Caught on tape: School officials laughing as they talked about hiding millions of dollars

(KDVR) — Hours of secretly recorded conversations obtained exclusively by FOX31 Denver News indicate school officials in the Adams 12 Five Star School District may have been intentionally hiding tens of millions of dollars in retirement benefit payments from the public.

“We did not want the public at large to know that we have these big stipends that people get when they exit the system,” said Superintendent Chris Gdowski. “We did try to bury it,” replied Chief Human Resources Officer Mark Hinson. “The way it has been shown is…off the budget,” said financial consultant Vody Herrmann.

Adams 12 'The Tapes'

That exchange was caught on tape by the school district’s internal auditor Gina Holub back in September.

Holub was meeting with the Superintendent and executive level staff to discuss concerns she had with the school district’s 2012-2013 budget.

“I recorded the conversation because I was concerned that school officials were hiding millions of dollars while cutting jobs and eliminating educational programs,” said Holub.

“Many of the cuts were not necessary. The school district is hiding more than $17 million dollars.”  She was concerned that schools officials “were going to sweep it under the rug.”

To investigate Holub’s concerns the school district hired Vody Herrmann, the former Assistant Commissioner of Public School Finance for the Colorado Department of Education.

But the school district is trying to keep her findings from the public. They’ve refused FOX31 Denver’s repeated requests for a copy of Herrmann’s report. They argue it’s a matter of attorney-client privilege.

When asked if “Vody Herrmann agree[d] with any of the issues being raised by Gina Holub?”  Superintendent Chris Gdowski replied, “No. I really don’t think she did.” When asked if he was “certain about this?” The Superintendent adamantly replied, “I am.”

But the secretly recorded conversation between the Superintendent, Vody Herrmann and others tells a much different story.

“I am going to agree with you,” said Herrmann to Holub. “This unassigned amount is going to grow to be $12 million dollars.” Holub replied, “That’s what I’m thinking, $17 to $20 million of fund balance will be left.” Herrmann clearly agreed, “Right.”

The recording clearly contradicts the Superintendent’s claims. In a letter he sent to over 40,000 parents, teachers and staff, Herrmann claimed she found “no merit” to Gina Holub’s concerns.

She told the public “there were no grounds to support the charges of unethical or illegal behavior” and said the school district is “acting prudently in planning for the long-term financial health of the district.” Read Vody Herrmann’s letter.

But behind closed doors Vody Herrmann raises serious concerns. Over and over she’s caught on tape questioning the budget, how it’s prepared and a total lack of transparency.

“I think this budget lacks detail to such a significant level that I should have written it down as a recommendation, said Herrmann. “The detail is not there. It’s all at such a high level that it’s difficult to find out where anything is.”

The district’s Chief Financial Officer, Shelley Becker, who has declined our repeated requests for an on-camera interview, can be heard laughing as Herrmann delivers her findings.

“You know, I think the immediate thing is you either need to hire staff a couple of people or redirect staff within the district to really get in and review those building operations budgets, program operation budgets. That is crucial. Needs to be done in a quick as time possible,” said Herrmann. “I’m certain you are going to come up with close to $12 million. I know you are.”

Herrmann has declined our repeated requests for comment and Gina Holub has since been fired. She’s filed a federal lawsuit and alleges she was terminated for speaking out. Gina Holub’s Federal Lawsuit

Adams 12 In their own words

At a recent meeting, School Board Vice President Norm Jennings claimed Vody Herrmann “looked at our stuff and said everything is spot on, we are clean.”

School Board President Mark Clark took it one step further. He claims the district has hired a team of consultants, outside experts and external auditors who investigated the entire budget and “state we have done everything by the book.”

Professor Jim Sorensen, a CPA, Ph.D. and an expert in forensic accounting, certainly disagrees. “The president needs to re-read the report because the report says quite the opposite,” said Sorensen.

That report, the actual correspondence between the consultants and the Superintendent, raises even more concerns.

According to that report, the consultants found “numerous inconsistencies.”

They were unable to reconcile the budget. They highlight the fact that the district has underspent its benefits budget by “as much as $4,000,000 dollars in a single fiscal year.”

They uncovered “significant under spending” when it came to “supplies and materials.”  Read the Consultants’ Report

We shared our findings with Kerrie Dallman, President of the Colorado Education Association. “Listening to this recording I think every educator, every parent and every student should be very insulted,” said Dallman.  “It’s sounding more and more like the financial crisis has been made up on the part of the district. That it’s not real and that it has been parents, students and staff that are paying the price.”

Late Wednesday afternoon, the Colorado Education Association fired off a letter demanding the state take immediate action.

CEA Executive Director Tony Salazar questions the leadership of Superintendent Chris Gdowski.  He’s requesting the State Auditor launch “a formal examination into the budgeting and financial management practices of the Adams 12 School District.”
Read the CEA Letter to the State Auditor

The letter was hand delivered to the Office of the Governor and the Colorado Department of Education.

It references our reporting and states that the “taxpayers and the community members” have an overwhelming “right to know how their hard-earned tax dollars are being managed.”