Statement on State Auditor’s Report on Central Horticulture

The Auditor of State of Iowa released a report today after being notified by Internal Audit at Des Moines Public Schools (DMPS) about suspected mishandling of student funds by a former instructor. The concerns involved the Central Campus greenhouse and its Spring Plant Sale.

“As soon as leadership at Central Campus became aware of potential mismanagement of funds, an official request for an internal audit was made. We are grateful for the support of the school district and the State’s Auditor’s office in helping ensure the AgriScience program is not only operating in compliance with state law and district policies, but making sure funds are utilized to provide students with the highest level of quality educational opportunities in the field of Agriculture Science,” said Tascha Brown, director of Central Campus.

“Over this past year year our AgriScience program has opened the state’s first high school-owned grocery store, increased greenhouse production and sales, added additional college credit to AgriScience coursework, and will be opening an orchard and shade garden with the support of the agriculture industry in Iowa,” added Brown. “We are actively working with our community leaders to onboard new partnerships with the goal of having more under-represented student populations accessing our program at DMPS, engaging in paid internships, and a having a secured path to the AgriScience industry before graduation.”

BACKGROUND
In May 2020, the DMPS Human Resources office notified the school district’s internal auditor of concerns that Craig Nelson, who was then employed as a horticulture instructor at Central Campus, was potentially mishandling student funds and allowing plant sales outside of the greenhouse when specifically directed that only online sales were to occur during the COVID-19 pandemic. Nelson managed the greenhouse and its annual spring plant sale, including processing financial transactions. With the revenue from the annual plant sale, he arranged a yearly international trip in which several qualifying students participated. Nelson hired his wife to assist with greenhouse operations and plant sale.

Based on the investigation by the school district’s internal auditor, improvements were deemed necessary for the annual plant sale, maintenance and repair work on the greenhouse, and compliance with established policies, procedures, and guidance. Central Campus had adequate procedures in place for processing expenditures. However, due to a lack of controls around proper documentation of plant sales, dual accountability, and the inability to review the former employee’s personal bank accounts and transactions, the internal audit was unable to determine if any cash sales have been misused or misappropriated.

Following notification by DMPS of suspected wrongdoing, the Auditor of State’s office completed and released a report on financial issues involving Nelson, who was hired by DMPS in August 2007 and spent most of his tenure as the horticulture instructor at Central Campus. After being placed on paid administrative leave he became a long-term substitute teacher outside the horticulture program until his employment was terminated in April 2021.

STEPS TAKEN BY DMPS
In response to both its internal audit work and recommendations in the State of Auditor report, DMPS has taken or is in the process of implementing several steps to improve controls and ensure compliance with district policies and procedures, including:

1. Casual Labor – The Casual Labor, Professional Services Agreement, and Vendor Setup processes have all been updated to include questions about conflict of interest for vendors, contractors, consultants, and short-term employees regarding related persons already working for DMPS. The update ensures appropriate supervisory assignment to reduce the risk of higher pay, favoritism, and fraud.
2. Consumer Rebates –There are some vendors, specifically Menards, that offer purchase rebates after purchase through completion of a form supported by a receipt. Direct purchases from Menards occur using a district procurement card. The school district has established that all rebate forms will be overseen by the procurement card reconciler, who is not the purchaser. When a purchase occurs with a possible rebate, it will be the reconciler’s responsibility to a) verify the rebate has not been completed, b) complete and submit the rebate form with a copy of the receipt, and c) receive and deposit the rebate to the credit of the school, department, or unit. The Central Campus bookkeeper has been actively monitoring purchase rebate opportunities and completing them on behalf of the school.
3. Student Field Trips Policy & Procedures – A new student field trip administrative policy with associated procedures are currently in process. The new policy and procedures will address cash handling and chaperone issues identified in both audits. Employees will not be allowed to deposit student cash and checks into personal bank accounts. All student field trip money will follow the same process as all other money collected by employees within the school district. The updated policy and procedures are expected to be completed for August 2021 employee training. 
4. Sprint Plant Sale Operations – The 2021 Spring Plant Sale used an authorized cash box obtained from District Treasury. The program purchased a point-of-sale (POS) system to replace the former cash register, became operational in April 2021, and was used for all sales. System training occurred in April 2021 when it was installed. A daily sales recording and reconciliation process was established for the 2021 Spring Plant Sale based on cash handling training provided to Horticulture employees at the end of March 2021. The training included restrictively endorsing checks immediately upon receipt, recording sales individually and immediately when transacted, counting cash and checks when reconciling sales at the end of each day, securing sales and cash box in the horticulture safe overnight and on weekends, and preparing deposits for pickup by Central Campus twice a week. This training follows the process already established by the district. The training included recording sales on a pre-numbered paper receipt until the new POS system was installed. An update to the sponsor cash count report was completed with two individuals to count cash and checks daily and provide dual signatures authenticating the count. The end-of-day process included reconciling the cash and checks counted to the daily sales report from the POS system. A plant resale inventory was created in early April 2021 based on living plants. The inventory information was entered in the new POS system during its installation. A replacement safe was originally installed in the Greenhouse in June 2020; however, it was moved nearby to a more secure location in April 2021. The daily sales process was observed as operating during the 2021 Spring Plant Sale.
5. Greenhouse Maintenance & Repair – Work orders for Greenhouse repair began being placed in June 2020. Some have been completed and other larger repairs are still in process. DMPS Facilities Maintenance is aware of and performing periodic maintenance.
6. Other Operational Items – All Central Campus employees were notified in November 2020 that deliveries of goods were to be made to the school unless prior approval was obtained from the Director. A computer or laptop with school district network access was not available or used in the Greenhouse during the 2021 Plant Sale. The new POS system replaced the need for a computer or laptop and required separate login credentials. The annual employee handbook requires employees to follow all District policies, procedures, and administrative directives. Each year, every employee must complete and certify annual handbook training, indicating their understanding of their responsibilities. District policy disallows the use of District property for personal use.