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Adams 14 accuses former management partner of suspicious financial activity

The school district released findings from an independent audit on Thursday.

COMMERCE CITY, Colo. — The Adams 14 Board of Education shared its findings of an independent audit on Thursday detailing financial actions taken by its former external management partner, MGT Consulting LLC.

The school district selected MGT to help run the schools after an order from the state because of years of low academic performance. 

The Colorado State Board of Education recommended management by a private group other than the district. Adam 14's agreement with MGT started in June 2019.

After she was hired, the audit said Superintendent Karla Loria began reviewing contracts between the district, MGT and individual vendors. According to the report, she thought Adams 14 had paid other parties to provide similar services to those MGT was responsible for performing. 

"MGT did not properly oversee district expenditures and appear to have grossly misused district resources," said school board president Ramona Lewis. 

A spokesperson for MGT, said that isn't true. According to the spokesperson, district employees were asking for additional services that went above and beyond what MGT had already contracted with those vendors for and that is why there were separate contracts.

Eide Bailly LLP was retained in Sept. 2021 to review payments made by Adams 14. The firm reviewed contracts for eight individual contractors or vendors. According to Eide Bailly, the contracts seemed similar to work MGT was required to perform under the contract between MGT and Adams 14.

The audit said Adams 14 paid these eight vendors more than $495,000. 

"It was entirely possible that these services were being duplicated," said Adam 14's attorney Joe Salazar. "MGT was being paid already a significant amount of money to conduct these services but then they would go out and hire another group to do those services."

For superintendent Loria, this is not about the money. 

"It is about what we can get with that money for our students and our students didn't receive that," she said.

Adams 14 has struggled with low academic performance for more than a decade. According to the Colorado Department of Education (CDE), Adams 14 only received the two lowest ratings on the state's accountability scale from 2010 to 2019.   

“The forensic audit does not appear to provide conclusive evidence," said Education Commissioner Katy Anthes. "It simply directs the district to review its contracts. In the end, this is a contract dispute between the district and MGT. It is not something within the jurisdiction of either CDE or the state board."

"We continue to focus on the goal of improving academic outcomes for students. The board will hold a hearing in April, and it is legally obligated under the Accountability Act to take action to improve student achievement. We are waiting for the input from the independent State Review Panel, and have invited the district to make a proposal as well during the April hearing.” 

According to CDE, the department and the state board have both made multiple requests for the forensic audit over the last month and CDE did not receive it until 20 minutes before the press conference held by school leaders on Thursday. 

In a released statement, MGT's Executive Vice President Eric Parish said the "press conference is another example of the Adams 14 Board of Education making much ado about nothing." 

It continues, "there is nothing here, as the District Attorney's office itself has said, and the auditors would have come to a similar conclusion if they had actually interviewed anyone from the district's accounting or finance departments or anyone from MGT."

According to Parish, "the district's ongoing desire to create artificial distractions raises real questions about their interest and ability to lead the type of academic improvements that MGT accomplished during its time as lead partner."

The Adams 14 School Board voted to terminate its agreement with MGT, but the State Board of Education denied the Adams 14 request to find a new management partner. In April, the State Board will decide what to do next and if a different management partner will be allowed to work with Adams 14.

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