Marin schools foundation to refile tax forms amid complaints

A foundation that helps fund programs in the Larkspur-Corte Madera School District decided to file amended tax returns after parents raised questions about compensation and federal pandemic loans.

Jamie Heaps, a vice president with the Spark foundation, said the amended Form 990s — federal income tax forms used by nonprofits — will correct accounting mistakes made in the records for the 2020 and 2021 tax years. The amended returns will be posted on the foundation’s website, SparkSchools.org.

The foundation also pledged to change accountants, attributing the mistakes in reporting to a “third party firm” that filed the 990s, Heaps said.

The errors were uncovered after two parents sent a letter to the school district alleging irregularities in Spark’s financial information. They asked the district to investigate the foundation and audit its books.

At issue were two federal Paycheck Protection Program loans totaling just under $70,000 received by the foundation during the pandemic, and the salary for Sara Ryba, Spark’s executive director, during the same time period.

According to Matt Kirk, one of the Neil Cummins Elementary School parents who requested the investigation and audit, Ryba’s salary was listed as zero for the affected years. The PPP loans were listed as revenue rather than loans.

“No one would explain why,” Kirk said. “Based on my experience with accounting, I assume there’s always a why.”

He said the issue is about maintaining the community’s trust so that when families donate money, they feel it will be handled with integrity.

“The community’s trust requires transparency,” Kirk said. “I think the community will give more if they trust that the money being taken care of and is being handled responsibly. Nonprofits can’t raise funds without the community’s trust.”

Heaps said that the accounting firm hired by Spark “checked the wrong box” for Ryba’s salary.

“Sara was paid her contracted salary that year, as were most employees at businesses who received PPP loans,” Heaps said. “The government gave companies money to make sure they could continue to pay full salaries for employees.”

“Sara did not receive additional salary because of the PPP loans and there was no ‘double dipping’ — which we assume he is alleging — where she received her full salary plus the value of the PPP loan,” Heaps said. “The PPP loan was simply a funding source for the foundation.”

Kirk said that he was not alleging any double dipping or other misuses of the PPP loans.

“I have not made allegations that I know where the PPP money ended up,” Kirk said. “I don’t have the information to make such statements.”

Heaps said Ryba’s salary was $98,875 in 2019, $101,723 in 2020 and $105,073 in 2021. Those figures will be included in the amended 990 forms, she said.

The accounting firm also incorrectly recorded the PPP loans as revenue rather than loans.

“In other words, they were reflected in the filings, but in the wrong place,” Heaps said.

Heaps said the mistakes “were in no way illegal, fraudulent or intentional.”

“While listed incorrectly on our tax filings, all salaries were accounted for in our expenses and there were no errors on the overall balance sheet,” she said.

Kirk, meanwhile, has contacted John Carroll, the Marin County superintendent of schools, and asked him to look into the matter.

Carroll said that he has asked staff at the Marin County Office of Education to track the amended tax filings.

“Hopefully that will resolve the issue about (a) incorrect compensation level for 2020 and (b) how the PPP loan was booked in SPARK’s accounting,” Carroll said in an email.

Carroll said that while there might have been some accounting mistakes, his initial assessment is that there was no malfeasance on the part of foundation leaders.

“I have faith that the foundation is operating on good faith,” he said.

Kirk said he is also looking into the percentage of the community donations to Spark that go to pay for student programs. He said that since Ryba joined the foundation, the amount of money per each $1 in donations “has plummeted from 96 cents to 74 cents” and “all that money has gone to insider salaries and benefits.”

Heaps disagreed. She said the foundation was 100% volunteer-run until 2017, when the structure changed to allow for some staff to be paid. She said while that might have slightly affected the percentage of the money raised that was devoted to student programs, Spark’s contribution overall remained at the highest levels the nonprofit has seen.

“Since switching from a fully parent-volunteer model in 2017 to a hybrid of paid staff and parent volunteers, Spark has continued to increase grants to the district, with a current annual commitment of $1.2 million,” Heaps said.

She also said the foundation “has increased the participation rate of families donating in the district from 46% of families donating in 2017 to 76% at the end of the 2022-2023 school year.”

Kirk’s allegations “make no real world sense and have no basis in fact,” Heaps said.

“I truly hope these baseless and senseless allegations don’t get amplified any more than they have already,” she said.

Kirk, a financial specialist who said he uncovered the tax form irregularities when he was considering an application to serve on the Spark board, said he wanted to make sure that students received the maximum amount of benefit from the money donated to the foundation.

Prior to the controversy, Kirk’s family had donated $11,000 to Spark in one year and $5,000 the next, he said.

“The goal is to understand what has happened here,” Kirk said. “It matters because the cause that Spark champions is really important.”

He said making the enrichment programs accessible for all public school children is something he and his family support.

Brett Geithman, the superintendent of the school district, said it took the investigation request seriously.

“As superintendent, I think it’s incredibly important to take a look at all of our community funding resources,” Geithman said. “It’s also important to ensure that the money we receive is collected and reported in appropriate ways.”

In looking into the matter, Geithman said district officials did not find “any hint of wrongdoing” by Spark. They denied the request and closed the complaint, referring the parents to Spark for any further questions, Geithman said.

“The district uses extreme caution and fully investigates any complaints,” Geithman said. “However, as a steward of public funds, if we were to engage in a formal investigation with an audit for the last five years, that comes with a significant cost.”

Kirk said he did not accept matter as closed. He filed three public records requests to look into what he said were related issues.

“The first PRA request was on the cash the district has received from Spark,” Kirk said. He said those records matched up exactly with the budget records from the district, so there was no problem there.

He said the second records request was for other requests the district received under the California Pubic Records Act and the federal Freedom of Information Act, as well as the responses.

“I wanted to see what kind of answers they gave to other people,” Kirk said. “I find it a little concerning that when I asked how much was Ms. Ryba paid, they just don’t give you the answer.'”

He also asked for copies of correspondence between the district and Spark going back to 2017. So far, he has received some of that correspondence, but not all, he said.

Geithman said district staff are still working on the third records request. So far, he said, the district has spent “tens of thousands of dollars” covering hundreds of hours of staff time to respond to the records requests.

While the district is complying with the records requests, Geithman said, he stands by his original decision to deny the request for an investigation and an audit.

“Our practice as a district is that we err on the most conservative side,” Geithman said. “If there were any concern about fraudulent or illegal activity, we would absolutely pursue this.”