Beaufort Co. school board member calls $2.5M TCL deal ‘one of the sloppiest’ she’s seen

Correction: A previous version of this article misstated the signees of a 2018 agreement between the Town of Bluffton, Beaufort County and Beaufort County School District to send $11.3 million in construction funding to Technical College of the Lowcountry. The district and TCL formed a separate agreement in 2017 regarding the terms of the former’s contribution.

A Beaufort County school board member is demanding answers in what she calls “one of the sloppiest deals” she’s ever seen, a $2.5 million agreement made in 2017 between the district and Technical College of the Lowcountry using money the board had not approved in exchange for services the district appeared already to be receiving from the college.

JoAnn Orischak, chairwoman of the board’s finance committee, began raising questions this fall, when she says she first noticed a discrepancy in a 2018 memorandum of understanding — signed by the district, Beaufort County and the Town of Bluffton — that would provide funding for the college’s new culinary school, now being built in Buckwalter Place.

According to the agreement, the school district would give $125,000 to TCL annually for 20 years, redirecting tax revenue the district had previously pledged to Buckwalter Place in a 2008 multi-county industrial park, in exchange for $2.5 million in dual-enrollment credits for district high school students.

However, the district was never part of the 2008 agreement and therefore had just committed money from its own coffers.

What’s more, the district was already receiving significant tuition waivers from TCL per a 2004 agreement with the college.

“This is probably one of the sloppiest deals I’ve ever seen,” Orischak said Thursday.

The district’s director of finance, Tonya Crosby, said Thursday that her department had also noticed a problem with the 2018 agreement but that Orischak’s questioning kick-started the district’s investigation into where the money was coming from to pay TCL and how much the district would now receive in tuition waivers.

On Oct. 7, the district hired the Vaux and Marscher law firm in Bluffton to help sort out the issue.

On Aug. 8, Crosby sent a letter to Richard Gough, TCL’s president, seeking clarity on the amount of tuition waivers the district would now receive under the 2018 agreement.

“Something was wrong,” Crosby said at a September finance committee meeting.

So far, the district has not made any payments to TCL per the agreement, according to Crosby.

In the meantime, the district has said the annual payment of $125,000 will come from money previously earmarked for paying down its debts.

The culinary institute

TCL broke ground on the Culinary Institute on Oct. 15, with plans to open in fall 2020. The district’s payments toward TCL will start in March 2020, according to Mary Lee Carns, the college’s spokeswoman.

The college first proposed the $11.5 million, 26,000-square-foot facility at Buckwalter Place in 2015 as a response to the shortage of restaurant workers in the county.

It will be able to hold 300 students, with six classrooms, two teaching kitchens, two baking labs, a lecture theater and a teaching restaurant; there will also be a museum in the building dedicated to Southern food.

As it stands, the district has more than 280 students in food courses at four of the district’s six high schools, district spokesman Jim Foster said Wednesday.

He suggested that these students could transfer into the community college’s courses, which can count toward an associate’s degree, as could the students at the district’s two other high schools or at the Beaufort-Jasper Academy for Career Excellence.

The district’s $2.5 million contribution to the institute is supplemented by $5 million from Beaufort County and $500,000 from the Town of Bluffton in taxes from the 2008 multi-county industrial park agreement. The county is also chipping in an additional $3.2 million of local hospitality tax funds.

“In a sense, it will be a wash,” Gough said while asking the district to contribute to the institute in 2017, according to previous reporting in The Island Packet and The Beaufort Gazette.

Then-superintendent Jeff Moss agreed, adding that enrollment in the district’s culinary program is on the rise, according to previous reporting.

“If 400 students participate, it should not be a problem,” Moss said at the time. “It’s a viable option for us.”

How did this happen?

In 2008, the town Town of Bluffton and Beaufort County decided to send taxes they got from Buckwalter Place back into the project to fund land purchases and construction, forming the MCIP.

The school district, however, declined to do the same.

In August 2017, school board member David Striebinger moved that the board “forgo up to $125,000 per year of MCIP funds for 20 years contingent upon an agreement for TCL to provide $125,000 or more in services to Beaufort County K-12 students for an equal length of time.”

The board approved the idea in a 7-3 vote, with Orischak, then-member Mary Cordray and current board chairwoman Christina Gwozdz voting no.

“Other higher education institutions may come to us for capital needs, depending on how we vote tonight,” Orischak said at the time.

The 2018 agreement cites the 2008 ordinance, saying “the School District opted out of the 2008 (MCIP)“ and says the money will come from “MCIP funds.”

The 2018 agreement also says the district will receive $2.5 million in tuition waivers over 20 years — the equivalent of $125,000 annually — but does not explicitly say this would be in addition to the waivers it was already receiving from TCL.

Orischak said Thursday that neither Crosby nor TCL could produce records regarding the deal when she started asking questions about the 2017 agreement.

The district maintains that there was “never a switch” between the intended funding source for their end of the TCL agreement, Crosby said Thursday.

“There was never a switch in terminology,” Crosby said. “It may have just been poorly worded.”

Orischak says the problem is that the board never authorized the district’s tax revenue to be spent on Buckwalter Place in the first place.

This fact, she said, was not brought to the board’s attention before it voted on the 2018 agreement to redirect the money from the MCIP to TCL’s culinary institute.

In other words, the board has never properly voted on the matter and the district is basically signing onto a deal the board had previously rejected, she says.

“It’s pretty simple,” she said Thursday. “We don’t belong to the MCIP, we didn’t participate.”

‘We don’t really know what the issue is’

According to Crosby on Friday, the district is not entering the deal the board turned down 11 years ago.

“The culinary agreement had nothing to do with the MCIP,” Crosby said. “It’s just built within the MCIP.”

The district is simply using tax revenue from the geographical area delineated in the 2008 agreement to give to TCL.

“Technically it is debt service revenue, but generated by properties within the industrial park,” Crosby said, referencing the taxes the district collects from Buckwalter Place and uses to pay down district debt.

Orischak said Thursday that was “not her understanding” of the deal. She said the board assumed it was part of the Buckwalter agreement, which influenced their decision in 2017.

“I don’t appreciate the way this was presented to the board,” she said. “... We haven’t decided to be added to that 2008 ordinance. Then we could go to TCL.”

Crosby’s primary concern, however, isn’t the source of funding from the district to TCL — it is how the district would be reimbursed for the money, according to a letter she wrote to TCL President Richard Gough in August.

The district has received dual enrollment credits from TCL since at least 2004. So have Hampton County and Jasper County school districts, which do not participate in the 2018 deal.

Crosby wrote to Gough that the district assumed “TCL would not apply the existing fee waiver credits that have been in effect for the last 15 years toward these $125,000 credits,” and requested proof that further credits have been provided since the February 2018 deal.

The proof has since been provided, Foster said Wednesday.

“I’ll be honest,” TCL spokeswoman Mary Lee Carns said Thursday. “We don’t really know what the issue is with the school district and board of education, because they haven’t communicated it to us.”

According to Carns, the district received $220,000 of tuition waivers from the college last year, and 80 percent of TCL’s students are from Beaufort County.

The college is expanding services to the district in 2020, though the district doesn’t know yet if it will be an additional $125,000 value to what’s already provided.

TCL has announced new dual enrollment programs for construction, HVAC and criminal justice careers, Carns said — plus the services of the culinary institute, set to open next fall.

“We don’t want anything to encumber or negatively impact one of the largest economic development deals in the county,” Carns said.

Related stories from Hilton Head Island Packet

Rachel Jones covers education for the Island Packet and the Beaufort Gazette. She attended the University of North Carolina at Chapel Hill, and has worked for the Daily Tar Heel and Charlotte Observer. Rachel grew up in Ayden, NC, surrounded by teachers.