The idea was to teach students at Rock Terrace School about money management in a real-life setting.

Special-education students would take a bus about two miles to a now-defunct teachers’ credit union during the school day. They withdrew cash from personal accounts that school employees helped them open. And when they finished, students handed envelopes full of money to adults.

But it is unclear where exactly the money went after it left the bank. And parents are outraged that their children — some minors with severe developmental disabilities — had bank accounts opened in their names without express parental consent.

Now, parents and special-education advocates are questioning the legality and ethics of a Montgomery County schools program designed to teach students life skills as district and state officials investigate allegations of financial mismanagement.

Problems at the special-education school came to light after parents were denied public benefits, including food stamps and disability money, because of the cash that parents say they knew nothing about. Montgomery had been depositing money into student accounts to teach financial and job skills. Bank statements and Form W-2s were addressed to the school, not students’ homes.

“It’s not a lot of money,” said one Rock Terrace parent who spoke on the condition of anonymity. “But the purpose of using my daughter's name and Social Security number is totally so wrong. I’m so upset because my daughter’s identity has been misused.”

The parent said her child, 19, is non-verbal and unable to walk far without assistance. Going to a bank would be a useless educational experience.

“She doesn’t have a way to understand whether 25 cents or a dollar is bigger or smaller,” the mother said. “How would she benefit from using that bank account?”

Rock Terrace serves special-
education students
ages 12 to 21. School officials are looking into the “Transition to Work” program, although parents involved say financial problems could extend to other parts of the curriculum.

Through Transition to Work, students work at department stores or area businesses. Students also perform in-school work, such as stuffing envelopes or putting together newsletters.

“As part of the program, students receive a small amount of money from the MCPS operating budget, which is part of the program’s mission to develop life skills that will lead to independence and success in the work world,” district spokesman Dana Tofig said. “Students are participating in an education program and are not employees of the companies and organizations where they perform this work.”

The school system declined to comment on the merits of opening bank accounts for the students or how the money is accounted for and used, citing the ongoing investigation.

Principal Dianne G. Thornton has been placed on administrative leave, a routine procedure during such investigations, district officials say. Thornton did not return calls for comment. The comptroller of Maryland is also looking into the allegations because of the tax ramifications.

According to current and former Rock Terrace employees who spoke to The Washington Post, the money students withdrew would be pooled to pay for weekly trips students took to the mall, grocery store, restaurants or other spots in the community. The outings are designed to teach skills such as comparison shopping, budgeting and navigating public transportation.

But parents said they sent their children off to school with cash to pay for community activities. If the money put into their children’s bank accounts was used for community outings, parents want to know why they also sent money each week and where that money went.

Despite its aims, the program’s structure is unusual and ripe for fraud and abuse, said Diane Smith Howard, the staff attorney for juvenile justice and education at the National Disability Rights Network.

“It sounds terribly well intentioned but tremendously poorly managed,” Smith Howard said.

She said the system raises questions about what safeguards are in place to prevent exploitation of a vulnerable population — particularly if some parents did not know whether their children were considered employees or volunteers for the work they did.

“The problem is, whether you call it a stipend or anything else, money these kids theoretically earned is impacting their public benefits and is attached to their individual names,” Smith Howard said.

Rock Terrace parent Deborah Albert said she learned money was being deposited into her daughter's account after Social Security started reducing her daughter’s disability checks. The government had considered money her daughter, 21, received at Rock Terrace as income.

“I gave [the school] permission to open the account so she can learn about how to deal with the bank,” said Albert, whose daughter graduated from Rock Terrace in June. “I didn’t expect them to put any kind of money into the bank account.”

People who are disabled are allowed up to $85 a month in assets before the Social Security Administration starts reducing certain benefits, said Meghan Marsh, communications supervisor at the Maryland Disability Law Center. The money in student accounts could also jeopardize a family’s application for Medicaid, food stamps, public housing or other programs based on family income.

Parents and students could also be responsible for back taxes on the money, said Cindy Hockenberry of the National Association of Tax Professionals.

“They can call it whatever they want, but if they’re requiring services to be performed to get this money . . . by nature that is considered compensation and taxable,” Hockenberry said.

The Educational Systems Federal Credit Union found about two dozen accounts tied to the school over the last decade, said Chris Conway, president and chief executive of the credit union. Last year, the credit union merged with the financially distressed Montgomery County Teachers Federal Credit Union, where student accounts were first opened.

Most of the Rock Terrace accounts involve small amounts of cash, and there doesn’t appear to be any suspicious activity, Conway said. Red flags would include large or frequent withdrawals or deposits of cash, he said.

Tamara Clark learned about money her son received from the school system after he came home with a W-2 in his backpack and her family was almost rejected for food stamps.

April and May bank statements for Clark’s son show withdrawals ranging from $25 to $200. And a check from the school system for almost $800 was made out to Clark after she started asking the principal questions about the money and the account.

Her son performed a variety of jobs through the school and at local department stores, but she thought it was all volunteer work. Clark said her son, who has autism, received about $2,000, based on the financial documents she has reviewed.

But Clark’s investigation is not complete. She still wonders where the money went and how it will continue to affect her family or her son’s public benefits.

“I don’t know what is going to happen to me next,” Clark said. “I just don’t know what all the legalities are and where we fall.”