Inquiry Into the Misuse of District-issued Credit Cards in the East Side Union High School District

Conclusions 1

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  The alleged complaint of inappropriate use by board members of District credit cards was found to be valid, but led to an additional finding that District staff had also been misusing credit cards on a much larger scale than in the complaint. Adoption of written policies as recommended by the CSBA by the board of trustees removes ambiguity about what is authorized, protecting the district, the board member, and the school staff processing the payments. Boards of trustees must ensure that internal financial control structures are in place and that administrators make them effective. Finding I District-issued credit cards have been used inappropriately by District staff and by board of trustee members. The number of cards issued has now been limited to the top staff only in the District and written policies have been signed by those with cards. Recommendation I-A The District should continue to pursue reimbursement by District staff of unauthorized and inappropriate expenditures. 4 Recommendation I-B The board of trustees should approve the list of District credit card holders. Recommendation I-C The District should invite FCMAT to audit after the 2004-2005 fiscal year to ensure that a culture of fiscal responsibility has been established. Finding II Several school districts within Santa Clara County do not have written policies regarding the reimbursement of expenditures by school board members nor the use of district-issued credit cards. Recommendation II All school districts within the County that issue credit cards should have written policies containing all the elements in the CSBA recommendations regarding the use of district-issued credit cards and the reimbursement of expenditures. Finding III Only three school districts issue individual credit cards to their board of trustee members. All other districts in the County find it unnecessary to issue credit cards to board members. Recommendation III To avoid problems and conflicts of interest, school districts should not issue individual credit cards to board of trustee members. PASSED and ADOPTED by the Santa Clara County Civil Grand Jury on this 6th day of May 2004. ________________________________ Richard H. Woodward Foreperson 5 References Documents California School Board Association web site: www.csba.org. Email from the California School Board Association dated November 21, 2003. FCMAT Management Review of the District Report dated May 11, 2001. East Side Union High School District Credit Card Policies and Procedures, 2001-2002. East Side Union High School District Credit Card Policies and Procedures, 2003-2004. East Side Union High School District web site: www.esuhsd.org. San Jose Mercury News, March 14, 2004, pg. 8B, Academic Performance Index scores. Interviews Chief Operating Officer, East Side Union High School District, March 17, 2004. Director of General Services, East Side Union High School District, April 14, 2004. District Auditor, East Side Union High School District, April 13, 2004. Former Superintendent, East Side Union High School District, April 21, 2004. Superintendent, East Side Union High School District, March 17, 2004, and April 13, 2004. Meetings Attended District Board of Trustees Meeting January 5, 2004. 6 Figure 1 Total District Credit Card Usage $100,000 $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 7 htnoM rep degrahC tnuomA latoT 69-luJ 79-naJ 79-luJ 89-naJ 89-luJ 99-naJ 99-luJ 00-naJ 00-luJ 10-naJ 10-luJ 20-naJ 20-luJ 30-naJ 30-luJ 40-naJ 40-luJ 100 90 80 70 60 50 40 30 20 10 0 htnoM rep desU sdraC fo rebmuN Fiscal Crisis and Total Amount ($) Management Number of Cards Used Assisstance Team Audit Report New Superintendent New Policy Appendix A East Side Union High School District Credit Card Policies and Procedures 2001-2002 § For emergency purchase of supplies and materials § For travel and conference expenses supported with the following documentation submitted with a monthly statement: o Approved Travel and Conference form completed with actual expenses o Registration forms o Travel Itinerary o Meals receipts § For supplies not available in the district warehouse § For business meeting expenses supported with the following documentation submitted with the monthly statement: o Meeting Agenda o List of Attendees o Receipts § NOT FOR purchase of EQUIPMENT over $500 (i.e. computers, printers, TV’s) § For use with vendors not accepting Purchase Orders § Not for personal purchases § Monthly purchase limit is $10,000 § Single purchase limit is $3000 § Submit monthly statements, original receipts, and invoices to the Business Office by the 15th of each month (example: Statement dated June 24th is due by July 15th) o Do not hold statements because of missing receipts and/or disputed item(s) o Attach “Statement of Questioned Item” form as documentation for missing receipt and/or disputed item(s) § Accounts over 30 days past due will be suspended § Accounts over 60 days past due will be cancelled and referred to the General Counsel, Deputy Superintendent, and/or Asst. Supt. Of Business Services for further disciplinary action § Repeated misuse of credit card is cause for cancellation (i.e. equipment purchase) § Credit card purchases will be charged to pre-approved General Fund accounts (i.e. “481- 4310” and “481-5210”) unless indicated otherwise on the monthly statement 8 Appendix B (with changes from 2001-2002 underlined) East Side Union High School District Credit Card Policies and Procedures 2003-2004 Credit Cards May Be Used For: § Approved emergency purchase of supplies and materials § Approved travel and conference expenses supported with the following documentation submitted with a monthly statement: o Copy of Travel and Conference form completed with actual expenses o Registration forms o Travel Itinerary o Itemized Meals receipts § Business meeting expenses supported with the following documentation submitted with the monthly statement: o Meeting Agenda o List of Attendees o Itemized Receipts § Vendors that do not accept Purchase Orders § Supplies not available in the district warehouse Credit Cards May Not Be Used For: § Personal purchases § Entertainment § Supplies available in the district warehouse § Equipment over $500 (i.e. computers, printers, TV’s) Credit Card Limits: § Monthly purchase limit: $3,000 – Principals and Directors $5,000 – Cabinet, Superintendent § Single purchase limit: $1,500 – All Credit Card Clearing Procedures: § Submit monthly statements, original receipts, and invoices to the Business Office by the 15th of each month (example: Statement dated June 24th is due by July 15th) o Do not hold statements because of missing receipts and/or disputed item(s) o Attach “Statement of Questioned Item” form as documentation for missing receipt and/or disputed item(s). Cardholder responsibility to clear as soon as possible – will remain in the unclear list/past due account list. Credit Card Suspension and/or Revocation: § Accounts over 30 days past due will be suspended by the Business Office § Accounts over 60 days past due will be cancelled by the Business Office and referred to the Superintendent of Schools for further action § Repeated misuse of credit card is cause for cancellation (i.e. equipment purchase) § Credit card purchases will be charged to pre-approved General Fund accounts unless indicated otherwise on the monthly statement 9 Credit Card Holder Personal Responsibility: § Each credit card holder will be held to the highest standards of protocol according to these Board Approved Policies and Procedures ____________________________________ _____________ Authorized Card Holder Date ____________________________________ _____________ Chief Financial Officer Date 10 Appendix C Table of Survey Responses Written Policies for CA School Reimbursement Cards Issued to Board Assn. School District Board Staff Board Staff Member Alum Rock Union Yes Yes No No Yes Berryessa Union Yes Yes No No Yes Cambrian Yes Yes No Yes Yes Campbell Union High Yes Yes Yes Yes Yes Campbell Union Yes Yes No Yes Yes Cupertino Union Yes Yes No Yes Yes East Side Union High Yes Yes now No Yes Yes Evergreen No No No Yes Yes Franklin-McKinley Yes Yes Yes Yes Yes Fremont Union Yes Yes No Yes Yes Gilroy Unified Yes Yes No Yes Yes Lakeside Joint Yes Yes No Yes Yes Loma Prieta Joint Union Yes No No Yes Yes Los Altos Yes Yes No Yes Yes Los Gatos Union Yes Yes No Yes Yes Los Gatos-Saratoga Joint Union High Yes Yes No Yes Yes Luther Burbank Yes Yes Yes Yes Yes Metropolitan Education Yes Yes No Yes Yes Milpitas Unified Yes Yes No Yes Yes Montebello No Yes No No Yes Moreland Yes Yes No Yes Yes Morgan Hill Unified Yes Yes No Yes Yes Mount Pleasant Yes Yes No Yes Yes Mountain View-Los Altos Union High Yes Yes No Yes Yes Mountain View-Whisman Yes No No Yes Yes Oak Grove Yes Yes No Yes Yes Orchard Yes Yes No No Yes Palo Alto Unified Yes Yes No Yes Yes San Jose Unified Yes Yes No Yes Yes Santa Clara Unified Yes Yes No Yes Yes Saratoga Union Yes Yes No No Yes Sunnyvale Yes Yes No Yes Yes Union Yes Yes No No Yes 11

No Responses Found 30

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