples of "unrestrained spending," including $18,000 spent by Kamaile Academy in Waianae on three student trips to an amusement park, an ice skating rink and a pizza restaurant.  Kamaile no longer spends school funds on those types of activities, which were called "student incentives."

HAWAII TECHNOLOGY ACADEMY: STATE'S LARGEST VIRTUAL SCHOOL

Oahu-based students work mostly at home, traveling to the Waipahu learning center once or twice a week for in-person classes, with additional time for electives.

Some students have lifestyles that make traditional school difficult.  They are competitive surfers or performing artists who need a flexible schedule.  The school is also popular with military families and parents who want to home school their children.

In a 2011 interview with the Honolulu Star-Advertiser, Piontek said 47 percent of HTA's students came from public schools; 31 percent were military dependents; 20 percent were home schooled and 12 percent came from private schools.

The school uses a standardized online curriculum purchased from the for-profit company K12 Inc., the nation's largest provider of curriculum and online education for students from kindergarten through high school.

In the fiscal year ending June 30, 2011, HTA paid K12 Inc. $1,567,480 in management and technology fees, according to the school's profit and loss statement.  That's about 22 percent of the school's annual $7.1 million operating budget.

Enrollment has dropped below 1,000 students this year, something some parents attribute to the school's management problems.

The school has been "disorganized" in the fall of 2011, said one parent of a high school boy enrolled at HTA who declined to be identified.

She said parents have not been able to get administrators to respond to some problems and the school lacked coordination in recent months.

"Because of what happened, a lot of kids, 'cause I know my son's friends, they quit the school.  They went back to public school," she said.

PIONTEK HEADED HTA SINCE ITS INCEPTION

Jeff Piontek was the first head of school for Hawaii Technology Academy, which opened four years ago. Instead of being called the principal, executive director or headmaster, Piontek's title was head of school.

Before taking the helm of HTA in July of 2008, he was a state science specialist with the Hawaii Department of Education, a position he held for nearly three years.  He headed the DOE's science curriculum, assessment and instruction in that job, according to Piontek's LinkedIn profile.

The summary he wrote on his LinkedIn page said this: "To become ruler of the world!!! But seriously, to make Hawaii the focus of the Pacific rim with regard to Science Technology Engineering and Mathematics (STEM) education.  We have recently been awarded a National Governor's Association/Gates Foundation grant for our work in STEM education and workforce development and a NOAA Marine Science grant."

Piontek also listed himself as president of Educational Consulting Services, Inc., which he describes on his LinkedIn profile as "an innovative company with expertise in infrastructure and design to curriculum implementation and development.  With years of experience across the country and worldwide we have been successful in meeting our employers needs on-time and on-budget."

Piontek's profile said he has run the education consulting business from 2005 through the present, while he also worked for the state school system and headed HTA.  He reported earning a PhD in curriculum and assessment from the University of Hawaii in the 2006-2007 school year.

Before moving to Hawaii in 2005, he held several posts with the New York City Department of Education, including science regional instructional supervisor and director of instructional technology, according to his resume.

Piontek, who's 44, was born in Brooklyn, New York.

K12: LARGEST ONLINE SCHOOL COMPANY IN U.S.

K12 Inc., based in Herndon, Va., provides products and services to more than 2,000 schools and school districts across the United States, with about 94,000 full-time students enrolled in online public schools.  The company receives an average of $5,500 to $6,000 per student from state and local governments.

"The company's goal is to serve public education, empower teachers, and help children reach their full potential," according to a company statement.  "K12's wide range of offerings – from individual courses (credit recovery, world languages, AP) and assessment tools, to blended and online school programs – enables districts and schools to choose solutions they want for the needs of their students.  School districts and independent, nonprofit charter school boards determine the level of products and services they want to purchase from K12."

In December of 2011, a scathing investigative report by The New York Times called into question the effectiveness of K12's virtual schools, sinking its stock price by 25 percent.

The newspaper reported, "a portrait emerges of a company that tries to squeeze profits from public school dollars by raising enrollment, increasing teacher workload and lowering standards."

Current and former staff members of K12 told the newspaper that intense recruitment efforts fail to filter out students who are not suited for the program, which requires strong parental commitment and self-motivated students.

"Teachers have had to take on more and more students, relaxing rigor and achievement along the way, according to interviews," The New York Times reported.  Teachers complain about low pay and heavy class loads, with some high school teachers overseeing more than 250 students, the newspaper said.

K12 released a statement in reaction to the Times investigation that called the story "unfair and one-sided," saying the article "advances an anti-parent choice policy agenda."

"Instead of presenting a factually accurate look at K12's online and blended learning products and education programs, the writer mostly editorializes, selectively picking and choosing some facts and omitting many others to satisfy a pre-determined narrative," the company said.

On Feb. 7, K12 reported its quarterly profits dropped 46 percent from the year before to $4.2 million.  K12 management blamed the decrease on an $8 million adjustment in revenue related to potential funding reductions by state and local governments, as well as higher levels of instructional costs, product development costs as well as administrative expenses to support growth of its business.

On Feb. 10, a few days after the company's latest earnings report was released, a New York City law firm announced plans to file a class-action lawsuit on behalf of investors who bought K12 stock between Sept. 9, 2009 and Dec. 16, 2011.

The complaint, filed by the firm Levi and Korsinsky, alleged that K12 misrepresented and failed to disclose "materially adverse facts about the company's business, operations and prospects."

The lawsuit will charge that K12 engages in improper and deceptive student recruiting and that it failed to disclose administrative pressure to pass students despite poor academic performance to maintain high enrollment levels and continued government payments.

Ronald J. Packard, K12's chief executive, earned a compensation package worth $5 million in fiscal 2011, nearly twice the $2.67 million he earned the year before.  The company reported $522 million in revenue in 2011, an increase of almost 35 percent from the year before.

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