Carlton school district under scrutiny for grant spending

Talk about it

Two sets of auditors and the superintendent of the Carlton school district have raised questions about the way in which a local committee that oversees federal and state grants for American Indian education has administered the money.

Carlton school Superintendent Peter Haapala also said the committee inflated the number of Carlton school students who are enrolled members of a tribe.

Irregularities found in a 2011 routine school audit led the Minnesota Department of Education to analyze the past 10 years of committee spending, Haapala said. The state department found that during that time, the Carlton Indian Education Committee spent or improperly retained up to $91,000 from the state account it oversaw, he said.

“We’re trying to determine if that’s an accurate amount or whether that number will change,” the superintendent said. “We’re hoping it will go down.”

The state is investigating the committee’s spending of state grant money for the past 10 years, said Charlene Briner, chief of staff for the Minnesota Department of Education.

“We’re taking it seriously,” she said, explaining that the department has the statutory authority to recoup money. “Clearly, we have a level of concern any time we get information that taxpayer dollars aren’t being utilized to make a difference for kids.”

The school district is following a corrective action plan submitted Oct. 1 to the U.S. Department of Education, and the state Education Department could order — at minimum — the return of $10,000 in gift cards and $36,000 improperly held over from the previous school year, Haapala said.

The 2011 independent audit for the school district performed by the CPA firm Eikill and Schilling revealed a lack of documentation for spending of thousands of dollars for the Indian Education program.

The U.S. Department of Education did its own audit of the 2011 federal money it provided and came to the same conclusion. An investigation is continuing, said Haapala, who has been with the district since 2010.

The school district’s Indian Education Committee, which is composed of parents, was led by a district employee, Kim Shabiash, who has since resigned. The committee’s purpose is to advise the school district on the use of state and federal grants aimed at increasing the academic skills and career opportunities of American Indian students.

Shabiash didn’t return phone calls requesting comment for this article.

Committee returns money

From 2002 through 2012, the committee handled nearly $793,000 from the state’s Success for the Future fund and about $313,000 for the federal Title VII fund. Success for the Future grants are meant to help increase literacy, math and science skills of American Indian students through a curriculum that acknowledges cultural differences. The goals for Title VII are similar but include broadening career opportunities.

Among the problems reported by the U.S. Department of Education was a failure to spend Title VII grant money within the year it was allocated or, alternatively, to return the money. The same was true for the Success for the Future money, Haapala said.

The committee also spent money on “unallowable things,” according to an e-mail written by Lana Shaughnessy of the U.S. Office of Indian Education to Haapala.

“The committee had been granted authority by the district to spend those funds, and there apparently was a lapse on the district’s part in reviewing those and keeping a close eye on them,” Haapala said.

Copies of Shaughnessy’s e-mail as well as other correspondence between Haapala and government agencies were included in a packet of documents the school district handed out at a Nov. 7 meeting with concerned parents.

Haapala reported the findings to local law enforcement and the state auditor, and he asked the committee to return the money the committee had in each account. The school district did not have access to those accounts.

Committee members considered that the money belonged to the committee, not to the school district, and at first refused to return the money, Haapala said in a July 3 e-mail to the Office of Indian Education.

Carlton County Sheriff Kelly Lake said the district asked her to investigate the matter. After the committee returned the money, her office did not get involved, she said.

On Aug. 20, the committee returned $36,000 that was in the Success for the Future fund and nearly $23,000 from the federal Title VII fund, copies of canceled checks show. With the school year over, both accounts should have been empty, Haapala said, because the grants must be spent during the school year for which they’re allocated or be returned to the granting agency.

The committee had said the money was spent, Haapala said.

A question of numbers

Both the federal and state departments of education are aware the district has the unspent money, and the district is waiting to hear from each how much it has to return, Haapala said.

Already it has returned $5,150 to the U.S. Department of Education for unallowable committee spending that included $4,700 in cell phone bills and $450 to attend meetings in 2011.

The committee also handles grants from the federal Johnson O’Malley program, which are channeled through the Fond du Lac Reservation for students enrolled with a tribal government. The money comes from the Bureau of Indian Affairs.

School district documents allege that the former Indian education coordinator reported 95 tribe-enrolled students in the Carlton schools, but only 29 students were verified last year.

The Johnson O’Malley fund is meant for supplemental programs to “meet the special educationally related needs of eligible Indian students.”

Success for the Future and Title VII money is for students who are descendants of enrolled members.

The committee also had more than $17,000 in gift cards for Best Buy, Office Max and Wal-Mart purchased with money from the Success for the Future and Title VII funds, a school district document shows.

“We think it was partly a means to carry over funds from prior years,” Haapala said.

Committee member Rita Ojibway said gift cards were purchased to buy school supplies for American Indian students, which they put inside backpacks each year.

Petition for new committee

Haapala said he doesn’t believe the Indian Education program is in danger of losing federal or state money. The district received Success for the Future and Title VII grant money this school year. The Johnson O’Malley funding might be reduced, he said.

“Over-reporting of enrolled members is not just a Carlton school district problem,” he said. “It hasn’t been watched very closely.”

Haapala said school district parents have presented him with a petition asking that a new committee be formed. He said Johnson O’Malley bylaws dictate elections be held every two years and one is expected to be held in December.

According to the corrective action plan the district submitted to the U.S. Department of Education, all committee purchases must be approved by the superintendent and the district business manager, and the new Indian educator coordinator is to be given training on allowable spending.

“The district is asking that any CIEC member who may be aware of other (funds) in any form including … positive credit card balances, gift cards, in-store credits, positive balances or revolving cards with any vendor … notify the district so that they may be returned to the district to help meet this liability,” Haapala wrote to committee members in a Nov. 2 letter.

From the time the district was audited and received corrective action guidance from the federal education department, School Board Chairwoman Julianne Emerson said, it has been taking steps to fix the situation.

“We’re trying to do the right thing going forward,” she said.

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