Minneapolis schools' credit card usage raises accountability questions

Minneapolis Public School employees are using district credit cards for unauthorized purchases — including personal use — and have routinely failed to follow expense policies, a Star Tribune review of school expense records found.

Several school district leaders — including the outgoing superintendent and the current CEO — repaid the district for expenses only after the Star Tribune inquired about them.

The Star Tribune reviewed $1.5 million in credit card expenses submitted by 262 employees over the past six months.

School officials spent thousands of dollars at grocery stores, Target, Wal-Mart and restaurants in Minneapolis and around the country. The chief executive's secretary spent $2,000 framing high school sweatshirts for a conference room. The secretary of the district's human resources director charged $1,000 for balloons for several days of job fairs.

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 $1,000 included no receipts. District policies require receipts for every expense.

Evidence of questionable spending or sloppy financial record keeping on expenses by Minneapolis school officials is arising at a time when the district is facing a budget shortfall in excess of $5 million.

After the Star Tribune's inquiry, some top executives, including outgoing Superintendent Bernadeia Johnson and CEO Michael Goar, reimbursed the district for expenses deemed unallowable. Goar owed the district nearly $500, which included two purchases from a high-end office supply store and some meals. Johnson reimbursed $185 in food charges using a discretionary account.

School officials said they are working to improve the submitting of receipts.

"It's an issue," said Stan Alleyne, a district spokesman. "That's one of the things we really have to work on, to remind folks to keep their receipts."

Critics said the lack of scrutiny raises questions about the district's credibility.

"It's yet another example of lax oversight in the district," said Peggy Clark, a district parent who closely scrutinizes district spending.

But school officials dismissed the idea that the receipt issue reflects a larger problem. Halvorson said the district closely scrutinizes spending in monthly audits.

Robert Doty, the district's chief operations officer, said 95 percent of purchases comply with the district's rules and regulations. Doty himself had to reimburse the district $43 for an unallowable meal purchase at the Monte Carlo.

"We have a pretty robust process, and we are really pleased with that," he said.

In the past two years, the district's purchasing card system has already undergone a number of changes. In May 2013, the district said it would limit the number of card users from 370 to 250.

An audit for fiscal year 2013 found there were deficiencies in the way schools used credit cards because purchases were not "always approved before payment or not approved at all."

"We weren't confident in the process, and we made changes," Halvorson said.

In 2010, the superintendent of Denver Public Schools restricted food and travel expenses after district employees abused official credit cards for purchases such as $270 in scented pencils and $4,000 in doughnuts and burritos for meetings at a high school.

Denver officials instructed employees to opt for virtual conferences rather than paying for out-of-state travel and stopped paying for food for internal staff meetings.

Minneapolis introduced a new system that allows for better auditing and inputs transactions into the district's systems automatically, Doty said. The district can also limit the types of purchases officials can make and where they can make them.

Still, concerns remain about cardholders following the district's purchasing and reporting guidelines.

The district does not allow employees to purchase personal meals, even if it is for a business meeting. The only time that is allowed is if the employee is traveling. Yet expenses at restaurants in Minneapolis made up the majority of reimbursements from Goar and other executives.

District officials would not make Goar available for comment.

Some executives and other cardholders have exceeded the daily food limit when they travel. District employees are allowed $7 for breakfast, $11 for lunch and $23 for dinner.

On a trip to New York City, Michael Thomas, who supervises associate superintendents, spent nearly $70 at Uncle Jack's Steakhouse. He eventually reimbursed the district for the meal using grant money.

Doty and other officials say some policies should change, such as altering the daily meal rates based on what city the employee is eating in.

Executives, like the CEO or superintendent, should be allowed to charge a meal to their credit card if they are conducting business, school officials said.

Other cardholders are not using approved vendors. Karen Kohagura, who runs a child care program at Lake Harriet Lower Campus, bought a couch, picture frames and tables from Ikea. Halvorson said these were legitimate business expenses, but "we do prefer that some of these items be purchased from our authorized vendor."

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.

Halvorson said Johnson got verbal permission to charge the items on her card because the district was experiencing six-to eight-week delays in receiving Apple products. That timing was "not conductive to the schedule that was needed by the superintendent and the CEO."

Goar's assistant charged $2,000 to frame sweatshirts from Minneapolis high schools for a conference room. Alleyne said the district shopped around for the best price and that it was an appropriate charge because "it shows pride."

"We wanted to give people a reminder that this is what this work is all about," Alleyne said.