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A Whistleblower Lawsuit Claims a School Inflated Attendance Figures

A former principal raises questions about a key Portland Public Schools partner.

A new lawsuit says the Native American Youth and Family Center falsified attendance figures at a private school the nonprofit organization runs in Northeast Portland.

Yolanda Gallegos, former principal of the NAYA Early College Academy, says top management fudged the numbers to keep public dollars that support the school flowing in from state and federal sources. She claims the nonprofit inflated average attendance figures from 65 percent to higher than 85 percent—an exaggeration the suit says cost $50,000 in government funding.

In a her lawsuit, filed March 15 in Multnomah County Circuit Court, Gallegos claims she was fired for whistleblowing and seeks $800,000 in damages.

NAYA employees, the lawsuit says, had "specific knowledge of the falsification of records for the receipt of program funding" and "state and federal funds used to mislead others."

NAYA's interim executive director, Tawna Sanchez, who is also running for the Oregon Legislature in House District 43, says the lawsuit is "without merit" but declined to answer specific questions.

"NAYA staff work diligently to ensure our programs comply with state and federal regulations," Sanchez says. "We have no reason to believe NAYA is out of compliance with any state or federal mandate."

Native American Youth and Family Center is a nonprofit that runs education, elder care and housing programs from its campus of low-slung brick buildings in Northeast Portland's Cully neighborhood. One of those programs is Early College Academy.

The academy, founded in 2007, focuses on serving at-risk students, many of them high school dropouts, ages 14 to 20. This school year, it has 70 students, of whom 27 percent are Native American.

The amount of school funding at issue in the lawsuit isn't much, but NAYA is a key partner in the district's effort to improve racial equity.

Under Superintendent Carole Smith, Portland Public Schools has worked to improve dismal graduation rates for Native American students, just over half of whom finish high school in four years.

The nonprofit has long had close ties to PPS. Former executive director Matt Morton, who left NAYA in December, served on the Portland School Board from 2011 to 2015.

NAYA also has multiple contracts to work with city schools. Its contract with PPS to run the Early College Academy is worth up to $664,615 this year.

Its biggest project with the school district is a $22 million joint venture called NAYA Generations, which will create an early-childhood education center surrounded by affordable housing in Lents.

Even before Gallegos' lawsuit, there were signs of financial stress at NAYA. In 2013-14, the same year Gallegos alleges the attendance figures were inflated, the nonprofit's tax return showed a significant deterioration in its financial condition. Revenue dropped and expenses jumped, swinging NAYA from a $1.4 million surplus to a $1.3 million deficit that year. That's a lot of red ink for an organization whose total budget is $9.3 million.

Morton says he stands by NAYA's leadership.

"Being a culturally specific, community-based organization committed to serving the most marginalized and invisible Portlanders is hard, risky and politically vulnerable work," Morton tells WW. "I have a great deal of confidence in NAYA as an organization and its staff and board leadership."

In 2013, Gallegos took over as principal of the Early College Academy.

Gallegos says she soon spotted major problems—including the fact that kids weren't showing up for school in the same numbers the academy was claiming.

NAYA submitted what she says was a "falsified" report inflating students' attendance in January 2014. At issue wasn't the number of students enrolled but the attendance of the students in question, though Gallegos' suit also says the school wasn't properly tracking students who were no longer enrolled.

Gallegos says more than one of every three students were missing on an average day during the period of the falsified report—a startlingly high number of absences even for a school that focuses on serving dropouts.

NAYA's contract with at least one school district required an 85 percent attendance rate, the lawsuit says.

When Gallegos brought the issue to the attention of her supervisor, Cori Matthew, Matthew admitted she already knew about the false report, the lawsuit says.

After Matthew's admission, Gallegos went around her back and reported the problem to Portland Public Schools, the suit says. Gallegos says her whistleblowing ultimately cost the academy $50,000 in funding.

WW could not independently confirm that NAYA was ever financially penalized for inflating attendance figures.

For every public school in the state, funding is contingent on kids continuing to attend. When a student misses 10 consecutive days, the district or the school loses funding. That policy applies to the Early College Academy, says PPS.

The lawsuit makes other allegations as well: The school was improperly awarding credit when students hadn't earned it, and staff left students unattended.

The suit also charges that Matthew failed to address drug use and dealing on or near campus and "directed" Gallegos not to report to the school district the treatment of students by a special education teacher who called one child "retarded."

Gallegos says Morton, NAYA's top executive and a School Board member, also failed to act.

When Gallegos approached Morton, the lawsuit says, he told the principal "there were conflict of interest issues so he had to be careful with his involvement" because he was on the School Board.

Matthew did not respond to messages left with her current employer.

Morton directed WW's inquiries about the lawsuit to NAYA and the nonprofit's attorney.

In her lawsuit, Gallegos claims NAYA retaliated against her for calling attention to shortcomings at the academy and, instead of addressing the school's problems, fired her in March 2015.

Gallegos' attorney, Dori Brattain, says Gallegos, who now works in New Mexico, was homeless for almost a year after NAYA fired her.

"Whistleblowing cost her everything she had except for her integrity," Brattain says.

Elevating graduation rates for students of color has been at the top of PPS Superintendent Carole Smith's to-do list. By one key measure, Native American students have struggled more than any other minority in the district.

This year, PPS's graduation rate rose to 74 percent for the class of 2015, but just 51 percent of Native Americans graduated in four years. The graduation rate for NAYA Early College Academy, because it is technically a private school, is not publicly reported.

Smith, who ran a community-based program for 23 years, has relied on programs such as the academy, despite past criticism that they aren't helping to raise the district's graduation rates ("Flunk Factories," WW, Nov. 12, 2013).

PPS officials say NAYA failed to meet contract requirements for attendance in 2013-14, but the academy has improved. Smith declined to comment.