Audit accuses NCHSAA official, Chatham schools of fraud
Posted December 8, 2011
Raleigh, N.C. — An official with the North Carolina High School Athletic Association wrongfully accrued state retirement benefits for a year by having Chatham County Schools list him as an employee, according to a state audit released Thursday.
The audit's findings have been turned over to the State Bureau of Investigation and Chatham County District Attorney Jim Woodall to determine whether criminal charges are warranted.
The NCHSAA was founded by a University of North Carolina at Chapel Hill professor a century ago and remained affiliated with the university until last year, when it became an independent nonprofit. The move meant that association employees were no longer considered state employees and had to end their participation in the state pension system.
Rick Strunk, the associate commissioner for communication at the NCHSAA, had more than 26 years in the pension system at the time, meaning he was less than four years away from full retirement benefits, according to the audit. State officials said there was no way to grandfather him or any other association employee into the pension system to let them continue to accrue benefits.
Association officials wanted to find a way for Strunk to earn his full retirement benefits, so they agreed with Chatham County Schools in June 2010 to list him as a school district employee, making him eligible to continue participating in the pension system, while the NCHSAA paid his salary, the audit states. The arrangement continued until last April, when state auditors began to question it.
Raleigh lawyer Joe Cheshire responded to the audit for Chatham County Schools, saying district officials thought the arrangement was legal. He noted other instances where employees of non-state agencies have been allowed to participate in the pension system, such as the North Carolina League of Municipalities and regional education service agencies.
"Neither the (school) board not its superintendent intended to mislead any person or entity," Cheshire wrote. "As soon as the board learned that the retirement system did not approve the the arrangement ... the board voluntarily corrected the mistake."
Auditors questioned the accuracy of Cheshire's statements, noting that Strunk was an employee of the school district in name only and didn't do any work for the district. Also, the district continued to forward pension contributions from the NCHSAA on behalf of Strunk to the state even after auditors informed Superintendent Robert Logan that the arrangement wasn't legal.
NCHSAA attorney Jim Maxwell said the association never knew the deal with Chatham County Schools was improper until auditors questioned it, so no criminal activity occurred.
Auditors stated that, before approaching Chatham County Schools, the NCHSAA tried craft a deal with Orange County Schools where all association employees would be listed as school district employees and remain eligible for the state pension system. State officials rejected that plan, so the association should have known that a similar deal exclusively for Strunk also would be prohibited, the audit states.
"The athletic association chose not to contact the retirement system for approval after prior arrangements were denied in clear, precise terms regarding affiliation with other school districts," the audit states. "This failure to request approval for the third method indicates a decision to move forward under the philosophy that 'it is better to ask forgiveness rather than permission.'"
Strunk didn't return a phone call Thursday seeking comment. Instead, the NCHSAA and Chatham County Schools issued a joint statement reiterating that they don't believe his employment deal with the school district was wrong.