School Overbilled $154K

Staff Report

A change of accounting firms identified local charity Bridge KY collected overpayments totaling $154,666.80 from Barren County Schools going unnoticed for three years.

This was revealed when Taylor, Polson & Company CPAs, PSC became Bridge’s new choice in their payroll processing role for the county afterschool program, Barren Beyond the Bell (BBB).

Barren County Board of Education Finance Director Joe Murley noticed a large discrepancy in the billing by the non-profit who fronts as the payroll provider for school employees of BBB.

In January 2023 when their subcontracted firm began distributing paychecks, Bridge’s invoice for the service was less than months prior and the considerable variance caught Murley’s attention.

In an interview March 12, 2024, with Superintendent Bo Matthews, CheyAnne Fant, BC Director of Nutrition also overseeing BBB and Murley, it was explained Bridge was an entity utilized in name-only to process payroll of hourly school employees working in the afterschool program.

Fant said, “Bridge runs our payroll and when I say ‘us’, I mean our afterschool programs such as Little Learners and Summer Camps and intramural programs at the high school and middle school.”

Initially the program began in the 2018-19 school year offering afterschool childcare out of federal 21st Century Community Learning Center (CCLC) funding from the US Congress.

Those grants covered the outset of our afterschool funding, says Fant, except for employee overtime and associated payroll costs inherent to the Kentucky School System.

According to Fant, grants nor their School Board want to pay overtime, so excess pay to classified employees became a drain on their General Fund. The program ended its first academic year with an uncertain future under such additional concerns as the state required benefits cost of school employees and limitations in their availability without paying overtime.

The idea to outsource processing payroll through a non-profit, thereby deferring employee retirement pension payments, was drafted in a Memorandum of Understanding (MOU) between a then newly created Glasgow charity Bridge KY and the Barren County Schools.

Superintendent Bo Matthews in describing the decision said,“They’re not paying into retirement—but they’re getting cash in their pockets” referring to the instructional assistants already trained as school employed classified workers and utilized in this program.

The calculation given was a 24-cent match to each hourly dollar a school employee earns and required of Kentucky school systems to pay into an individual’s classified pension was avoided.  Therein making Barren County’s general fund “in the good” upwards of $400,000 to date in sub-contracting Bridge as their payroll pass-through, who then sub-contracts to an outside CPA firm.

The MOU was approved afterwards in a July 2019 school board meeting for that upcoming academic year signed by Kerry Dilley, Board Chairman, and Patrick Gaunce, CEO of Bridge, Inc.

Terms of the one-page MOU were stated as follows:

Responsibilities of Barren County Board of Education & Community Education.

The responsibilities for the cost and expenses related to the afterschool program will be the fiscal responsibility of the Barren County Board of Education & Community Education. This would include the cost of wages, salaries and training provided by the Bridge, Incorporated.

Barren County Board of Education will also make a non-monetary donation of 10% of wages paid in two payments for the year, not to exceed $30,000 annually.

Community Education Director will assist in the hiring process, oversee staff and daily interactions of the program sites, and will serve as the general coordinator.

Responsibilities of Bridge, Incorporated.

…… Bridge, Inc. will be responsible for hiring and maintaining payroll expenses and sending a monthly bill to Barren County Board of Education for reimbursement.

This Memorandum of Understanding (MOU) was the only agreement between the two parties and remained in place until April 23, 2023, when the Board of Education was made aware of the overcharge as noted within a new contract titled “Labor and Payroll Outsourcing Agreement” being submitted for their approval.

While wording of both agreements infer the charity was involved in hiring and to some extent managing the labor, Bridge had no hand in either. Worker timecard hours and all monies to pay employees in BBB were sent by the school to Bridge as bank deposits for a “Bridge Kentucky INC” paycheck to the employed individuals.

The new 6 page contract formally defined Bridge as an Independent Contractor. It also terminated the MOU and outlined a repayment plan had already been enacted for $154,662.80 in overbilling.

Settlement of repaying the over-billing came in a prior meeting called by Joe Murley, with Cheyanne Fant, between Patrick Gaunce and Gary Somerville. Murley and Fant both believed Somerville to be the internal accountant for Bridge and Gaunce was in charge of the organization.

Taylor & Polson numbers assisted Murley in identifying the overcharge and those in attendance agreed on a grand total of $170,442.88 difference in what Bridge was paid and the actual payroll expenses of BBB employees.

They further agreed the outsourcing to Bridge had incurred $15,780.08 in direct deposit fees and accounting costs of their former CPA firm, Lockshield Partners. This $15.7k was credited for a total $154,662.80 unaccounted overpayment.

Additional $60k credit was advanced for 2023 and 2024 in terms of the original MOU having agreed on a $30k maximum annual payment for services rendered.  Another $20k credit was given for two years of a “Boys & Girls Club membership”. (BCP has confirmed no B&G membership payment has ever been made by Glasgow Schools).

These generous future credits left a balance of $94,662.80 to be returned to the Barren County Board of Education.

Somerville as Bridge’s financial representative negotiating in that meeting abruptly resigned his official accounting role in Gaunce’s other B&G charity after our March BCP interview with Barren County Schools and has not responded to multiple requests for comment.

On February 28, 2023, a check written to the Barren County Board of Education in the amount of $91,662.80 from Bridge KY signed by Mallie Boston, was received. It cleared March 3, two months prior to a School Board vote on the new contract acknowledging there’d been an issue.

Noted in the agreement “Bridge may retain $3,000 of the total overpayment amount in a separate payroll account to ensure the account maintains a positive balance.” When reached for comment Patrick Gaunce would not discuss the program saying, “I’m not involved at all, it is managed by the payroll people and the school.

Publisher’s Comments:

We now know that over $3M in school funding was transferred through Bridge Kentucky by Barren County as a payroll workaround of employee overtime and pension costs.

We also are now aware that a sizable billing error occurred, how it was identified and the steps taken for Barren County Schools to secure a return settlement of their overpayment.

In future segments of BCP coverage, we will review how the overcharge came about, where money was deposited, and how billing overages were exponentially increasing as payroll totals approached over $1MIL annually.

We will show how the original MOU signed by Patrick Gaunce and Kerry Dilley was not an accurate description of the non-profit’s function as approved by the Barren County Board of Education.

Finally, we will compare the BC Schools program as implemented with Bridge to another in our region, provide a state response, and detail how even today the program in place is not what the current Board approved contract reflects.