What happened, and why did $750,000 in state funding disappear? 

"The money went somewhere; where it went, I don't know," said Shari Bruce, the board's president.

Ms. Bruce, other Lynacre school board members and the school's former accountant say former superintendent Delores Beall misspent funds and destroyed records between the school's opening day in 1999 and her dismissal in 2006.

Ms. Beall could not be reached for comment. No one has officially charged her with criminal wrongdoing in connection with missing money at the school, and one relative who worked at the school said Ms. Beall never asked her to do anything improper.

The Lynacre school case raises serious questions about Ms. Beall's stewardship, her school board's oversight and TEA procedures for safeguarding taxpayer money.

Lynacre's closing cast 73 students adrift in the middle of the school year. Also left amid the shambles is an ongoing lawsuit between Ms. Beall and the school board that sheds light on their accusations against each other.

She accuses them of mismanagement and wrongful termination.

But board members blame Ms. Beall. They accuse her of buying real estate for herself with school money and asking a school janitor to help her steal potentially incriminating records. She also went to the city to retrieve the deposit on the school's water account, prompting workers to shut off service.

State auditors and school board members have known for two years that Lynacre lost $750,000 in state funds.

Rita Chase, TEA's audit director, said charter schools are more prone to accounting errors than regular public schools because the educators in charge often have little experience in record keeping.

State law allows TEA to revoke or non-renew a charter school based on material violations of the charter, including unacceptable academic or financial performance.

TEA did not exercise either option.

"We were working with the school because of the children," Ms. Chase said. "Our intentions are never to shut down a charter school because they're there for the children, and that is our main concern."

TEA officials say their investigation of Lynacre Academy continues.

School's beginnings

Ms. Beall, 64, is a former social worker turned educator. The state granted her a school charter in 1998. By then, she had developed a 12-year track record of offering homework help and other programs to poor students in South Dallas through her tax-exempt company, I Am That I Am Training Center.

"We need to become a full-time school so we can continue our work," Ms. Beall told a state committee reviewing charter legislation in 1997.

In fall 1999, many of the students who enrolled in the new I Am That I Am charter school had flunked out or been kicked out of other schools.

The school's name would later be changed to Lynacre Academy.

Along the way, Ms. Beall continued to run the I Am That I Am Training Center for after-school homework help. The training center's board also served as the charter school's governing board.

During the school's eight years, Ms. Beall hired three of her four children to work at the school.

The first signs of trouble emerged in 2002 when Ms. Beall's daughter, Denise Jones, was acting as school attendance clerk. She reported inflated attendance figures to TEA, which funnels state money to schools based on attendance. Ms. Beall admitted the error and Lynacre was forced to pay back $200,000, court records show.

The record-keeping debacle led the board to fire Ms. Jones in 2003, according to court records. Then, Ms. Beall hired her daughter-in-law, Melody White, to keep the attendance records. In their response to Ms. Beall's wrongful termination lawsuit, school board members accused her of concealing her relationship with Ms. White.

At the time, the school's outside auditor noted that Lynacre officials were not properly recording cash payments, but board members say they didn't suspect trouble. They reviewed budgets at their quarterly meetings but didn't compare those plans with what school officials were actually spending.

"We never ever had the feeling anything was being hidden from us," said Patricia Crocker, the board's vice president.

Unusual complaint

The state received an unusual complaint in May 2005.

The aunt of a graduating Lynacre senior called Rep. Helen Giddings, D-Dallas, to complain about the school charging her nephew $900 for 30 days of absences before he could graduate.

"These people said they didn't have this kind of money," Ms. Giddings said. "I didn't think it would be true: Nobody would be asking a student to pay $900 to graduate."

But it was true.

The school had been charging seniors $30 for every day they were absent and an additional $260 for graduation expenses. The state prohibits both kinds of charges.

"That caused us great concern," said Ms. Chase, the TEA administrator. "That was one of the reasons we went out there."

But it wasn't the only reason.

State auditors found inaccurate attendance records when they visited the school in May 2005 and soon launched a full investigation.

Ms. White said that she kept accurate records and that Ms. Beall never instructed her to inflate attendance figures to increase TEA funding.

"I never felt she was trying to do anything illegal," Ms. White said. Ms. Beall's "favorite quote was 'I'm not going to jail for anybody.' She was very meticulous in her record keeping."

Under increasing pressure, Ms. Beall sent a letter to the board in August 2005 vowing to cancel school credit cards, establish a nepotism policy and start bringing payment records to the board.

But it was already too late.

Money owed

A week later, James Montfort, the school's accountant, delivered the bad news: Auditors had found the school owed TEA an estimated $750,000 for inflated attendance figures and failing to have a state-certified special education teacher.

The $750,000 amounted to roughly $100,000 more than the school's annual operating budget.

"I was so shocked by everything going on, I didn't know what was going on," said Ms. Bruce, the board president.

Mr. Montfort immediately took over running the school, and Ms. Beall stayed on staff as a fundraiser.

As the investigation wore on, Ms. Beall told Mr. Montfort that she had written some checks from the school to the training center, and that the money was gone, according to a sworn affidavit Mr. Montfort later filed in connection with Ms. Beall's lawsuit.

The training center, which she also controlled, had already closed. Even while it was open, it would not have been entitled to receive federal or state education funds.

Mr. Montfort is also a defendant in Ms. Beall's wrongful termination suit. In a sworn affidavit, he said she told him that she had destroyed some records and asked him not to tell TEA. Ms. Beall said that God would forgive him for lying, he said.

When TEA auditors arrived back on campus looking for missing records, a school custodian said he had helped load files into Ms. Beall's car. He said she told him the records were not secure at the school. He assumed that she took them home with her.

When auditors went to her house in Lancaster, her son told them she was out of town. But she turned up later that day in Dallas.

Call the DA

TEA auditor Romeo Diaz suggested the board call the district attorney's office.

"We are concerned that Ms. Beall might be tampering or destroying school records or that you might lose any rights to appeal to the bank about the 'stolen' money from the accounts if not reported in a timely manner," he stated in an e-mail.

The Dallas County district attorney's office and the Texas attorney general's office say no one has ever contacted them. Mr. Diaz has since left the TEA and was unavailable for comment.

Ms. Chase said the TEA, which regulates public education in Texas, typically refers cases to law enforcement only after it concludes its own investigation. After nearly three years, TEA's Lynacre probe is still open. No one knows how much money the state will recover, if any.

Ms. Bruce, the board's president, said she didn't feel she had enough evidence to make any complaint to the district attorney because Ms. Beall had taken the records.

"What are we going to tell the DA? I have no records of attendance reporting," Ms. Bruce said.

Water shut off

In April 2006, Ms. Beall went to the city's utilities office and collected a $3,500 deposit attached to the school's water account, school board members alleged in their answer to Ms. Beall's lawsuit.

The school had to close for a day when the water was shut off temporarily, according to Mr. Montfort.

Finally, in May 2006, the school board fired Ms. Beall. She filed for personal bankruptcy in July 2006.

Among the assets she listed in bankruptcy is a Dallas house. School board members allege that Ms. Beall purchased the house in her name with school funds – an allegation she denied. School records list the address as the home of her son, Michael, another child she had hired at Lynacre.

With the 2006-07 school year about to start, the school board members struggled to find money. They generated $110,000 by selling timber rights on an East Texas property that the school owned.

Board members and staff members traveled to Austin, trying to work out a long-term plan to pay off Lynacre's debt. They vowed to sell the East Texas property and give the proceeds to TEA. But they later gave those funds to other creditors whose claims needed to be satisfied to keep the school open.

"Every time we planned to start the recouping the money, [school board members] came back and asked for a delay," the TEA's Ms. Chase said. "We were trying to work out a plan. We didn't want these students without a place to go."

By December 2006, the school didn't have enough money to cover teachers' salaries.

"We were asked not to say anything about it because we didn't want to alarm the children," said Frances Jones, a math teacher who would later be terminated in a last-ditch effort to cut costs.

With little money left, Mr. Montfort suggested that the board close the school in January 2007.

Eric Wolfgang, the board's attorney, warned them that TEA could hold board members personally responsible for negligence.

"Thus, the only rational conclusion to this is to stay until the last man is down," Mr. Wolfgang wrote in an e-mail. "At least that way the board can argue that they did EVERYTHING they could do, respectively and as a group, to pay back TEA for Ms. Beall's wrongdoing."

Board members say they were determined to keep the school open for the children. They donated a total of $5,000 of their own money to pay the bills. They acknowledged that Ms. Beall had also loaned the school money at times.

Soon, Mr. Montfort resigned and board members decided to run the school themselves.

"We couldn't do any worse than they had been doing," Ms. Crocker said.

The school filed for bankruptcy in August 2007, holding off TEA from collecting its debt. But a bankruptcy judge ruled last month that TEA could start withdrawing its payments to the school.

Without another choice, the board closed the school.

Students move on

As it turns out, the former Lynacre students are finding other schools to attend – despite the concern that closing the charter school would leave them out in the cold.

Ralicia Kelley, an 18-year-old senior, said she has enrolled in Dallas CAN! Academy. Other students are trying to enroll in other private and public schools, including Roosevelt High School in Dallas Independent School District and Lancaster High School.

Laqueeta Jones, an English teacher who also served as the school's counselor, said some still have not found new schools.

"The kids and parents are calling me every day," she said. "My heart is broke because I put a lot into these students. Those were not just my students. They were my babies."