Unit 4: Lack of policy, but no lack of spending

Unit 4: Lack of policy, but no lack of spending

State Police investigating use of district purchasing cards: 'I would say it's worth looking into anything that deals with public funds.'

Superintendent on probe: 'I'm very concerned because if an individual is making a decision, it’s a reflection on the people leading the organization.’

Administrator who was forced to reimburse Unit 4: ‘A policy would have saved the district and staff pain, time, and money.’

Urbana district on consequences for improper use of cards: ‘Their card is canceled — and yes, we have canceled cards.’

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CHAMPAIGN — As the Unit 4 school district asked residents to accept millions of dollars in cost overruns for needed building renovations, dozens of district employees charged pricey staff dinners, flowers and more to taxpayers.

A News-Gazette Media examination of 19 months of purchasing card expense data for 81 people obtained under the Freedom of Information Act revealed that Unit 4 staffers have charged scores of catered meals, working lunches and snacks, a $200 retirement print from the Larry Kanfer Gallery, flowers for funerals, and thousands of dollars in gift cards for student and staff "incentives" on purchasing cards issued in their names.

Superintendent Susan Zola, now concluding her second year at the helm of the county's third-largest employer, said no written policy exists to guide or govern the use of the district credit cards (or "P-cards"), which predate her hiring as superintendent by three years.

She said she plans to have a policy for the school board to approve no later than July 1, even though she acknowledged that concerns about P-card abuse were brought to her attention almost a year ago.

The controversial spending practices are the subject of a criminal investigation by the Illinois State Police that will be referred to the Illinois State's Attorneys Appellate Prosecutor's Office for potential charges.

Zola said — and detective Sgt. Mike Campbell confirmed — that the district is cooperating with state police.

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Campbell said detectives have finished their interviews of district employees and, when the district responds to subpoenas for documents, the case will be forwarded to the appellate prosecutor.

He was unwilling to share specifics of what his investigators have found, but said his office was contacted in early April by an unidentified individual about "possible misuse of funds."

"I would say it's worth looking into — anything that deals with public funds, any issues with the spending of that money," Campbell said.

Champaign Police Chief Anthony Cobb declined to say why his department is not investigating the expenditures. But Champaign County State's Attorney Julia Rietz said she advised Champaign police to refer the case to state police. And because of her working relationship with the school district, she preferred that prosecutors outside her office review the reports for possible criminal charges.

"I work on a lot of policy issues with a lot of people at Unit 4, so I requested a special prosecutor be appointed to review any potential issues," Rietz said. "It's the same reason the Champaign police department sent it to the state police on my advice."

Zola said she believes the criminal investigation involves one employee.

That individual, documents show, is 24-year district employee Angela Ward, Unit 4's assistant superintendent for achievement and equity. Identified in expense reports by her former name, Angela Smith, Ward was reprimanded by Zola for scores of personal food purchases — including 101 orders at Smoothie King from July 2017 to August 2018, according to documents.

"All of my purchases were reported to the Business Office and were supported by receipts and required documentation," Ward, who makes $158,255 annually, said in an emailed statement to News-Gazette Media on Friday. "A policy would have saved the district and staff pain, time, and money."

Said Zola of the criminal investigation: "I'm very concerned because if an individual is making a decision, it's a reflection on the people leading the organization."

P-card purpose

In the district's past two fiscal years, there was a 34 percent increase in purchases charged to P-cards, according to Chief Financial and Legal Officer Tom Lockman. The number jumped from roughly $407,000 in fiscal 2017, Judy Wiegand's final year as superintendent, to $544,000 in fiscal 2018, Zola's first as her successor.

Unit 4 has 86 P-card holders — 81 of whom are administrators, principals, administrative assistants and department heads. The remaining five are linked to accounts for magnet schools and curriculum.

Zola said no employee has ever asked her for a P-card, adding: "I think it all goes through the business office," which has the ability to refuse one and has done so recently. "But I don't know under what context."

The district has used P-cards since 2014, Zola said, to "streamline the buying process," thus avoiding the need to seek advance permission for purchases.

"If you do a purchase order or requisition, it's a couple-week process," she said. "So if my administrative assistant needs to go and pick up something, with a P-card, they can obviously do it in a 24-hour window. We certainly use the requisition process still, but it does allow us to streamline and sometimes be more efficient in getting something."

It's a program encouraged by the Illinois Association of School Business Officials, which works with 218 districts that use P-cards.

"It's a very clean budget process," said Executive Director Michael Jacoby, who added that "we counsel them from the very beginning that they should have firm policies."

Unit 4 did not do that.

Zola said that although she saw a Unit 4 draft policy on the use of P-cards from December 2013, she doesn't believe the school board ever adopted it.

Asked if Unit 4 now has a policy, Zola said: "Not to my knowledge. I don't know that we have a clear policy on usage."

Lockman, the finance and legal officer, said he gave Zola a draft policy he created in August 2018.

That same month, Lockman said, he "registered a concern very formally" with Zola about potential abuse of the cards. Zola said she responded by looking at about a year's worth of cardholder expense reports and referred the matter to a standing Unit 4 committee that develops district policies.

"At this point, the only P-card expenditures I would have seen would have been my own," she said. "There's no process where I see other people's because that's the business office," which Lockman oversees.

At an Aug. 16, 2018, meeting, after looking at the reports, Zola said she gave her 16 cabinet members copies of their own P-card expense reports, as well as the reports of those they supervise.

"I framed it in 'This is meant to be an exercise in sort of wanting to look and being aware' and then I also at that time provided some directives just around taking a look at the policy and having some more consistency and clarity around when we should think about using the P-card and when we might want to go back to the requisition process, even though I realize it's a longer process," Zola said.

Those directives, which appear to have had minimal impact, were verbal and not in writing, Zola said.

Lockman said that prior to that cabinet meeting, he stressed to Zola the urgency of getting a policy in place.

"The formal concern also indicated that a policy — this policy or a policy — needs to get in place ASAP," Lockman said.

The draft was not shared with the cabinet, he said.

Zola was an assistant superintendent when P-card use began and doesn't remember any conversations about it among members of Wiegand's cabinet.

Lockman said the policy committee, under the direction of Dan Casillas, director of human resources development, met on Aug. 22, 2018.

Lockman said he and about eight to 10 others, including district administrators and building principals, were present at that meeting 256 days ago.

"That is the last discussion of any group I've been aware of regarding a policy related to the use of P-cards," he said, adding that two other policy committee meetings scheduled for October and December were canceled.

"There was a brief discussion at the cabinet meeting regarding being thoughtful about how P-cards were used," Lockman added. "At the meeting on August 16, nor at any point since then, has there been a discussion with cabinet about a policy or common expectations related to the appropriateness of certain types of purchases, whether on P-cards or not."

Gift cards on hold

Gift card purchases show up frequently on expense reports, ranging from $30 at Walgreens for the winner of Centennial's ugly sweater contest last school year to nearly $3,000 worth of purchases posted on the same May 2018 day by Unit 4 Deputy Superintendent Laura Taylor.

In charges tagged only as "staff appreciation" in the note field of her report, Taylor is shown to have purchased $2,957.88 in gift cards — $1,240 worth at Walgreens, $1,717.88 (at a slight discount) at Sam's Club, documents show.

Asked about the gift cards, Taylor said via email: "The gift cards purchased generally range from $10-$25 and are used mostly for staff appreciation and some for student recognition. Many of the staff appreciation gift cards go to secretarial/clerical employees. They are distributed by me and other administrators throughout the school year, with several remaining from the May purchase for use next school year."

Taylor did not answer who told her it was acceptable to buy gift cards with tax dollars.

Months after Lockman said he raised the issue, Zola in early February issued one directive in writing via email instructing staff to suspend buying gift cards with P-cards until a formal policy was adopted by the board. It's a process, she said, that "is taking a little longer than I anticipated."

At her direction, Zola's administrative assistant created a "tracking" mechanism for the remaining gift cards in the district: a spreadsheet that would detail the card vendor, the amount, the student to which it was given and the reason why, such as attendance or academic achievements.

"If they'd told a student, 'If you meet your goal, you're going to get a Subway gift card,' they're going to give us that information, so we can track that, like 'so-and-so in seventh grade met his attendance goal, received a Subway gift card for $20 on May 15,'" she said.

The same was to be done for gift cards purchased for staff as incentives.

Lockman said he recommended the district not buy gift cards at all.

"Because that recommendation has not been approved, the business office still has asked what the tracking mechanisms are for them and has raised issues related to gift cards being given to staff as taxable benefits as a reason they should be stopped or, at a minimum, have a record kept with the business office," Lockman said. "To this point, the direction has been that the superintendent's office is tracking gift cards."

$8,100 for audit

Zola's suspension of gift card purchases came six months after she said she first became aware of more obvious P-card abuse.

Angela Ward's expense reports detail repeated personal food purchases — of 293 P-card transactions totaling $4,935.82 in just over a year's time, 259 were for fast-food purchases. Others were for conference travel, a $38.14 "retirement gift," books from Barnes & Noble and gift cards.

Of the 259 food purchases, 101 were at Smoothie King, 49 at Arby's, 38 at Subway and another 59 at 17 other eateries. Most of the transactions were an amount that suggested she bought food for one.

Lockman disputed Ward's suggestion that her documentation was sufficient, noting that she had to provide reimbursement for sales tax paid on at least 140 of those purchases. Because of its tax-exempt status, the district is not required to pay sales tax. Also, he said, she failed to provide receipts at least 25 times.

Zola said that on the advice of the board's law firm, Franczek of Chicago, she put a "formal write-up" in Ward's "permanent personnel file, and I requested reimbursement."

"We ... concluded that the questionable use of the card was based on poor judgment, not any intent to defraud the district," Zola said, adding that Ward had submitted receipts for her purchases.

Unit 4 spokesman John Lyday said the amount of Ward's purchases determined to be personal was $2,378.73.

"The amount reimbursed to Unit 4 was $2,625.05. Auditing of the personal purchases has not been finalized, so these dollar amounts could change," he said.

News of Ward's credit card abuse came to the school board's attention in mid-August 2018, said former board President Chris Kloeppel.

But it wasn't until five months later that the board decided to hire an outside auditor to help develop a policy.

"In the middle of January, we got a memo about P-card use from Tom (Lockman)," Kloeppel said. "The day we received the memo, we set in motion getting requests-for-proposals for P-card auditors."

The board's law firm, Franczek, commissioned RFPs on behalf of the board. After receiving two, the board discussed their options in closed session in late February, then chose Chicago-based auditing firm Sikich, recommended by Franczek lawyer Sally Scott. The audit will cost the district — and its taxpayers — $8,100, according to Kloeppel.

"I think we're getting a fresh perspective. I assume anything they have to offer us will be helpful," Zola said.

Zola met with a Sikich representative for the first time on April 25. She did not have a timetable for when Sikich would make recommendations.

Culture of feeding

Several Unit 4 P-card users charged working lunches, including the superintendent. Zola said she arranged many of her 57 district-charged working breakfasts, lunches and dinners at the urging of the school board and the outgoing superintendent.

"(The board) gave me a list of the people and Dr. Wiegand also gave me a list of people from various pathways," she said. "If you track the data, that was my effort to try to get out and interact with people I wouldn't normally have crossed paths with."

Records show many of Zola's meals were with Unit 4 employees.

Of her meals with Champaign public officials, Zola said "sometimes they paid, sometimes I used my personal card to pay. It just varied," she said, putting the split at 60 percent taxpayer-funded and 40 percent out of her own pocket.

Food-related charges weren't limited to working lunches. Administrators across the district often used their P-cards to expense catered meals for staff parties, meetings or all-day interviews. Amounts charged range from a few dollars for staff meeting snacks on up to $1,895.75 for a Novak Academy "senior celebration" from Black Dog Smoke & Ale House.

Asked if she felt district spending on food was excessive, Zola departed from a prepared statement to reply: "Yes. I think there's quite a continuum of how people make those decisions, and I hope to align them to a more formal set of practices."

Other P-card charges using public money included:

— $165.88 for poinsettias from Schnucks for seven school board members, charged by Zola's assistant.

— $208.97 for a framed picture from the Larry Kanfer Gallery given to a secretary retiring after three decades. Zola said Assistant Superintendent Jennifer Ivory-Tatum asked Zola's assistant to make the purchase. The gift was in addition to an office retirement party and an annual dinner to which all retiring district employees are invited.

— Several charges for flowers (one for as much as $219.90), including those sent to the funerals of employees' relatives and to staff recovering from illness. "In times of tragedy, I would authorize flowers or a plant to be sent to students, families and staff members," said former Jefferson Middle School principal Angi Franklin, among several P-card holders who expensed flowers.

Zola said she doesn't believe the district has a policy on purchasing flowers.

"I think they're always trying to be thoughtful about 'How directly connected is the person who passed away to the employee?' and so some of those are done with personal dollars and some of those are done with district dollars," Zola said.

What other districts do

The type of help Sikich is providing is already available through the Illinois Association of School Business Officials, which offers drafts of policies districts can adopt as soon as their P-card programs begin.

That's what Urbana District 116 did in 2003, Chief Financial Officer Carol Baker said.

"We started out with pretty strict guidelines, so there was more a need to educate cardholders on the rules, as opposed to tightening up language," she said.

"We have recently created a P-card procedure manual we are using to retrain staff. Our issues have been more with getting paperwork turned in in a timely manner for processing. If we continue to have issues, we bring them in for additional training. If it still doesn't improve, their card is canceled — and yes, we have canceled cards."

Urbana has 142 P-card users, 56 more than Unit 4.

Urbana cardholders also have limits on their cards; high-dollar items require a purchase order be filed in advance, ensuring the district goes to the vendor "with the best price."

Similarly, the St. Joseph-Ogden High School district requires that purchases greater than $5,000 receive prior school board approval, said Superintendent Brian Brooks.

There are four cardholders in the district, including Brooks, plus two school cards that can be checked out.

Brooks said the other cardholders talk to him first for amounts like $500 or $1,000. "And if I need to purchase something large, I run it by the school board. Even though we carry them, it's more for emergency."

At Paxton-Buckley-Loda, the school board approved all nine of the district's cardholders and adopted a policy for their use, said Superintendent Cliff McClure.

And in Monticello, the buck stops with Superintendent Vic Zimmerman, who said that he must approve all purchases.

"We do have a district credit card, but we don't really use it for purchasing items — it's more for travel," Zimmerman said. "In order to use it, you have to come to the unit office and fill out a purchase order, and I would have to approve it, and then you could make the purchase. It's just kind of a checks-and-balances thing."

Despite Zola asking staffers in August to be considerate about their P-card usage, records reflect that taxpayers funded coffee, danish, bagels, pizzas, sandwiches and cookies for staff, students and visitors almost daily in the first half of the 2018-19 school year.

"When you're working to change things in the culture or the decision-making in a large organization, it's my hope that there would be some clear guidance," Zola said. "So in August, when I asked for the policy to be worked on, I expected that to happen. It didn't."

"I take responsibility for what didn't get accomplished. I'm trying to get that rectified."

24 meals over $500

The majority of charges by Unit 4 purchasing card holders involved food in some form, from candy ($224.91 in school "board gifts" from Fannie May, charged to Superintendent Susan Zola's assistant's card) to cookies ($82.99 for a "Thinking of You" bouquet, for an unknown recipient from Zola's assistant) to cupcakes ($44.89 on Valentine's Day 2018 for Edison Middle School staff).

Among the biggest purchases and spenders, according to 81 expense reports analyzed and obtained under the Freedom of Information Act by News-Gazette Media:

Principals of Unit 4's three middle schools have racked up the highest food bills on their P-cards since July 2017. Jefferson, which had two principals during that span, led the way with $12,517.91 in food-related charges, followed by Edison ($11,1288) and Franklin ($8,930.63).

Over two days just before students returned last fall, $2,132.37 worth of food for staff was charged at Edison — $1,100 for lunch from Biaggi's, $80.99 for coffee from Dunkin' Donuts, $152.45 for bagels from Einstein's catering, $750 for day 2 breakfast from El Toro and $48.93 in food from County Market.

$1,036.36 in "teacher appreciation" cookies from County Market, charged on one May 2018 day to Zola's assistant's card.

Asked if she felt the spending on food was excessive, Zola said: "I think it differs by campus, which is part of what we're trying to get in common and understand as we move forward. Certainly, every year as we welcome teachers back, we do provide muffins and juice and coffee. And of course, if you're doing that, you're providing for a thousand people.

"Parent-teacher conferences, sometimes parents will help with that. Sometimes we help cover that. We want to make sure that if teachers are working morning, afternoon and evening that there's food provided."

Here's a rundown of food charges exceeding $500 that building principals or their office managers put on district purchasing cards from July 2017 to March 2019:

$1,895.75: Novak Academy, May 21, 2018, Senior celebration at Black Dog Smoke & Ale House.

$1,351.02: International Prep Academy, Dec. 17, 2018, Staff holiday party at Biaggi's.

$1,110.00: Edison Middle School, Aug. 15, 2017, Inservice day food from Biaggi's.

$1,110.00: Edison Middle School, Aug. 14, 2018, Inservice day food from Biaggi's.

$1,060.88: Jefferson Middle School, Feb. 12, 2019, National African American Parent Involvement Day lunch from Hickory River Smokehouse.

$971.85: Centennial High, May 22, 2018, Food for retirement party.

$870.00: Garden Hills Elementary, Oct. 30, 2017, Dinner from Moe's Southwest Grill for teachers on day of parent-teacher conferences.

$840.00: Jefferson Middle School, Aug. 13, 2018, Opening day staff lunch from Cactus Grill.

$820.00: Jefferson Middle School May 11, 2018 Staff appreciation lunch from Maize Mexican Grill.

$777.75: Novak Academy, Dec. 17, 2018, Staff holiday dinner at KoFusion.

$750.00: Edison Middle School, Aug. 15, 2018, Breakfast from El Toro for second inservice day.

$736.96: Centennial High, Aug. 13, 2018, New teacher/mentor orientation at Olive Garden.

$675.00: Franklin Middle School, May 14, 2018, Teacher/staff appreciation luncheon from Moe's Southwest Grill.

$653.30: Booker T. Washington Elementary, Aug. 15, 2018, Institute day food from Jupiter's at the Crossing.

$627.84: Jefferson Middle School, Aug. 15, 2018, Day 2 breakfast from Einstein Bros. Bagels.

$610.73: Franklin Middle School, March 5, 2018, Teachers professional development dinner from Panera Bread.

$600.00: Jefferson Middle School, April 11, 2018, Food for Advancement Via Individual Determination (AVID) Night.

$587.88: Jefferson Middle School, Aug. 14, 2018, Day 1 breakfast from Einstein Bros. Bagels.

$568.90: Centennial High, March 19, 2018, Food from Subway for teachers on day of parent-teacher conferences.

$556.36: Novak Academy, Dec. 14, 2017, Staff holiday dinner from Biaggi's.

$540.00: Booker T. Washington Elementary, Aug. 15, 2017, Day 1 staff lunch from Chipotle, following $216.06 staff breakfast from Panera.

$533.38: Central High, May 11, 2018, Food for teacher appreciation event from Gordon Food Service.

$535.25: Centennial High, Oct. 22, 2018, Food from Subway for parent-teacher conferences.

$525.00: Stratton Elementary, Aug. 14, 2017, Opening day staff breakfast from Bob Evans.

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