CHASING THE PAPER TRAIL: DISTRICT EXAMINES CREDIT CARD USE

Copyright 1995

After three years of charging food and travel expenses on corporate American Express cards, Cape Girardeau school administrators and board members concede some charges were inappropriate. They also agree the worst record-keeping related to the superintendent's own expenses.

When he was told last week about questions that had been raised by a school district resident, Superintendent Neyland Clark asked for an independent auditor to examine the district's travel-expense records and make suggestions for improvements.

Stephen C. Del Vecchio, audit manager for Hillin & Clark certified public accountants, said Clark telephoned him Friday and asked him to meet with Dan Tallent, high school principal, to recommend ways to improve documentation of travel expenses. Del Vecchio said he had already met with Larry Dew, the school district's business manager, earlier in the week about specific questions raised by Amy Randol in a letter to school board members.

Clark said during an interview Thursday: "If something is bad, let's fix it and get on with running schools."

He said Randol's questions indicated "a lack of policy for legitimate expenditures, a breakdown of clerical and support documentation. This has been a mixed blessing. It raises some issue that need to be raised."

Eight American Express cards

The district opened an American Express account in January 1992. Since then, approximately $60,000 in expenses, mostly for hotel rooms and food, have been charged to the corporate account.

Eight individuals have district cards issued in their names. Both Pat Ruopp, a school board member and former board president, and Ed Thompson, the current board president, have cards. It costs the district $55 a year for each card on the district's account.

Until questions were raised last week about the use of the cards, Clark and board members were unaware of how many cards were in circulation.

Board member John Campbell said, "There is not going to be any whitewash of this thing. We're going to get to the crux of the issue. If there is missing information, we'll obtain it. I think we have a couple of inadvertent things."

Board member Kathy Swan said, "None of it's intentional. It's just sloppy."

Dew, the business manager, said the mechanics are in place to track credit card charges, but the superintendent doesn't always turn in receipts.

The district has a $25-a-day limit for meals. But credit-card receipts show a number of meal charges surpassing the daily maximum.

Clark said he came to Cape Girardeau in 1991 as a change agent. "When you change and move things from where they have been, it's going to irritate some folks."

Amy Randol checks records

Randol, whose questions have drawn attention to sloppy records regarding travel expenses, has been a school district volunteer for the past six years. She began looking at school expenditures six months ago and found Clark's missing documentation. She also found questionable credit card charges and other expenditures. Last Tuesday, she sent a letter to board members with her questions and asked the board to respond by Friday. Board member Campbell said the board plans to respond at the March 13 meeting.

Clark asked for credit cards

Cape Girardeau schools didn't have an American Express account before Clark arrived.

While still negotiating the terms of his employment in 1991, Clark asked for a district credit card. Board member Ruopp remembers that the reason given at the time was to simplify bookkeeping and improve accountability.

Business manager Dew set up the American Express account -- at Clark's request -- for central office administrators and the school board president and vice president.

A card is still issued in James Englehart's name, although he retired as director of secondary education in June. An additional card was issued for his replacement, Tim Niggle. Englehart still works eight to 10 hours a week for the district as a consultant, but said he turned in his credit card in June.

Ruopp said he didn't know one of the cards was issued in his name, and he said he had never used it. But expenses are charged to Ruopp's card regularly.

Trading credit cards

The eight cards are used by a variety of school employees, including teachers, who sign the name embossed on the card for charge receipts.

For example, although both Ruopp and Thompson have cards in their own names, they used Clark's card in January 1993 to charge dinner at Hooters, a restaurant in Maryland Heights, on their way to a board certification meeting.

On another occasion, Clark's first name is misspelled on a meal charge receipt in January 1993 that apparently was signed by someone using Clark's card in Columbia.

Since cards are traded back and forth, the monthly account summary provided by American Express doesn't always show who actually made the charges.

Dew, in his administrative role over the business office, frequently chases down exactly who spent what.

For virtually everyone who uses the credit card, with the exception of the superintendent, the paper trail is easy to follow.

Lack of receipts

Dew expects card users to turn in receipts for all expenses. District policy requires receipts for all travel reimbursements, but the policy doesn't cover the use of credit cards. Most of the time, receipts are in order. "We have excellent documentation on all but one of our employees," Dew said.

Clark turns in receipts about half the time. Each month when the American Express bill arrives, Dew asks Clark about his missing documentation. If Clark doesn't produce receipts, Dew attempts to figure out where the superintendent has been. "I never found any travel expenses that were not on district business," Dew said.

Clark thinks it is his business manager's responsibility to take care of the documentation. And the district's attorney, Diane Howard said the American Express summary is the only documentation needed for charges. "That is a legally acceptable voucher," Howard said.

Spokespersons for the Missouri auditor's office and the Internal Revenue Service say sometimes detailed explanations are needed.

The monthly American Express account summary lists charges in general categories for each card showing where the expense was incurred, the amount and a general description of the kind of expense.

For example, in December 1994, $1,262 was charged on assistant superintendent Richard Bollwerk's card at the Omni Hotel in Washington, D.C. Bollwerk's card was used to pay for charges incurred by a number of people while at the hotel. The billing summary says the charge is for lodging. The computer-generated American Express receipt shows the arrival and departure dates and the number of nights spent in addition to the total bill.

The itemized hotel bill shows that long-distance telephone calls, meals in the hotel's restaurant and in-room movies were included in the total bill.

In addition to in-room movies, the American Express cards have been used to charge, valet parking, liquor and flowers for the superintendent and his wife sent at the request of a board member.

In 1994, 30 meals at Cape Girardeau restaurants were charged to American Express.

Meals charged on the credit card during 1994 totalled about $2,800. Hotel charges totalled about $15,000.

On one occasion, a $15 bill for breakfast was charged to American Express. Clark also turned in a separate receipt for the same meal for reimbursement. Clark said the duplication was a mistake.

Savings under Clark

"You're looking at $400," Clark said. "I'm looking at $20 million. I'm looking at the big picture."

Often Clark conducts business over lunch or dinner. "It's a lot cheaper to buy their lunch and pick their brain than to pay a consulting fee. It's pretty cost effective."

Clark points to many savings he has instituted in the district, including a quarter-million-dollar reduction in health insurance costs. Clark said he also discovered a $55,000 bank error in the school district's favor.

The suprintendent's total travel expenses in 1994 were 18 percent under his travel budget. The superintendent is allotted $7,500. He spent $6,124.

The superintendent said the first time he was aware there were any problems with documentation for travel expenses was last week, even though he has repeatedly been asked to provide missing receipts and was aware that a school district patron had been scrutinizing expense charges for more than six months.

Dew, who is leaving the district in June to become assistant superintendent in Poplar Bluff, said the procedure is that district employees submit receipts for travel expenses to the a clerk in his office. When the American Express bill arrives, she matches the receipts with the bill. If receipts are missing she gives the bill to Dew to contact the employee.

Prior to the credit cards and in cases when employees don't use a district credit card, Dew explained, travelers are expected either to fill out a request for travel expenses and receive cash in advance or pay for their expenses out of their own pockets and submit documentation to get reimbursed.

Dew said individuals who owe the district money for personal charges will be asked to repay the district.

Business office questions

Board member Lyle Davis said the board has been aware of "inherent problems in the business office" for some time, such as delayed payments to vendors. Clark said sometimes vendors have waited up to a year for payments.

Dew said some payments have been slow in the past. But in the last 17 months, 95 percent of payments are made within 30 days. In those 17 months Dew's office has paid $28 million on 15,351 items.

Board member Campbell said, "Let's not point fingers. Let's get this fixed."