The state auditor reprimanded the Shakopee School Board in a recently released report, saying the board didn’t hold former Superintendent Rod Thompson accountable for policy compliance when Thompson made $87,479 in improper transactions using school funds.

The state auditor's office has been involved in the Thompson case since the Shakopee Police Department began its investigation in June 2017. Thompson was arrested in November 2017 and convicted in November in Scott County District Court on 19 charges of theft and embezzlement. He was also convicted of one federal charge of bribery. He’s expected to be sentenced this spring to two years in prison.

In a letter from Special Investigations Director Mark Kerr to Superintendent Mike Redmond and the Shakopee School Board, Kerr spells out three areas of concern stemming from the investigation: the school board didn’t hold Thompson accountable for compliance with its P-card policies and procedures, the board didn’t oversee Thompson’s reimbursement requests in accordance with his adoption benefit agreement, and the board didn’t create a control environment favorable to accountability.

The school board members have changed since Thompson’s resignation. During the last year of his tenure, the board included current members Matt McKeand, Reggie Bowerman, and Angela Tucker, along with former members Scott Swanson, Shawn Hallett, Tony Pass, and Mary Romansky. Swanson, Hallett and Pass served terms that ended in December, and Romansky resigned in April.

OSA recommendations

For each area of concern in his letter, Kerr recommends an action and gives the school board a March 1 deadline to submit a written response detailing how it will implement the recommendations.

In an interview, Superintendent Mike Redmond said the details of the report were not surprising, and the board has already been working toward more accountability and transparency.

“What the OSA is asking for are things that we’re largely doing, and doing very well, currently,” he said. “We’re getting a recommendation, if you will, after the fact.”

One of the recommendations is for the board to review its process for supervising its superintendent's adherence to board spending policies.

The board updated its P-card policy and procedure manual shortly after Thompson resigned in June 2017. Redmond noted Thompson is the last Shakopee superintendent to even use a P-card; former Temporary Superintendent Jon McBroom and late Superintendent Gary Anger didn’t use theirs, and Redmond doesn’t have one.

“I don’t have a need or a use for a P-card,” he said, though he makes about a dozen reimbursement requests annually for things like parking fees at work-related events. Redmond’s reimbursement requests must be accompanied by itemized receipts and approved by the school board chair and the finance director.

“The policies that were in place during Rod Thompson’s tenure were sound,” Redmond said. “It’s a district that’s redoubled the efforts in terms of procedure and protocol. I expect we’re going to operate this way indefinitely into the future. We want to operate with outstanding policy and procedures in all areas.”

The auditor's office deemed $47,725 of school funds paid to Thompson for adoption-related expenses improper and recommended the school board “critically review and formally approve transactions that it has committed itself to oversee.”

In 2014, Thompson’s contract allowed him $30,000 for an adoption benefit, with an additional 25 percent that could be approved by the executive committee of the school board. State auditors reviewed emails between the former school board chair and former Director of Finance Mike Burlager and found only informal approval for the additional 25 percent, or $7,500.

In addition to the maximum benefit amount of $37,500, the auditors found $12,325 in adoption-related charges to Thompson’s P-card.

“The OSA found that the former superintendent submitted misleading documents to obtain certain reimbursements, and sought and received payments outside the reimbursement process provided for in the Adoption Reimbursement Addendum,” the report says.

The final recommendation asks the board to “demonstrate a commitment to integrity and ethical values by encouraging an environment in which internal controls are valued and supported.”

According to the report, the school district didn't follow state law when it didn’t report concerns raised in early 2017 about improper expenditures.

“The school district should create an environment where employees feel comfortable reporting breaches in internal control procedures without fear of retaliation,” Kerr’s letter says. “Employees need to know to whom their concerns should be reported, and they need to feel confident that such concerns will be addressed.”

Redmond said he hopes district employees feel comfortable reporting such behavior, especially after the district’s efforts to be more transparent to the public and restore trust.

“I hope the staff feels confident in coming forward. We’re facing a challenge. We get criticized, I would say, unfairly. The criticism goes back to the previous issues,” Redmond said. “That’s something we’re dealing with, but we also can’t be weighed down by unfair criticism, which can impact our ability to do a high quality job in the present.”

Improper transactions

The auditors reviewed Thompson’s P-card transactions from August 2011 through his resignation in June 2017. Minus the adoption-related expenses, it found $39,754 in improper or questionable expenses, including:

  • $9,751 in non-business travel purchases.
  • $656 in alcohol purchases.
  • $1,033 in transactions with and The Great Frame Up.
  • $1,050 in transactions with various PayPal vendors and FansEdge.
  • $8,065 on two laptop computers, a digital camera, a Kindle e-reader, a wireless Bluetooth speaker and external hard drives.
  • $1,513 on personal memberships or subscriptions to Amazon Prime, Sam’s Club, Audible and the U of M Alumni Association.
  • $9,126 in personal items, including two 42-inch televisions, luggage, a freezer, fireplace equipment, an elevated garden bed and other patio accessories, a work bench, an Apple TV, and two alcohol flasks.
  • $191 in Apple iTunes purchases.
  • $2,000 to the Spirit of the Saints Gala for a “premier table.”
  • $5,479 in questionable purchases for which no supporting receipts were available.

According to the report, Thompson’s P-card was credited $5,018 in refunds from vendors, and he wrote personal checks to the district totaling $3,442 to refund some of the transactions. He also reportedly made a $500 cash payment to the district to reimburse one of his TV purchases. In June 2016, Thompson also wrote a $3,500 check to the district, but the district hasn’t been able to determine exactly what purchases he was intending to reimburse, according to the report.

The auditor's report noted a portion of Thompson’s purchases costing about $2,000 may have been for items for the Shakopee Alumni Association’s silent auction in 2016. According to the report, school districts lack the authority to spend money to support nonprofit fundraising activities.

“Although the Shakopee Alumni Association is a separate nonprofit corporation, the school district was actively involved in the finances related to the operation of the fundraiser,” the report states. “A school district should not maintain or control a nonprofit organization’s funds. More generally, Minnesota law does not permit local governments to donate to individuals or nonprofit organizations unless the donation is based on specific statutory or charter authority.”

The auditor applied this same concept its consideration of Thompson’s $2,000 contribution to the Spirit of the Saints Gala in 2016. The gala is held annually by the Saints Foundation, which supports St. Francis Regional Medical Center in Shakopee with grants.

“Donations to nonprofits, charities, or individuals do not generally serve a public purpose,” the report says.

The report indicates problems began early on in Thompson's tenure: A July 2011 addendum to Thompson’s initial employment contract allowed for up to $7,000 in reimbursements for “reasonable moving expenses.” But Thompson received reimbursement from the district for a $798 TV, carpet installation costing $2,300, and lawn supplies and a new faucet costing $162.

“The OSA questions whether these reimbursements should be considered ‘reasonable moving expenses,’” the report says.

Reporter and Lifestyle Guide Coordinator

Amanda McKnight has been a Southwest News Media reporter for four years. Amanda is passionate about accountability journalism and describes herself as spunky and assertive. She enjoys running, knitting, exploring nature and going on adventures with her hu