On second try, Indian River tax increase passes

Delaware’s Indian River School District voters overwhelmingly approved a 19 percent property tax increase Thursday, just three months after narrowly rejecting the district’s bid to raise $7.4 million amid serious questions about district spending.

The fast-growing Sussex County district’s first attempt to raise the money failed five days after the release of a blistering state auditor’s report that detailed questionable allocations by the longtime chief financial officer and described lax monetary controls. The report triggered a criminal investigation that is ongoing, the Attorney General’s Office said Thursday.

The Nov. 22 referendum lost by just 20 votes out of more than 6,600 cast. Thursday, however, voter turnout nearly doubled and the tax hike was approved 7,095 to 5,394 – a 1,701-vote margin of victory, according to the district’s unofficial totals.

The increase will cost the average homeowner $95 a year, district officials said.

Indian River has 10,500 students, making it the sixth largest of the state’s 19 school districts. In the last six years, enrollment has grown by nearly 1,700 students.

The district has a wide disparity in wealth, featuring expensive beach resorts such as Bethany Beach and Fenwick Island, sprawling new communities attracting an influx of out-of-state families and retirees, and vast stretches of lower-income farming communities.

The new tax money will be used largely to hire teachers and paraprofessionals, keep 15 armed school safety monitors and other safety officials, and pay for more technology and textbook upgrades, security equipment, classroom supplies, materials and furniture.

“We are extremely grateful for the public’s support of this important initiative,” Interim Superintendent Mark Steele said. “In my 36 years as a teacher and administrator in the Indian River School District, I have never been more amazed and overwhelmed by the generosity of our parents and community members.

Voter support will allow the district to “continue providing students with exemplary instructional programs into the future,” said Steele, the former deputy superintendent who took over when Superintendent Susan Bunting resigned to become Gov. Carney’s education secretary.

Bunting called the passage “a true school-community effort,” adding that residents “value the outstanding education students are receiving in the district.”

The district’s ability to raise more cash was stymied this fall after state Auditor Tom Wagner released the stinging findings of his “special investigation” into district spending controls.

Wagner’s report said his office received reports of alleged financial misconduct by then-Chief Financial Officer Patrick Miller in January, who had been with the district for nearly 20 years. Wagner opened an investigation and the district put Miller on administrative leave in April. He retired in June.

Wagner’s investigation found a general lack of financial oversight within the district. “The blind faith placed in the CFO allowed him to create an environment ripe with intimidation tactics, favoritism and nepotism,” the report said.

Several Indian River employees reported to the auditor’s office that Miller forced them to share their log-in credentials for the state’s accounting system, which Wagner called a “blatant violation” of Delaware’s computer usage security policies.

Among other issues Wagner discovered:

• Miller gave more than $20,000 in district funds to the Indian River Volunteer Fire Company and more than $32,000 to the Boys and Girls Club of Oak Orchard/Riverdale – two organizations where Miller was board president.

• Miller made several inappropriate or questionable purchases without proper documentation, including $7,000 for a Teacher of the Year ceremony at the Baywood Greens golf resort, $353 for Alex and Ani bracelets for selected district employees and a Tiffany and Co. bracelet for $380 as a recognition gift for Bunting.

• The district paid for an abundance of in-state meals that didn’t meet state requirements for school district spending.

The state’s investigation into Miller and district spending “is going through the Office of Civil Rights and Public Trust,” Carl Kanefsky, spokesman for Attorney General Matt Denn, said Thursday. Kanefsky could not provide a timetable for the conclusion of the investigation.

District spokesman David Maull acknowledged Thursday that the audit report “didn’t help” the district’s bid to raise more money.

Maull said the district has taken several steps to shore up financial policies and procedures. He noted that last week Wagner wrote a follow-up memo to Steele that credited the district for taking strong corrective action in the aftermath of the report.

On Thursday, voters turned out in record numbers, with 57 percent voting yes, Maull said.”We certainly hope it helped a restore a measure of confidence in our district among community members,” Maull said of Wagner’s update. “The district is committed to transparency and this was part of that process.”

Even with the new tax rate, Indian River remains the lowest of Sussex County’s seven districts.