From July to March, WCPS spent $400,000-plus on legal services

In the first nine months of the 2019-20 fiscal year, Wayne County Public Schools spent more than $400,000 on legal services.

The billing statements for July 2019 through March 2020 were released as a result of a Freedom of Information Act request by the New Old North.

It is unclear why the statements for April and May were not part of the school district’s response.

The district is currently represented by Schwartz & Shaw, a firm that specializes in education law, which was hired in 2017.

According to Schwartz & Shaw, PLLC’s contract with the district, WCPS pays the firm a $3,000/month retainer that covers “the availability of Richard A. Schwartz, Brian C. Shaw, Rachel B. Hitch, or other members of the firm for telephone and office consultation with the Board of Education, the Superintendent, and central office administrative staff.”

The retainer also includes the presence of one of the firm’s attorneys at Board of Education meetings, committee meetings, conferences and staff meetings, up to six half-day “Board/staff development workshops per fiscal year,” board policy review and drafting services.

Additional legal services — from “legal research” and representation at “internal hearings” to consultation and court appearances — would be billed at the rate of $170/hour.

Here is the breakdown of the billing:

• July 2019: $49,215.96

• August 2019: $54,379.80

• September 2019: $27,175.96

• October 2019: $66,933.35

• November 2019: $46,774.41

• December 2019: $32,934.49

• January 2020: $39,489.18

• February 2020: $41,359.40

• March 2020: $50,545.64

Total: $408,808.19

The district did not indicate whether the billing includes the retainer — and did not include the actual itemized billing statements. However, if the billing does include the retainer, the board has paid an additional $381,808.19 in billed legal fees over those nine months.

That number, divided by the hourly rate, is 2,245.93 hours — or 93.58 days of work — in nine months beyond the services covered by the retainer. And that is not counting any expenses that occurred in April, May or June — the final three months of this fiscal year.

The draft budget proposal given to board members by former Superintendent Dr. Michael Dunsmore before his resignation proposed a budget of $350,000 for legal services for fiscal year 2020-21.

Board attorney Richard Schwartz was legal counsel for Tyrell County Public Schools, the district Dunsmore left in 2015 to take the WCPS job.

Dunsmore and former Finance Officer Michael Hayes, who also resigned, came under fire earlier this month when the district announced during its 2020-21 budget workshops that it was facing a $5 million deficit and that cuts in staffing and programs were likely necessary to balance the budget.

Since then, an audit, which was completed by Rives & Associates LLP and released to the district in November 2019, has revealed significant and precipitous spending increases over Dunsmore’s term as superintendent, including massive hikes in spending in Central Office salaries as well as other categories.

Board members said they never saw the audit results.

In addition to hiring former Wake County Public Schools Superintendent Dr. James Merrill as WCPS’ interim leader, the Board of Education also hired School Operations Specialists to review the county’s finance department as well as other processes to see how the schools went from a $7 million fund balance in 2016 to a nearly $3 million deficit in the same fund in 2019.

Board members have said publicly that they had no idea that the district was in financial trouble and that they were assured that the district’s finances were “in good shape.”

The diminishing fund balance has been indicated over the last four years’ audits, culminating in this year’s deficit, according to charts included with the 2019 audit, which was presented, at the request of the board, by Rives & Associates at a meeting on June 3.

Accountant Diana Hardy shared the audit findings, as well as specific details on the spending increases that contributed to the shortfall.

In his first public appearance since his hiring, Merrill said “painful” decisions were on the horizon and that he could not guarantee staff cuts weren’t coming.

He added that he and the consultants are looking at the finance department and that he has advised Central Office staff to start looking for places to cut.

He has also indicated that few of those employees were familiar with the budget or the budgeting process.

And as of a few weeks ago, the district wasn’t sure it would be able to pay teachers their annual stipend — or cover June payroll.

The Wayne County Board of Commissioners offered the BOE a $3 million loan in exchange for an accounting of how every dollar would be spent, but on the morning of the day the deal was going to be signed, Merrill said WCPS had decided to borrow from its state account instead, a move he later acknowledged would require an interest payment.