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Nearly $110,000 in improper disbursements made to Mason City schools employees, audit shows

MASON CITY – Nearly $110,000 in improper disbursements were made to Mason City schools employees, an audit released this morning shows, prompting a yet-to-be-released separate special investigation report.

According to a report from the state auditor’s office:

Auditor of State Mary Mosiman today released a reaudit report on the Mason City Community School District (District) for the period July 1, 2014 through June 30, 2015. The reaudit also covered items applicable to the years ended June 30, 2016 and June 30, 2017. The reaudit was performed at the request of a District official pursuant to Section 11.6(4)(a)(2) of the Code of Iowa.

Mosiman reported the reaudit for the period July 1, 2014 through June 30, 2015 identified $109,073.24 of improper disbursements, including $68,678.26 of improper vacation payout costs. The improper vacation payouts identified were issued to 5 former employees.

Mosiman also reported the improper disbursements identified include $40,394.98 of improper salary costs for payments made to the District’s former Business Manager John Berg and former Human Resources Director during the fiscal years ended June 30, 2016 and 2017. The improper payments were a result of unauthorized salary increases, improper salary amounts, and related benefits.

Mosiman also reported additional concerns were presented subsequent to completion of the reaudit, which related to prior fiscal years. Because the additional concerns were outside the scope of the reaudit, a separate special investigation report will be issued pending the outcome of additional procedures performed.

Mosiman recommended the District review various Board policies to ensure they are appropriate, complete, and properly followed and strengthen termination benefit policies by including specific terms of payouts. The District should also ensure any vacation payouts are approved by the Board, are mathematically accurate, and comply with the established Board policy. In addition, the Board, or a designated Board member, should perform an independent review of payroll to ensure approved salary increases are properly calculated. The District responded favorably to the recommendations included in the reaudit report.

http://northiowatoday.com/wp-content/uploads/2017/08/1530-4131-T00Z.pdf

John Berg, holding a check.  He got a $26.54% raise, not approved by the school board.

FROM THE REPORT:

On June 15, 2015, the Board approved a service contract for John Berg, the former Business Manager/Board Secretary, with an annual salary of $65,000.00. However, on January 7, 2016, the former Superintendent made a retroactive contract adjustment without Board approval to increase Mr. Berg’s salary to $75,000.00 annually, a 15.38% increase. The District provided a copy of an updated service contract signed by the Board President on January 8, 2017; however, according to our discussion with the Board President, she was not aware of the contract adjustment and did not physically sign the amended contract. We determined the Business Office had an electronic signature for the Board President on file. Use of an electronic signature is discussed further in “Finding (D)” of this report.

On June 20, 2016, the Board approved a 3% raise for non-bargaining staff, including administrative personnel, for the 2016-2017 school year. Based on review of the 2016-2017 service contract for Mr. Berg, his annual salary was $82,250.00. As a result, he received a 26.54% increase from his previously approved salary of $65,000.00 which is well above the approved 3% increase. This contract was not presented to the Board for approval; and, although it contained the Board President’s signature, she was not aware of it and did not physically sign this contract.

In addition, Jodie Anderson, the HR Director, was hired at a starting annual salary of $80,000.00 for the 2015-2016 school year, which was to be prorated to $76,000.00 because she started on July 20, 2015. This contract was not presented to the Board for approval and the electronic signature for the Board President was used to sign this contract. Ms. Anderson was subsequently paid $80,000.00 for the 2015-2016 school year. For the 2016-2017 school year, Ms. Anderson’s service contract was increased to $87,750.00 annually, a 9.69% increase from the previous year. This contract was also not presented to the Board for approval, and the electronic signature for the Board President was used to sign this contract, as well.

We are unable to determine who applied the electronic signature to the contracts.

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