Bice: State superintendent candidate Deb Kerr should ‘come clean’ over 2010 financial scandal, opponent says

A  decade-old financial scandal is coming back to haunt former Brown Deer Superintendent Deb Kerr in the final weeks of the race for state school superintendent. 

Kerr’s opponent, Pecatonica Superintendent Jill Underly, said in an interview that Kerr needs to “come clean” on why she kept the business manager on the payroll for 17 months after he overdrew the school district’s bank accounts by nearly $500,000. Kerr later wrote a letter of recommendation for the business manager when he sought work elsewhere. 

Underly suggested the Kerr’s handling of the situation raised concerns about her judgment. The two square off in the general election April 6.

“She seemingly hasn’t really come clean about the situation with the business manager,” Underly said, adding it took a “huge effort” for the information to be made public. “We need leaders who, even if things go wrong, will stand up and admit it right away and just focus on fixing the problem.”

In a statement, Kerr pushed back on the criticism, saying personnel issues are difficult and each one is different.

Kerr said she inherited the employee and launched an investigation as soon as she became aware of the “malfeasance.” But she said the situation was complicated by the fact that three other school districts were involved. 

“The district won every case filed in state and federal court, and all claims were dismissed,” Kerr said. “We saved the Brown Deer School District thousands of dollars, and my school board was supportive throughout the entire nine-year process to reach a resolution.”

The scandal became public in February 2009 when Kerr placed Edward Towle, the school district’s business manager, on paid administrative leave after discovering the district’s bank accounts had been overdrawn by about a half-million dollars. The banking overdrafts resulted in $1,500 in late fees for the district between December 2008 and January 2009.

Towle remained on administrative leave for 17 months, being paid salary and fringe benefits of $136,451, according to the state Department of Public Instruction. At the same time, the district paid a consultant $48 an hour to perform Towle’s duties.

Kerr’s investigation, which included an audit by an accounting firm, resulted in 21 findings that Kerr said showed Towle had breached his contract “by failing to perform at a professional level of competence,” the Milwaukee Journal Sentinel reported at the time.  

Under Towle’s leadership, the investigation said, the district had lost more than $260,000 in state aid or federal fund losses, missed payment deadlines for bills from vendors for $585,000 and was late with its property tax payments to the Village of Brown Deer. 

On top of that, the report said, the business manager caused a budget overrun without warning the superintendent and school board that, when combined with a new benefit program, could have resulted in a “significant loss of state aid.”

Towle and his attorney disputed the allegations. 

Despite initially recommending Towle’s dismissal — and reducing the findings against him from 21 to six — Kerr never held a hearing on the allegations, and the School Board never voted to terminate his contract. 

Amazingly, Kerr wrote an effusive letter of recommendation for Towle, who was offered employment at Community Consolidated School District 46 in Grayslake, Ill., and resigned his position in Brown Deer. She called Towle a “good steward of public funds” in her letter to Grayslake.

“Edward has had a great number of experiences in his 16 years in school business administration that have enabled him to grow as a professional,” Kerr wrote in her letter. “That is something money simply cannot buy and will be an asset to a future employer.”

The suburban Illinois district later rescinded its contract and settled with Towle after learning about his problems in Brown Deer and his lengthy leave of absence. 

Shortly after that, Towle took the Brown Dear School District to court, accusing it of breach of contract and interfering with Towle’s prospective future employment opportunities.

But a Milwaukee County judge rejected his claims, and that decision was affirmed by a state appeals court. Also, a U.S. District Court in eastern Wisconsin found that Kerr did not violate Towle’s due process rights.  

In her interview with the Journal Sentinel, Underly said she believed the financial scandal is “fair game” in the election, given that Kerr is essentially asking the voters for a promotion. 

As a school superintendent, Underly said she has been forced to fire employees. She said this is never easy, but she said she always followed the rules and kept her school board informed of her actions. She said it is not clear to her that Kerr was transparent with her board or the public, something that was necessary given that hundreds of thousands in tax dollars was at stake.

“I’m troubled that she tried to cover this up and push the problem off on another school (district),” Underly said. “There needs to be some explanation.”

So why did Kerr write a glowing letter of recommendation, particularly when it became clear that Towle had problems in other Wisconsin school districts?

“She is not at liberty to discuss the final legal resolution,” said Susie Falk, a spokeswoman for the Kerr campaign.

Contact Daniel Bice at (414) 313-6684 or dbice@jrn.com. Follow him on Twitter @DanielBice or on Facebook at fb.me/daniel.bice.