WARRENSBURG - Michael A. Kelly, 59, business manager of the Warrensburg Central School District for more than three decades, was arrested Thursday on felony charges he illegally changed documents describing his health care benefits to be paid by the school.
Police said Kelly altered his employment agreement with Warrensburg Central to state that he received 100 percent insurance coverage in his retirement rather than the 91 percent he had actually negotiated with the District.
Police say Kelly wrote the initials "R.M." beside the change he made to appear that former Superintendent of Schools Roger McQuain had endorsed the change.
Arraigned in the Warrensburg Town Court June 24 before Town Justice Richard Nissen, Kelly was charged with second-degree Forgery and first-degree Offering a False Instrument for Filing. He was released on his own recognizance.
Police said the situation was uncovered when Kelly's successor Kevin Polunci arranged with regional BOCES this Spring for an audit, which ended up indicating Kelly had not paid his 9 percent portion of health insurance premiums for 2007, 2008, and 2009 - and he owed the District $2,538.
The District sent Kelly a bill for the money, and Kelly responded in a note that during the 2002-03 school year, he was granted 100 percent health insurance coverage in an executive session.
Attached to his note was a page from his employment agreement that had language crossed out and new language was written in, accompanied by McQuain's initials, police said.
Kelly then e-mailed Polunci, asking him to take care of the matter by using his 400 accrued unused sick days to pay for the shortfall, according to a statement signed by a school official. In a note to the school, Kelly stated his contract was amended in 2002-03 in executive session and Roger McQuain initialed the amendment.
The school responded with a letter to Kelly that there was no record of such an amendment.
Later, Polunci received by certified mail from Kelly a letter signed by former School Board President Mark Brown stating he was present during the executive session, and the board authorized the 100 percent health insurance coverage.
Court records include a statement from Roger McQuain that he had not initialed the contract amendment.
To complicate matters, Kelly had received payment in full, prior to his retirement, for his 400 sick days, according to a statement submitted to police by the school.
Contacted Thursday night, Kelly reiterated that before he retired, he had negotiated for the school district in executive to pay his entire health care premiums, and the school board approved the action.
A statement police say was signed by Kelly and submitted to them indicates Kelly admitted changing the contract to reflect the amendment and signing McQuain's initials. "I only wanted what the teachers and other administrators got for health insurance coverage upon retirement," the statement reads.
"Roger never gave me permission to sign his initials, but I assumed that Roger would be absolutely fine with it - Roger knew I should have gotten 100 percent," the statement continues. "I apologize for any confusion or misunderstanding."
Kelly was employed as the business manager at the school district for 32 years, and had a record of maximizing state aid, recruiting lower-income residents sign up for school lunch assistance programs in order to lower the local tax burden, and pursuing educational and facility grants.
He retired in 2006.
But some of his actions at Warrensburg Central raised questions with state officials. A state Comptroller's 2007 audit of the school district criticized some financial practices under kelly's authority.
The audit questioned some alleged unauthorized expenditures, improper payments to administrative personnel, and lack of oversight of cash handling and record-keeping practices - all allegedly occurring during the latter years of Kelly's tenure.
The audit report, released in 2007, said that Kelly received pay and benefits in excess of his contract. It said that Kelly received $3,115 more than his regular salary, plus five days of family leave - not authorized by his employment contract - and $2,500 of school money improperly paid into his tax shelter annuity account, all without documented board authorization.
The state Comptroller's report said that three school administrators received $4,651 in improper payments, and no money should have been paid into his or other administrator's tax annuity accounts.
The state concluded earlier this year, however, they weren't going to take action on these issues against the school district.
State police investigators and uniformed personnel investigated this recent case against Kelly.
Kelly said Thursday that if the case got to court, three school board members of the nine would be testifying in his behalf.
"This is all about $2,500," he said. "This is crazy - why would I risk going to jail over $2,500?"