Minneapolis Public Schools officials are reviewing the district’s credit card purchases after new scrutiny revealed that cardholders were making unauthorized purchases and have routinely failed to produce receipts.
“The school district’s policies must be obeyed and carried out by every MPS employee empowered to charge expenses on district-issued credit cards,” schools CEO Michael Goar said Monday in a message to district employees. Goar said district officials will spend the next month reviewing purchasing practices. School leaders are also scheduling training sessions to ensure card users “understand the critical importance of following procedures, rules and regulations with regard to expenses.”
A Star Tribune report found that over the past six months, 262 employees charged $1.5 million on district credit cards, for everything from books to school supplies to balloons. Officials say the majority of those purchases were necessary and justified, but thousands of dollars were also spent on food, travel and other expenses for the district’s leadership team.
While it is not completely clear how many of the expenses are questionable, a sample of 270 expense reports showed nearly half were submitted with no supporting receipts. Some transactions for more than $1,000 did not include receipts, including to grocery stores and major retailers. District policies require receipts for every expense.
The questions about credit card spending come as district officials face a projected budget shortfall in excess of $5 million and as teachers have complained about the district being so cash-strapped that they have to spend their own money to buy materials and supplies for their classrooms.
“I really want to see the administration take this seriously,” Board Member Jenny Arneson said. “We need to focus on a system that expects employees to turn in receipts and stay within their budget.”
In his message to staff, Goar also said the finance department will “conduct an assessment to determine if additional infractions to our purchasing policy need to be more explicitly identified and reported publicly.”
District officials gave no further details on the scope of the review Monday and did not say how many transactions they will be scrutinizing.
Board Member Kim Ellison, who wants to be the board’s vice chair, said the district needs to be doing more than just a 30-day review.
“We need to look at what we allow and if it makes sense,” Ellison said. “We need to have an open discussion about this with the board, with staff and the public.”
A deeper problem
Last week, Leah Halvorson, the district’s procurement director, said her department was seeking more reimbursement from employees. She did not know the amount or who would have to repay money.
A purchasing consultant who used to work for the Federal Reserve Bank of Minneapolis said the lack of proper bookkeeping indicates a deeper problem at the district.
Lynn Larson, a consultant who specializes in purchasing card requirements for public and private entities, said the district should not only review its purchases, but also its procedures.
“Transactions should not be turned in without receipts,” Larson said.
She also said district employees need regular training to ensure the district’s purchasing policies are followed.
Some employees, including Goar himself, and outgoing Superintendent Bernadeia Johnson, had to reimburse the district for purchases that were not allowed under its policies. Goar reimbursed the district nearly $500 for two purchases at a high-end office supply store and several meals at the Monte Carlo and the Smack Shack. Superintendent Bernadeia Johnson paid back $185 using a discretionary account.
The repayments were made after the Star Tribune requested the credit card purchase data.
District officials say the purchases in question violated the district policy, but served a business purpose.
Some of the issues included employees who exceeded the daily meal allowance for travel or district leaders who charged for meals during business meetings. The district generally does not authorize employees to pay for meals unless it is for travel.
Robert Doty and other school officials said the district should consider changing some policies, such as setting a sliding scale for the daily meal rate based on what city the employee is eating in.
They also said taxpayers should pay for meals for top executives, like the CEO or superintendent, if it serves a business purpose.
Johnson told Minnesota Public Radio on Monday that the district should allow work-related purchases by administrators. The Star Tribune review found Johnson charged two laptop computers and two iPads for Goar and herself, purchases that would typically be against district policy.
“We need to go back and look at should we make some adjustments to the policy,” Johnson said. The policy needs to be accommodating so that “for a superintendent to buy a laptop or an iPad is an allowable expense.”