By David Carroll


CHATTANOOGA (WRCB)- The suspended teacher/cheerleading coach at East Hamilton Middle/High School did a poor job accounting for funds and keeping receipts, according to a school district review.
The 21-page report, compiled by Chief Financial Officer Tommy Kranz and other HCDE officials, is accompanied by more than a hundred pages of e-mails, receipts and purchase orders in an attempt to prove that Stephanie Knox engaged in misconduct. 
Late last month, Superintendent Dr. Jim Scales told Board members that he intended to terminate Ms. Knox.  On March 18, the Board can certify or reject Dr. Scales' charge letter against Ms. Knox.  If the Board moves forward, Ms. Knox would be entitled to a hearing before an independent hearing officer, appointed by the Board.
The report, which was given to Board members on Tuesday, concludes that:
1.  Funds were collected outside of the school's books.
2.  Funds were disbursed outside of the school's books, with little or no supporting documentation.
3.  Funds cannot be accounted for.
4.  No receipts were issued for cash/checks collected.
5.  Daily collection logs were not maintained.
6.  Parents were asked to make their payment in cash.
Kranz writes that there were inconsistencies in Ms. Knox's explanations during various interviews.  He cites an interview on January 4, 2010, in which "she indicated that only nine of the thirteen students had paid the entire $200 fee,"  rather than a statement in a June 6, 2009 e-mail in which she states eleven of the students had paid the fee. According to Kranz, the she said the discrepancy was because "she did not want to embarrass any of the students who had been unable to pay."  However, in a June 25, 2009 e-mail, Ms. Knox writes, "I will list the girls who have not paid tomorrow on cheer news, so please let me know if it is in the mail!!!"  Kranz writes that her statements are not "consistent."
He also questions various payments and disbursements that were made in cash, "with little to no proper documentation." 
The review also concludes that "four fundraisers were held without (Ms. Knox) obtaining the proper approval."  Kranz cites a discrepancy in t-shirt sales in which "$650 cannot be accounted appears that some t-shirt sales were conducted off of the school's books."  He cites her failure in obtaining a purchase order, getting the fundraiser properly approved, failure to prepare a profit and loss statement, and lack of a daily collection log and receipts.
In another instance, Kranz writes that the high school cheerleading squad conducted practices "at an outside gym in Georgia." According to the agreement, "each student is required to pay $30 per month for the use of the gym."  However, the report says that "neither (Ms. Knox) or the middle school coach were paying the $30 monthly fee.  Per our discussion with the gym, they do not charge the coaches for their children to use the facilities."  Kranz writes that District policies do not permit that practice; "it might appear that the waiver might be thought of as a form of "kickback" or extra benefit from one's employment."  The report says both coaches made this agreement without the approval of the school principal (Pam Dantzler).  The report includes copies of several "fundraising project authorization" forms, all of which were requested by Ms. Knox, and approved by Principal Dantzler.
Kranz also reports that Ms. Knox told him that despite having been a cheerleader sponsor for five years (at Ooltewah Middle prior to being hired at East Hamilton), she had not been provided with any sort of training regarding the rules for accounting of funds.  He says to the contrary, the bookkeeper at Ooltewah Middle provided proof that she furnished all employees with a handbook called "Dollars and Sense" which covered fundraising topics.
Among the recommendations are: 1.  Funds were collected and not accounted for; thus, in accordance with Public Chapter 206, Section 4 which states the following:
"A public official with knowledge based upon available information which reasonably causes him/her to believe that a theft, forgery, credit card fraud, or other act of the unlawful taking of public money, property or services has occurred shall report such information in a reasonable amount of time to the office of the comptroller of the treasury.  Based on the findings, we believe that this report needs to be forwarded to the Comptroller of the Treasury Office."
Ms. Knox could not be reached for comment.  Dr. Scales has recommended that Board members refrain from commenting on the report, since they will be voting on his charge letter at the March 18 School Board meeting.

UPDATED WED. FEBRUARY 24, 8:15 PM reflecting recent changes in state law, passed by the Tennessee Legislature in January 2010 as part of the First to the Top Act:

CHATTANOOGA (WRCB)- East Hamilton High School teacher/cheerleader coach Stephanie Knox could soon be terminated from her position.  In an e-mail to Board members, Superintendent Dr. Jim Scales wrote, "Attorney Scott Bennett has notified (the Hamilton County Education Association)  that we plan to proceed with termination."

Dr. Scales will present a charge letter to the Board on March 18.  Board members could vote to certify (approve) or reject the charge letter.  If the Board certifies the Superintendent's recommendation, Mrs. Knox could then request a hearing before an impartial hearing officer, with no connections to Hamilton County Board members or school employees.   That officer would ultimately determine whether or not to terminate Mrs. Knox.  The hearing could be private at the request of Mrs. Knox or the hearing officer.

Prior to the new state law passed in January, a teacher's termination hearing would be presented in open meeting before the School Board, which would then vote whether to terminate the teacher's employment.

(If the Board rejects Dr. Scales' charge letter at their March 18 meeting, Mrs. Knox could presumably retain her job and be entitled to back pay, unless Dr. Scales presents further reasons why she should be suspended or terminated.)

In the event of a termination hearing, if either Mrs. Knox or Dr. Scales is dissatisfied with the hearing officer's ruling, they would have ten days to request an appeal before the  Board.  At that hearing, no additional evidence would be presented, but the affected party could argue why the decision should be reversed.  If, after the results of such a hearing, the affected party is still dissatisfied with the resolution, the matter could be appealed to Chancery Court within a twenty day period. 

Mrs. Knox was placed on suspension without pay February 1, pending an investigation into alleged misconduct.

A suspension letter from Stacy Stewart, Director of LIcensed Personnel, stated that Mrs. Knox was being investigated for allegations "including but not limited to the following:

Violations of state and district policies regarding appropriate money management, including collection and disbursement of monies outside of the school's books, leading to funds being unaccounted for; failure to maintain daily collection logs; failure to comply with the three day deposit rule; failure to issue a purchase requisition/purchase order; failure to issue receipts for cash/checks collected; oversight and management of unapproved fundraisers; receipt of a benefit as a result of your employment, and also receiving a benefit from a vendor in excess of a nominal amount.

 An Eyewitness News investigation last week uncovered receipts from Varsity Spirits Fashions in Memphis.  The receipts, totaling almost $18,000, had not been approved in advance by school district officials.


CHATTANOOGA (WRCB)-- Channel 3 Eyewitness News School Patrol has examined copies of invoices for cheerleader outfits and supplies for East Hamilton Middle High School. That is the same school that where cheer sponsor Stephanie Knox used to teach. Ms. Knox, a teacher at the school, was suspended without pay earlier this month. The receipts were included in the monthly School Board information packet for its November 2009 meeting.

We obtained copies of receipts from order June 22 & 23 of last year. The two orders show combined purchases of almost $18,000 from Varsity Spirit Fashions in Memphis.  In addition to skirts, pants, tops and hair bows, the school was charged $1,267 in shipping fees from Memphis to Chattanooga. The invoices do not indicate packaging weight or speed of shipment requested.

Among items purchased on June 22 were:

17 "women's shell packages" at $100.95 each

17 "shell top packages" at $75.95 each

18 "polymicro pants" at $105 each

17 "Nike sideline cheers" at $50 each

17 "shrunken tees" at $95 each

These items were shipped to another teacher and cheer sponsor at her home address. That teacher is in good standing with the school system and has not been accused of any wrongdoing. The total of the June 22 invoice was $10,807, including $762.50 in shipping charges from Memphis. 

The June 23 receipt shows more items were shipped to Stephanie Knox, the high school cheerleading sponsor, at the school's address. That receipt includes:

14 "Polymicro jackets" at $61.95 each

14 "Polymicro pants" at $52.95 each

13 "Nfinity evolutions" at $69.99 each

13 "shell top packages" at $75.95 each

13 "shrunken tees" at $19.95 each

The shrunken tees were listed at $95 each on the middle school invoice.  The total of this invoice is $7,125, which includes a $507 shipping charge from Memphis. 

According to School Board documents, the purchases was considered "outside of guidelines" by Chief Financial Officer Tommy Kranz because  "purchase orders were not requested."  When contacted by Channel 3 Eyewitness News when the purchases were revealed last November, Kranz said, "the school will take care of it."

Last week, we submitted several questions to Kranz about the investigation, including this allegation in Stephanie Knox's suspension letter:

"Receipt of a benefit as a result of your employment, and also receiving a benefit from a vendor in excess of a nominal amount."

"Failure to issue a purchase order."

We also asked if the school district was reimbursed by the school for the money paid to Varsity Spirit Fashions, and if the $1267 in shipping fees from Memphis to Chattanooga were considered appropriate. Other questions included the $95 "shrunken tees."

In an e-mail, Kranz said he was in the middle of preparing the 2010-11 budget for the school district, and would respond at a later time.  In the meantime, Ms. Knox remains suspended without pay pending "an investigation regarding alleged misconduct."

 Original story from Feb. 3, 2010:

CHATTANOOGA (WRCB) -- A teacher at East Hamilton County High School has been suspended without pay for allegedly mishandling school funds.

Stephanie Knox has been instructed not to go back on the East Hamilton campus or go to any school events. In a letter sent to Knox on February 1st from Hamilton County school officials, Knox is to remain suspended until a hearing is held into the allegations of misconduct.

Specifically, the letter says Knox is under investigation for the following:

  • Violations of state and district policies regarding appropriate money management including:
  1. Collection and disbursement of monies outside of the school's books, leading to funds being unaccounted for.
  2. Failure to maintain daily collection logs.
  3. Failure to comply with the "three day deposit rule"
  4. Failure to issue a purchase requisition/purchase order
  5. Failure to issue receipts for case/checks collected
  • Oversight and management of unapproved fundraisers
  • Receipt of a benefit as a result of your employment and also receiving a benefit from a vendor in excess of a nominal amount