A Bryant School District employee told legislators Thursday that a former business manager made several fiscal decisions and transactions that went unchecked by district leadership, a practice that many times appeared to be for the district's benefit.
The Legislative Joint Auditing Subcommittee on Educational Institutions questioned the district's interim superintendent, Fred Dawson; business manager Angie Drummond; and School Board President Rhonda Sanders on the findings from the district's March audit Thursday. Drummond walked legislators through each of the audit's findings and what the district has done or is doing to rectify the problems.
Among the findings, auditors found the former business manager -- Richard Stipe -- opened an American Express rewards credit card in February 2010 without approval from the superintendent at the time, Randy Rutherford, or the School Board and made $1.5 million in purchases during fiscal year 2013 with the card.
Stipe, who resigned July 19, bought four iPads and other electronic equipment, according to the audit. Most of the equipment was recovered, and Stipe reimbursed the district for one iPad that wasn't recovered.
He also made an electronic transfer of $51,889 to American Express to pay an outstanding bill because the company hadn't received checks for the actual payment in time, the audit states. The district never incurred any fees on the card, Drummond said, adding that all electronic transfers have to be approved by her and the superintendent.
The district spent more than $10,000 in American Express reward points to buy merchandise despite having earned only $7,700, according to the audit. Before closing out the card, the district redeemed $15,775 in reward points as Amazon gift cards, the audit said.
Many times, the district wrote checks to vendors even though it would pay the merchants with the American Express card and later endorsed the original checks "I/C/O (in care of) American Express," the audit states.
On Thursday, legislators grilled the district's representatives about Stipe's intent and if he used the card or reward points for himself. Rep. Charlotte Douglas, R-Alma, asked if all the merchants paid with the American Express card were legitimate.
Though Stipe was the only employee who knew of the reward points at the time, Drummond said she felt "confident" the vendors were all real. The district had used most of the merchants for previous purchases, she said.
Drummond added that it seemed as though the business manager's "original intent" was to further the district -- the card was used to buy plane tickets for the cheerleading team to go to the national championship at one point, she said.
But, he had some of the district's property in his personal possession, she said, adding that Stipe had given an iPad to a fellow church member.
Stipe wasn't at the Legislative subcommittee meeting, and efforts to reach him for comment were unsuccessful.
The School Board had "absolutely no idea this was going on," Sanders told legislators. The matter first came to Rutherford's attention by early summer 2013, and he brought it to the School Board, she said.
It was at that time the School Board "highly recommended" a legislative audit to help find any other financial irregularities in the district, she said.
The district is now drafting a credit-card policy that prohibits anyone from opening a credit card in the district's name, Drummond said. The American Express card, which had a $750,000 limit, only had Stipe's name and Bryant School District on it, she said.
The audit's other findings, which include unauthorized spending and failure to bid out certain projects, have been brought to Saline County Prosecutor Ken Casady. Casady has enlisted the help of the Arkansas State Police to investigate the irregularities.
Rep. Walls McCrary, D-Lonoke, said school districts typically have segregation of powers in place to prevent misconduct.
"The superintendent has to share the blame, too," he said.
The Bryant School Board removed Rutherford as superintendent in March, suspending him with pay and recommending his termination. Rutherford earned $155,000 per year. The board reached a "separation agreement" last month in which the former superintendent agreed to "immediately submit his resignation" and be paid through June 30.
The Arkansas Democrat-Gazette has repeatedly sought documentation from the Bryant district under the Arkansas Freedom of Information Act showing the reasons for Rutherford's removal. Sanders, the board president, has refused to provide the documentation, saying it's a personnel matter.
The Democrat-Gazette has asked to see a copy of any resignation letter. Jay Bequette, an attorney for the board, said in an email that "no letter has been submitted."
Documents that form the basis to suspend or to terminate a public employee are public records under Arkansas law.
Metro on 05/10/2014