Did members of the Medina Board of Education know former Superintendent Randy Stepp paid $172,000 in student loans using district funds?
That question will be central to a jury trial scheduled for later this month in Medina County Common Pleas Court. A review of documents on file in the case shows there is still a dispute over whether school board members knew about Stepp’s student loan expenditures.
Stepp is suing the board for breach of contract, defamation and invasion of privacy.
Emails provided by Stepp show he notified then-board President Susan Vlcek about his plans to pay for his past student loan expenses, but Vlcek has said she does not recall their conversations. She also said she has lost emails related to her position as a school board member.
A Gazette review of the case shows one key fact is not in dispute: Changes to former Superintendent Stepp’s contracts that put taxpayers on the hook for more than $250,000 of his old college loans and other education expenses never were reviewed by any outside legal or financial consultants.
Emails submitted as exhibits with Stepp’s lawsuit show the board members did not consult any attorneys in their final executive session discussion on new contract language the board approved in November 2011. Those contract amendments included a provision that the district would pay for Stepp’s current and past education expenses.
In an email to school board members, Jim Shields, the district’s human resources director, said neither he nor attorney Don Scriven had anything to do with negotiating or drafting Stepp’s contract. Shields, an attorney and Medina City Council member, said he could not serve as the board’s attorney in the contract negotiations because he reported to Stepp.
The board terminated Stepp’s contract in April 2013 after he was placed on leave when board members discovered Stepp had the fund at the Medina County Schools Educational Service Center pay off $172,000 in student loans under a provision included in a 2011 contract amendment.
The board initiated a special state audit that found more than $4,000 in illegal spending by Stepp and more than
$1.5 million in spending that wasn’t properly documented or had no clear public purpose.
After the audit was released, the board terminated his employment.
In Stepp’s suit, filed Aug. 20, 2014, he included emails among himself, Shields and spokesperson Jeanne Hurt in which they debated how to respond to questions posed by The Gazette regarding the November 2011 amendment to Stepp’s contract.
Stepp cites those emails and the response the board issued to the news media as part of his defamation suit against Shields and former board members Vlcek, Karla Robinson, William Grenfell and Charles Freeman.
“The Board of Education and Shields’ wrongful conduct has directly caused injury to Stepp,” the lawsuit reads, “including, but not limited to, lost income, lost earning capacity, reputational damage, damage to his standing in the community, humiliation, mental anguish and suffering, and other money damages and special damages.”
When the changes were made to Stepp's contract in 2011, Grenfell, Vlcek, Freeman served on the board, along with Mark Dolan and Robert Wilder. Dolan was later replaced by Robinson, and Wilder was replaced in early 2013 by Tom Cahalan, who continues to serve on the board. On April 16, Cahalan was the only board member to abstain from the vote to rescind Stepp's contract and has not been named in the Stepp lawsuit.
Chain of emails
The chain of emails included by Stepp in the lawsuit began March 22, 2013, when Robinson — who was board president at the time — forwarded to the other board members a two-page list of answers to questions posed by The Gazette about Stepp’s compensation.
Robinson was looking for approval from the board before publicizing her response.
One response written by Robinson read, “The board learned of this expenditure on March 6, 2013, as the result of a public records request.”
Stepp replied that he found the document “somewhat misleading,” especially the assertion that the board discovered the expenditures in 2013. He alleged district officials knew what they paid for.
“In emails dated Aug. 3 and Aug. 4, 2011, I shared with Mrs. Vlcek, who was serving as Board president, that my intent was to have the costs for past education paid through the ESC,” Stepp wrote in the email.
Vlcek was aware, he said, that costs for his past degrees were estimated to be close to $150,000, but noted he was on vacation at the time he asked for the change and didn’t have a specific number in front of him.
In a public records request made by The Gazette, the district provided a copy of the emails Stepp referenced. In the emails to Vlcek, Stepp asked the board to “pay $30,000 each calendar year for costs associated with earning past academic degrees.”
In the email, Stepp stipulated that a little-known fund held by the Medina County Educational Services Center would pay for the degrees, cutting checks to both colleges and lending institutions.
Medina, like most districts in the county, contracted with the ESC to provide support services including nursing, bus drivers and specialists to assist students with needs. The district would approve a contract at the beginning of the year with the ESC and funds remaining at the end of a school year would be kept in a carryover account.
“At no time was I under the impression that we were talking about education loans going back as far as undergraduate degrees or that we were talking upwards of $175,000.”
Most districts applied end-of-year carryover funds to the following year’s contract with the ESC, according to a Gazette investigation conducted in 2013. However, Stepp directed dozens of payments using the account, including $172,000 to pay off his college loan debt. None of the ESC payments appeared in expenditure reports from Medina Schools because they were handled by the ESC.
Degrees for which Stepp owed loans included a bachelor’s in education, a master’s in education administration and a doctorate in educational leadership.
In a deposition taken in 2014, Vlcek told school board attorneys that she could not confirm any of Stepp’s allegations that she was aware of his payments using the ESC account. She said she had all her board emails forwarded to a personal email account. She said her board and personal emails were mixed in the account and nearly all her emails inadvertently were deleted.
“In March of 2013, I came home from a conference in D.C. and all my emails were gone, except for two weeks’ worth of emails in my personal account,” she said, explaining that she asked a computer expert from her work for assistance, and he couldn’t determine what happened.
Vlcek told attorneys her email service had “been set to delete messages older than two weeks.” When asked if she attempted to preserve the documents after discovering the problem, she said no.
“I didn’t see the need to do that,” Vlcek said.
She said the email issue lasted until May or June 2013.
“It just stopped doing that again,” she said. “Nobody ever figured out why.”
In the 2013 email chain, Shields denied Stepp’s claim that Shields was aware of the costs for Stepp’s previous degrees. He told board members in an email that he remembered a discussion about past degrees, but he thought the conversation referred only to his master’s degree in business administration from Case Western Reserve University, in which Stepp’s coursework was ongoing.
“At no time was I under the impression that we were talking about education loans going back as far as undergraduate degrees or that we were talking upwards of $175,000,” Shields wrote.
Shields also indicated his workplace was becoming tense because he reported to Stepp on a daily basis.
“All of this puts me in a terrible predicament with my boss,” he wrote in the email to the board. “I am feeling more and more uncomfortable each day.”
A second series of emails attached to Stepp’s lawsuit details conflicting answers from Stepp and Shields after The Gazette asked for more information about who was involved in the discussions for the 2011 contract amendment that paid his student loans.
Shields and Stepp provided different answers to questions posed by Hurt, the district’s communication director.
Stepp wrote that Shields drafted the final language in the initial 2009 contract and the 2011 amendment. Stepp also said board attorney Scriven may have been involved.
“I feel like I am sandwiched in the middle as I try to answer the various questions I am getting as I get differing answers.”
But Shields responded that Stepp’s answer was incorrect and that neither he nor Scriven drafted or negotiated the contract.
“In 2011, Susan Vlcek and I had a conference call with Dr. Stepp where we both feel we were not discussing the same issue as Dr. Stepp,” Shields wrote. “Dr. Stepp has always negotiated the specifics of his contracts in executive session where I was not invited to attend.”
Shields wrote in the email that the first time he learned of Stepp’s student loan payments was in March 2013.
“Dr. Stepp sat in my office this month where I informed him that I had told the MCTA (Medina City Teachers Association) that I believed the tuition reimbursement language was related to his MBA from Case,” Shields wrote. “He then informed me for the first time that it went all the way back to his bachelor’s, master’s and doctorate degrees.”
In the email chains, Hurt expressed her frustration in providing consistent answers to the media.
“I feel like I am sandwiched in the middle as I try to answer the various questions I am getting as I get differing answers,” she wrote.
A series of depositions filed in the case provide insight into how attorneys may frame the case in court.
The deposition of Stepp shows he graduated from high school in 1983 and attended the University of Akron for one year. He left the school in May and was out of school for about a year. He then attended Ohio State University from the fall of 1985 to 1991, both as a full- and part-time student, but did not receive a degree there.
He then attended Ashland University for about two years, graduating in 1993 with an education degree. Stepp returned to Ashland and received his master’s degree in 1998 and a doctorate in 2010.
In depositions, Stepp said he could not recall whether the loans paid for tuition or room and board. He said the language in the 2011 amendment gave him authority to pay for the loans regardless of their purpose.
In a deposition of Educational Service Center Superintendent William Koran, attorneys asked if Koran or former Treasurer Michelle McNeely knew what Stepp’s loans were for. Koran said the ESC was provided a printout of Stepp’s loan balance and copies of his contract, which authorized the payment.
Attorneys for the school district asserted Stepp was a business major in 1986 at Ohio State and therefore not completing coursework related to his education degree. They also point out that the loans may have been used to cover a math and an ethics course — which Stepp failed or withdrew from.
Warren Rosman, an attorney for the district, asked Koran to clarify that taxpayers funded courses that Stepp failed.
“That loan of $2,500 which went for Randy Stepp flunking a course could have been part of the $172,000 reimbursement which you authorized?”
Koran responded: “Yes.”
In addition to Koran, Vlcek and Stepp, depositions also were taken of Shields; board members Robinson, Grenfell, Robert Wilder and Freeman; ESC Treasurer McNeely; former Medina Schools Treasurer Jim Hudson; and Barbara Paynter and Howard Fencl of Hennes Paynter Communications, a crisis communications firm hired by the district in the spring of 2013. All those depositions have been filed as official documents in the case.