Bay City Schools credit card spending audit finds no wrongdoing

BAY CITY, MI – A more than three-month investigation into district credit card spending by six current and former Bay City Public Schools administrators revealed “no questionable trends.” according to a forensic audit report prepared by a financial consulting firm and made public this week.

The findings, district officials said in a statement issued Thursday, Dec. 12, showed that “while there were some expenses in the past that could have been considered more carefully, no wrongdoing was found.”

“In September, the Board of Education updated Board policies and guidelines that implement additional restrictions and controls on district credit card spending,” the statement said. “These updates have proven to be effective since their adoption and implementation in September.”

The audit was launched following allegations that district officials overspent on district credit cards. The claims were raised earlier this year by members of the local teachers union, the Bay City Education Association.

Those claims intensified when Superintendent Stephen Bigelow and the district have reached a separation agreement who saw him leave with a more than $90,000 severance package.

As union members began to publicly comment on the alleged frivolous spending, two other district administrators left of their own volition — one before Bigelow and one in November.

The district has yet to replace Bigelow full-time, first hiring former Midland Public Schools Superintendent Michael Sharrow as interim superintendent, then moving to former superintendent of Gladwin Public Schools Rick Seebeck as Sharrow’s replacement.

Bay City Education Association President Rick Meeth said in a statement that the union is committed to working with the school board and the new administration going forward.

“I’m pleased we’re moving forward and not looking back and we’re going to hold everyone to the highest standards,” he wrote in a text message to MLive/The Bay City Times.

audit

Attorneys representing the district board of education contacted Rehmann Corporate Investigate Services in August to request a review of credit card transactions by six current and former district administrators from Jan. 1, 2021, to June 2024.

The results of that review were shared with the board during a closed session Monday, Dec. 9, and were obtained by MLive/The Bay City Times through a Freedom of Information Act request after the board voted to waive attorney-client privilege on the report.

Prior to the audit, BCPS policy permitted the use of credit cards for transportation, conferences, hotel reservations, reasonable meal expenses, vendor purchases, safety and security related to student travel, and other purchases on a case-by-case basis.

Rehmann was specifically tasked with reviewing overnight trips outside the district and ensuring that the rules on per diem were followed. The district allows the purchase of meals with district credit cards with an allowance of $8 for breakfast, $12 for lunch and $20 for dinner.

Daily meal rates were difficult to compare, the investigators wrote in the report, because “most receipts included charges for multiple people.”

“Many of the receipts do not contain a list of attendees, and therefore it cannot be determined whether the attendees were district employees or others entertaining themselves in the promotion of district-related business,” the report states.

“Rehmann CIS learned that it is not uncommon for administrators to entertain out-of-district attendees at conferences and the purpose of the meeting is business-related. In these cases, daily rates would not necessarily apply.”

In some cases, there were overnight travel receipts submitted to the district by administrators who had individual meal receipts.

“No cases were identified where the administrator exceeded the daily rate in an apparently reckless manner,” the report said. “If the per diem was exceeded, the amount was within reason and only by a dollar or two. No significant excess amounts were identified.”

The audit report noted that during the 42-month period it investigated, nearly 98 percent of credit card transactions were supported by a receipt. Only a few transactions had no supporting documents.

“Based on Rehmann CIS’s thorough review and the fact that no questionable trends or exceptions have been identified, Rehmann CIS concludes that the Board has established policies and procedures, as they relate to the use of credit/debit cards by District Administrators, are working effective and there are sufficient internal controls to minimize any material risk.”

Rehmann recommended four policies to the district following his investigation.

One addressed meetings during which food was purchased with district cards and requested a form allowing the cardholder to explain the purpose of the meeting and detail those present.

Another related to monitoring overnight and out-of-state travel to ensure oversight of any questionable trends in trustees’ frequent travel, as well as the purpose and necessity of the travel.

The district implemented temporary measures that are currently in place, which include board approval of all meal and travel charges on district cards.

Other recommendations included delineating between out-of-state travel and local purchases.

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