July 18, 2013

VIA HAND DELIVERY

AND REGULAR U.S. MAIL

Phillip Shaw 4 Mayfair Drive Bluffton, South Carolina 29910 Dear Mr. Shaw: The purpose of this letter is to follow up the meeting that was held with you on July 16, 2013. Also present at the meeting on behalf of the school district were Alice Walton, Human Resource Officer for the District, and Phyllis White, the District's Chief Financial Officer. Additionally, your legal counsel and legal counsel for the school district were present. The purpose of the meeting was to allow you an opportunity to respond to the District administration's concerns about allegations of misconduct on your part during the time you served as principal of H.E. McCracken Middle School. I have now had the opportunity to consider the District administration's investigation into those concerns, as well as your responses. As will be discussed further below, it is my decision to recommend the immediate termination of your employment to the Beaufort County School Board pursuant to Section 59 25-430 of the South Carolina Code based on your violations of your school's policies and procedures with respect to the handling of money, your violation of the directives given you by the District administration while on administrative leave, your violation of employee confidentiality through your disclosures of information involving confidential personnel matters to the newspaper, and your handling of matters related to your medical leave. I have concluded your overall conduct was in violation ofHRS-33, which provides that: "Disciplinary action, up to and including a recommendation of termination, may be taken against any certified employee who is determined to have engaged in unprofessional or inappropriate conduct toward students, parents or staff. Such conduct may include, but is not limited to, violating district policies or procedures; insubordination; engaging in criminal conduct; engaging in inappropriate conduct of a sexual nature towards other employees or students; harassment, intimidation or butlying;

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and/or making inappropriate comments to students. This includes any action or conduct communicated or performed in person, in writing or electronically through such means as a telephone, cellular telephone, computer, personal data assistant or other telecommunication device, and includes text messaging and instant messaging. Disciplinary action, including a recommendation of tennination, may also be taken against any employee whose conduct the administration has determined has impaired the employee's ability to be an effective educator."
With regard to the violations of policies and procedures regarding the handling of

finances at your school, the District's investigation determined the following, with which, after reviewing, I agree: 1. Cash receipts were being accepted and not receipted through the bookkeeper. (Section 1.8.3, p. 12 - Middle and High school teachers are not permitted to collect monies from students. All Middle/High school students must be receipted by the school bookkeeper.) Sponsors of student council (teachers) were accepting cash and turning it over to the Office Manager (Ms." Denise Gibbo ). According to testimony from staff and evidence found on hand, cash was being collected by the Office Manager (Ms. Gibbo) for Student Council fund-raising. 2. Reimbursements for expenses were made from undeposited cash receipts. (Section 1.8.6, p. 15 and Section I.C, p. 20 - Under no circumstances should purchases be made or invoices paid from undeposited cash receipts.) According to testimony from staff and evidence found on hand, staff members were reimbursed for purchases with cash on hand. In addition, cash was provided in advance for purchases. 3. Cash in excess of $600 was kept in the school overnight. (Section 1.8.6, p. 16 and Section 1.8.8, p. 19 ~ Under no circumstances shall funds totaling over $25.00 be left in the school overnight.) Testimony from staff that envelopes of cash were kept in a filing cabinet located in Mr. Shaw's office, In addition, over $600 was found by Chris BaiTOW in the lockbox located in Mr. Shaw's office. According to staff testimony, the principal stated that the money in the lockbox belonged to Student Council. 4. Internal controls relating to cash receipts were violated. (Section 1.8.8, p. 19) Cash received by teachers and Ms. Gibbo was not receipted or recorded in any fashion. 5. Disbursements were made outside of the Concentration Account and Imprest Accounts. (Section I.C, p. 20) Testimony from staff demonstrates that disbursements were reimbursed using cash. In addition, a disbursement was made from a donnant PTO account.

6. Payments for goods and services were made in cash. {Section 1.8.6, p. 15 and Section I.C.2, p. 20) Evidence on hand demonstrates that reimbursements in the amount of at least $4,336.04 were made with cash during calendar year 2012.

7. Documentation and authorization for reimbursements were non-existent. (Section I.C.4, p. 22) As noted in item 6 above, reimbursements were made without any authorization from the principal or any supporting documentation for the expense other than the receipt.
8. Use of an unauthorized checking account for Student Activity purposes. {Section I.E, p. 31) A bank statement was found with Student Council financial records. This bank account was in the name of "H. E. McCracken Middle School 11 with an address of 10 Stonehedge Way, Bluffton, SC 29910. After contacting the bookkeeper, she was not familiar with this account and after questioning the principal, he was not either. It was not labeled "PT0 11 in any way; therefore, was considered an authorized bank account. The bank was contacted and refused to release any information because no one at the District Office had signature authority. They required a police report to release any information on the account. We explained to the principal that if he was able to produce any information on the account, we would file a police report. The principal also stated that there was not an active PTO at the school. This was confirmed by several staff members. There was evidence there was current activity based on the bank statement in our possession; therefore, to protect the assets of the school, a police report was filed. The address listed on the account was that of the Office Manager (Ms. Gibbo) and police obtained the checkbook and some other financial records from Ms. Gibbo. Ms. Gibbo stated that it was a PTO account. Transactions indicate that money from Student Council was corningled in this account as far back as February of 2011. According to the ban1c records, the account was established in 1999. A deposit was made into the so-called PTO account established at SCB& T sometime between November 1, 2011, and February 1, 2012, in the amount of approximately $1,500. The deposit was not recorded in the checkbook and undocumented. A check was then written on 4/29/12 from that account without any supporting documentation in the amount of $1 ,288 made payable to McCracken. It was also unrecorded in the checkbook and undocumented. The check was for a Student Council field trip to Carowinds and given to the bookkeeper to deposit into the Student Council acco\.mt to pay for transportation for the trip. It was at this time the bookkeeper became aware of this account and brought it to the attention of the principal. No action was taken.

9. Fundraising by a school club was not recorded in compliance with Manual. (Section II.C.l- All school-wide fundraising should be recorded in the proper account). Testimony by staff members and the principal confirmed there was fundraising by the Student Council and proceeds from such were not recorded appropriately.
10. Gifts to teachers were provided using Student Activity Funds. (Section 11..3, p. 60- The school, as a component of the Beaufort County School District, cannot

give gifts to employees.) Evidence of receipts demonstrated that gift cards were purchased with Student Council funds and distributed to teachers. Several staff members confirmed that they were reimbursed with cash for the purchase of the gift cards. In addition to the frnancial concerns, based on responses that you provided to me in our July 16 meeting, I have concluded you did not comply with the administration's directive not to communicate with faculty and staff members of H.E. McCracken Middle School during your leave as they would potentially be witnesses in the District's investigation. On several occasions during our meeting, you referred to information you had been provided by staff members, including Ms. Gibbo, in such a way as to make it clear to me that you continued to speak with staff while on leave. For example, on several occasions you referred to Ms. Gibbo telling you that Chris Barrow had provided information to her regarding the lockbox. Additionally, you refened to your wife having contact with Ms. Gibbo, which I consider violating the spirit of the directive you were given. You acknowledged during our meeting that you understood the administration's directive. I also concluded that you engaged in discussions with a local newspaper in violation of the confidentiality rights of the employee involved, specifically Ms. Ballard. Again, in the meeting, you acknowledged understanding that it would not be proper to discuss confidential employment infonnation with the members of the public, including the media. You indicated in your meeting that you understood that employment matters such as grievances are confidential and should not be discussed. However, after reviewing the information that was reported in the newspaper, and comparing it with the concerns you expressed in our meeting, the information shared substantially similar to the statements attributed to you by a local newspaper regarding your issues with Ms. Ballard. You did not offer a satisfactory explanation ofhow the newspaper would be aware of your concerns if you did not share the information with the newspaper. Your handling of your medical leave is also a concern. Although Ms. Walton requested that you provide "a physician's statement verifying the nature of [your] illness and approximate duration of the same," on or before March 28, 2013 you were purposefully insubordinate and did not provide the statement until it was requested a second time. Additionally, your responses to a number of the questions that you asked suggest that you were not honest regarding all the antics we discussed on July 16. For example, as noted above, I did not consider your responses to the questions about speaking with staff members and the media to be truthful. Ultimately, your overall poor administrative judgment in the handling of matters, including the apparent delegation of authority that you gave to your secretary, have left me with no confidence in your ability to be an effective administrator. For example, you indicated on several occasions that your secretary placed items in the lockbox that was under your desk without your knowledge. As you know, this lockbox was ultimately determined to have, among other things, over $600 in cash, as well as several personal items of yours. Although you deny having any knowledge of the contents of the lockbox, in light of the information from staff members that cash transactions were being done on a routine basis, I believe it is reasonable to

conclude that the cash contained in the lockbox confhms that cash transactions were being

handled on a routine basis and that cash was being kept in your school, in violation of your
school's own handbook. If these types of transactions were occurring without your knowledge,

you were not effectively managing the day-to-day operations of your school.
I am recommendi!lg your termination to the Board. Should the Board uphold my recommendation subject to your right to request an evidentiary hearing, you will be notified in

writing of the right to a hearing. I am willing to consider any alternative resolution of this matter that you propose prior to my recommendation to the Board. I regret that this action is necessary,
but after reviewing the facts and circumstances, including the information you shared in our

conference, I believe my decision is in the District's best interest.

ey C. Moss

-- uperintendent