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Thursday, November 21, 2013

MCPS Chief Financial Officer on Board of Subpoenaed Educational Systems Credit Union

Since May, multiple media outlets have written about the alleged mismanagement of student work-study money at Rock Terrace School, an MCPS special education school for students with disabilities. Students who performed tasks in a sheltered-workshop type class at the school earned money, which was deposited into credit union accounts opened in their names, without their parents' permission or knowledge. Other students who worked in the cafeteria or other jobsites within the school also earned wages, but never saw copies of W-2 statements or credit union account statements. Account statements obtained by parents reveal that large sums of cash were routinely withdrawn from these students' accounts, with no explanation where the cash went.

Records reveal that these credit union accounts go back to at least 2004, when the credit union was called the Montgomery County Teachers Federal Credit Union. Last year, the MCT entity changed to become the Educational Systems Federal Credit Union. Before the merger, the MCT Federal Credit Union was in financial trouble, and was the subject of a "cease and desist" letter from the National Credit Union Administration, prohibiting "Montgomery County Teachers from requiring Educational Systems to hire any or all of its staff or place its directors on the board."

Parents have complained that:
(1) Accounts were opened for their minor children without their knowledge or permission
(2) Staff members from Rock Terrace School, including the principal, were signed in as joint account holders on the children's accounts
(3) Account statements were mailed to Rock Terrace School, instead of to the child's home

Parents have hard questions for credit union personnel:

(1) When cash withdrawals were made, did tellers request to see I.D. of the account holder?
(2) What picture identification, if any, was used to open these accounts? (Rock Terrace Students are unlikely to hold drivers' licenses.)
(3) Where was oversight by credit union auditors that over a hundred accounts were listed at the same address?

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What is the cozy relationship between Montgomery County Public Schools and the Educational Services Federal Credit Union?

For starters:

Suzanne DeGraba, MCPS's CHIEF FINANCIAL OFFICER, is on the Board of Directors of Educational Systems Federal Credit Union.

So is Philip McGaughey, MCPS's DIRECTOR, DIVISION OF PROCUREMENT.


In today's Washington Post, the president and chief executive of Educational Systems FCU said that they had been expecting the subpoenas for the students' bank records, and intend to cooperate fully. Meanwhile, MCPS has steadfastly refused to attempt to account for and reimburse the students for the money that was stolen from them. Here's hoping that the Grand Jury will probe the relationship between the Credit Union and MCPS.

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