Despite our concerns about the nature of recent scrutiny, we are determined to bring clarity.
As members of the boards of directors of Seed Daycare, Harvest Prep School and Best Academy, we are very disappointed in the mischaracterizations of and inaccurate conclusions about our organization and associated schools in recent Star Tribune articles.
Most recently, the Aug. 25 article "Harvest Prep asked to reveal details of finances" failed to report that prior to the regularly scheduled board meeting on Aug. 23, our authorizer, Audubon Center of the North Woods (ACNW), had raised no concerns whatsoever about Harvest Prep's finances.
In fact, Harvest Prep went through an extensive and rigorous annual site visit by ACNW in February, with the final report issued to the Harvest Board of Directors on April 26. In that report, ACNW rated each and every one of Harvest Prep's performance measures -- including finance and governance -- as "exemplary."
Specifically regarding finances, the site visit report states: "The school received an audit that contains no material findings."
All of Harvest Prep's finances are managed by one of the nation's top 10 certified public accounting and consulting firms -- Clifton, Larson, Allen. And in 2011, the CPA firm of Schechter, Dokken & Kanter conducted a comprehensive audit of Harvest Prep's finances and issued an unqualified audit report with no material weaknesses.
The Star Tribune also failed to report that in April, the ACNW board of directors unanimously approved Harvest Prep for a new three-year contract.
Finally, on July 26, Eric Mahmoud contacted Audubon representative Pat Bernhoft requesting that she share any issues or concerns with the newly installed board chair. Ms. Bernhoft's reply did not include the issues raised in the notice delivered four weeks later.
In summary, for three years ACNW has repeatedly been on record with exemplary reviews of Harvest Prep and its financial management, and only issued its notice after the series of negative Star Tribune articles beginning on Aug. 10.
The previous articles conflated two additional issues: (a) the lease arrangements between Seed Daycare, as landlord, and Harvest Prep/Best Academy as tenants, and (b) the history of the Synergy facility.
Neither Seed Daycare nor Harvest Prep were parties to the grant agreement to build Synergy Residential Academy. It was an agreement between the Minneapolis public schools, Synergy Residential Academy and the state of Minnesota signed in December 1999 to construct a residential facility for at-risk youth on land owned by Seed, leased to Synergy.
The only contractual agreement with Seed was a lease between Seed, as landlord, and Synergy, as tenant. Synergy defaulted under that lease, failing to pay utilities and other amounts owing, in a total amount of nearly $100,000. After Synergy failed to cure its defaults, Seed terminated the Synergy lease. Regarding the grant, Section 2.08 of the 1999 grant agreement states that if the lease was terminated, the grant was terminated as well.
No questions or concerns had ever been raised by the state to Seed concerning the Synergy matter until the Star Tribune's inquiry to the Minnesota Department of Education earlier this month. Seed's leasing arrangements have undergone keen scrutiny by legal and financial counsel prior to each transaction.
In fact, the leases are reviewed and approved annually by the Minnesota Department of Education. Had the Department of Education asked for any additional documentation at any time, Seed gladly would have provided it.
In addition, prior to the article, we had had no communications from the Minnesota Department of Education or the state legislative auditor relative to a current review of our financials, which have undergone thorough state reviews every year.
Immediately upon reading the articles, we proactively reached out to and have had conversations with the legislative auditor to determine what additional information may be needed and to offer our full cooperation. We also reminded the state of our schools' consistently clean audits performed by external auditors that confirm the current financial health and integrity of our financial systems.
Despite our concerns with the ACNW process and the barrage of negative articles written by the Star Tribune, we are fully committed to responding to all requests for information in a timely manner and are confident that all questions raised will be clarified.
As boards of directors whose mission it is to responsibly manage the public's trust in educating our children and ethically managing the public funds to do so, we confidently stand behind not only the integrity and reporting of our financial systems and transactions, but also behind the inspirational and innovative leadership of Eric Mahmoud, whose "enterprises" have a proven track record of academic success.
In closing, our students are achieving, our finances are solid, and our leadership and management are strong.