Contract Terminated & Unpaid City Taxes
Staff Report
Bridge KY and Barren County Schools (BCS) ended their six-year relationship on July 1, 2024, in which over $3.2M of payroll funding passed through the nonprofit to avoid overtime and pension costs for after school classified employees.
In that time period, the arrangement resulted in a $154,000 over-billing of BCS, who was funding more than 90% of all monies the local charity received.
During those years city occupational taxes in the amount of $11,481.25 were not paid until we began our coverage. More on that oversight at the end of this report.
Former school superintendent Bo Matthews, with BCS Director of Nutrition, CheyAnne Fant, who envisioned the program, subcontracted with Bridge KY in name only for Barren Beyond the Bell (BBB) afterschool and daycare which began in July 2019.
The relationship provided a means to pay school employees working with the program outside the regular school system payroll. This workaround eliminated any school requirement of paying federal overtime and state pension costs.
After our Report #1, CFO Murley wrote in an email, “In order to help you better understand the partnership between Bridge Ky and Barren County Schools, we would like to inform you that as of 7/1/2024, Barren Beyond the Bell employees are no longer paid through Bridge. Moving forward, the afterschool program will handle all payments for Barren Beyond the Bell employees through the School District for the foreseeable future.”
The BCP confirmed this means all applicable employees are being paid overtime and their pension appropriations are made as all other school employees.
This termination was sudden and not expected because the program had year-over-year expense growth and was moving into having 2024 costs to be well over $1M. Documents show program expenses for 2021 were $459,809.58, $922,481.31 for 2022, and $963,702.39 totals for 2023.
Given this early termination of the Bridge contract, a prior repayment agreement of the BCS over-billing was not fully met; therefore, a balance of $30,000 is still owed to the school system. Murley said Bridge KY would be refunding $2,500 a month onward until the amount is paid in full.
This unique relationship had begun under a Memorandum of Understanding (MOU) approved by the Barren County school board and signed by Patrick Gaunce in July 2019. The Glasgow city councilman and Glasgow Boys & Girls Club Chairman was identified as CEO of “Bridge, Inc.” on the loosely drafted one-page document. Later known as Bridge KY, Gaunce’s then-newest charity was only months old and still awaiting its official 501(c)(3) non-profit approval at that time.
The agreement presented to the Board stated that Bridge would assist in hiring and managing the employees, process all payroll costs, and bill the school for reimbursement. The MOU outlined how Bridge having a singular salaried employee would be paid up to $30,000 annually in management fees for this service.
Bridge did not have an in-house accountant and outsourced the school’s check writing to the accounting firm of Lockshield Partners.
According to Drew Thompson, owner and managing partner of the firm, “We processed payroll for Bridge based on hours given to us by Sonya.” Sonya Davis is the BCS Community Education Director and Unit Program Coordinator for Bridge.
Thompson further said, “We had no input on the calculation and amount reimbursed by the school. That was based on the contract between Barren and Bridge, which we had no part of..”
According to Davis and Fant, the school would pay this amount plus a 23% premium explained as a need for expenses associated with payroll. Bridge would deposit it in their account and Bridge internal documents have referenced adjustments made as “per Patrick Gaunce”.
The MOU approved wasn’t at all the program in place. In retrospect, Bridge never hired, trained, managed, or even billed for any employees. Gaunce’s only response to our inquiries has been, “I am not involved at all, it is managed by the payroll people and the schools.”
Other county schools having afterschool programs were contacted and found to have programs outsourced as well. Yet, they are in line with what the Gaunce MOU pledged rather than what was really happening
No other examples can be found for, “in name only”.
The Kentucky Public Pensions Authority (KPPA) Executive Director Dave Eager would not discuss specifics of any school board but said there have been legislative mandates in place since 2021 stopping government from utilizing independent contractors to avoid pension costs and on the surface this would be the same.
Occupational Tax Oversight
On April 1, 2024, the BCP requested details associated with occupational taxes for Bridge and the Boys and Girls Club for the years of 2019 through 2023.
While Glasgow city government denied our request for details, Park City provided the following from City Clerk Sue Whobrey: “Bridge KY has only paid occupational Taxes for the year 2023…”
The Park City findings were forwarded to Gaunce, his accountant Tag Taylor, his attorney Brian Pack, and Murley.
Upon receiving this notification, Murley stated in a phone conversation, “If occupational taxes were not paid, Barren County Schools will rectify it.”
Glasgow City Attorney Rich Alexander and Glasgow Mayor Henry Royse were asked what might happen if a company didn’t pay its occupational taxes. Alexander stated, “Under code of ordinances, section 110.05, employers (corporately as well as its officers) are personally liable for the tax—as is the employee if the employer persists in not paying.”
He added, “It would be a collection action filed by the city and the ordinance provides for liens to be placed against employer property.”
According to Barren County Court records there were no actions filed by the City of Glasgow against Bridge KY or its chief officer Gaunce at that time.
On June 16, 2024, Murley followed up in an email, “The Barren County Board of Education has paid the Park City & Glasgow City Tax $1,026.52 and $10,454.73 respectively for back payroll withholding taxes recently. We have worked diligently with Taylor Polson to correct the local withholding back payroll taxes issue.”
Documents were provided detailing the calculations on actual city forms used to make quarterly payments. The forms specifically outline a 1% interest and a 5% penalty charge per month for not being paid on time. No interest or penalties were processed. The amounts approved by Matthews for back payments were made on June 4, 2024.
An anonymous source claims all associated with the January 2023 meeting were aware at that time taxes were not being deducted or paid. Murley didn’t deny it and said, “I guess there was a lack of follow-through,” when asked why it wasn’t addressed at that time.
In upcoming issues:
We will show examples of commingling of Bridge Ky, Boys and Girls Club, and Barren County Schools. Including the procedure of having these relationships approved and any changes in processing for the future
We will provide some compensation details for those involved and compare costs associated with the program while processed by Lockshield Partners, Taylor & Polson, and now BC Schools.
We will detail how the $1M grant announced for an expansion of the Boys and Girls Club for Glasgow and Cave City has been expensed. This report will have the required guidelines, details provided, and audit statements regarding this funding.
