Superintendent Ross approved unauthorized non-contractual payments to himself and certain staff without school board authorization. He also approved inappropriate compensation to School Board Member Scheu for meetings that did not qualify. Ross and the Director of Secondary Options Kerska abused their school credit cards by making undocumented purchases and not submitting proper receipts or expense forms, totaling over $9,000 between the two of them. Their actions violated several state statutes and deprived the school district of funds.
1. 1. Non-contractual payments made by Superintendent Ross without board approval.
Non-contractual payments were made to certain employees of the Houston Public School
District (“HPSD”) beginning, on January 1st 2009 and continuing through May 18, 2010. These
payments were made at the direction of then Superintendent of Houston Public Schools, Mr. Kim
Ross (“Ross”). There is no record of the Houston Public School Board (“HPSB”) authorizing
said payments. An auditor’s report, prepared by the Office of the State Auditor, State of
Minnesota, reports that non-contractual payments were made that were not part of the HPSB’s
approved budget. See Petition Engagement, Independent School District 294, Rebecca Otto,
State Auditor, attached hereto as Exhibit A. (“Auditor’s Report”)
Minnesota law further provides that: “No funds shall be expended by any board or district
for any purpose in any school year prior to the adoption of the budget document which
authorizes that expenditure, or prior to an amendment to the budget document by the board to
authorize the expenditure. Expenditures of funds in violation of this subdivision shall be
considered unlawful expenditures.” Minn. Stat. § 123B.77, subd. 4.
The Auditor’s Report sets forth specific non-contractual payments that were made from
January 1, through March, 2, 2009, and from March 3 through June 30, 2009, which were not
timely and properly approved by the HPSB.
An amended school budget was approved at the March 3rd, 2009 meeting of the HPSB. A
search of the public record shows no authorization for the non-contractual payments, no
documents in the HPSB meeting packet or any documents related to the individuals to be
compensated, what they were to be compensated for, nor any documents the HCSB may have
had alerting them to the payments. In fact, at the same March 3rd HPSB meeting it was
announced in the minutes that: “Mr. Ross is taking a voluntary wage freeze for the 2009-2010
school year.”
On or about May 18, 2010 the HPSB unanimously approved the following resolution:
“Motion to discontinue any and all stipend, payments to employees for days worked beyond
contracted requirements, and any other pay beyond base salary, unless such payments are
approved, in advance, by the School Board.”
Two School Board members who left office on December 31, 2008 have stated publicly
that no discussion was held in their presence regarding these payments. Since the payments
began on Jan 1st 2009, discussion or approval should have taken place during their term in
office.
Past practice for the HPSB has always been to approve at a public meeting any increase or
decrease in employee compensation whether it be Additional Compensation in an Administrative
Contract or financial modification to a teacher’s or administrator’s contract. Any School District
employee financial compensation changes, were and currently are, always reflected in the
official minutes of the HPSB.
It is apparent from the State Auditor’s report that these payments were commenced
illegally and then covered up in the HPSB’s budget without the knowledge of the authorizing
2. body. That constitutes theft and fraud. The appropriate measures should be taken to hold the
individual responsible for this crime accountable and the illegal payments returned to the School
District to be used for what the public was taxed for, the education of Houston School District
students.
Ross approved payments to himself and certain staff without authorization by the HPSB.
See page 2 of Auditor’s Report.
Theft – Unauthorized non-contractual payments initiated by Ross to himself, his
employee and business partner Mr. Kerska and select office staff.
In addition to criminal liability under Minn. Stat. 609.52, subd 2 Theft – it is believed
that Minn. Stat.609.52 has been violated as well since claim was made for payment without
substantiation of what the payment was for and without the elected body’s knowledge.
At an absolute minimum these non –contractual and unauthorized payments constitute a
violation of Minn. Stat. 609.45 (Public Officer: Unauthorized Compensation) – Whosever is
a public officer or public employee and under color of office or employment intentionally asks,
receives, or agrees to receive a fee or other compensation in excess of that allowed by law or
where no such fee or compensation is allowed, is guilty of a misdemeanor.
As the taxpayers in the State of Minnesota and the Houston Public School District we
assert Minn Stat. 604.14 (Civil Liability for Theft) and demand that the County Attorney
initiate not only criminal charges but seek the return of the purloined funds to the School District
2. Inappropriate compensation to School Board Member Scheu.
Although Minnesota law provides that school board members may receive “such
compensation as may be fixed by the board.” Minn. Stat. § 123B.09, subd. 12, unauthorized
and inappropriate payments are both unethical and illegal.
Page 3 of the Auditors Report puts forth the following Houston Public Schools Board
compensation policy: “On August 22, 2006, the School Board approved a school board
compensation rate in effect through February 14, 2011. The compensation rate provided that
board members would be compensated at a rate of $40 per meeting for regular board meetings,
study sessions, special board meetings, committee meetings, and other board meetings.”
The Audit Report details as well on Page 3 that Mr. Scheu (“Scheu”) was compensated
for 156 meetings from July 2008 through June 2010 for which no other Board member received
compensation. Attachment A or the Audit report details Scheu inappropriately being
compensated for individual meetings with Superintendent Ross 25 times plus individual
meetings with other persons. 30 meetings for “agenda planning”, 28 facility planning meetings
and even compensation for attendance at the graduation ceremony and diploma signing!
Scheu intentionally and repeatedly violated the School Board’s compensation policy by
submitting for and being compensated for “meetings” which do not meet the criteria for
reimbursement.
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3. At an absolute minimum, these non –contractual and unauthorized payments constitute a
violation of Minn. Stat. 609.45 (Public Officer: Unauthorized Compensation) – Whosever is
a public officer or public employee and under color of office or employment intentionally asks,
receives, or agrees to receive a fee or other compensation in excess of that allowed by law or
where no such fee or compensation is allowed, is guilty of a misdemeanor.
Scheu, with the Superintendent’s approval, accessed thousands of dollars in violation of
Board policy. As the taxpayers in the State of Minnesota and the Houston Public School District
we assert Minn Stat. 604.14 (Civil Liability for Theft) and demand that the County Attorney
initiate not only criminal charges but seek the return of the purloined funds to the School District
3. School Credit Card abuse by Superintendant Ross and Director of Secondary
Options Kerska.
It is both inappropriate and illegal for school personnel to make unauthorized and
undocumented charges to a school credit card.
Page 5 of the Auditor’s Report states: “Based on our review of the charges listed on the
monthly credit card statements, we could not determine whether some of the charges to the credit
cards were for School District business because the District could not provide us the related
vendor receipts. In addition, the Superintendent and the Director of Secondary Options did not
complete the District’s travel expense claim forms for travel expenses, nor did they complete the
District’s purchase orders for items they purchased with the credit cards. For the time period
December 1, 2008, through June 30, 2010, the Superintendent school credit card had
undocumented charges totaling $5,777.48. See Attachment B. For the period January 1, 2009,
through June 30, 2010, the Director of Secondary Options school credit card had undocumented
charges of $4,033.66. See Attachment C. See Attachment D for a copy of the District’s Travel
Expense Claim form.”
Along with the other financial improprieties, noted above, taking place at Houston Public
Schools, Ross and Kerska abused their credit card privileges by not submitting proper receipts,
travel expense claims or purchase orders. All other school staff were required to submit the
proper paperwork and complied with school policies.
The State Audit Reports that “The following software and computer parts were purchased
using the Superintendent school credit card, and the shipping address was the Superintendent’s
residence.”
Although the District’s Purchasing Procedure policy requires submission of a purchase order, we
found no such purchase orders for these purchases.
● October 2009, purchased Other World Computing upgrade bundle for $201.24.
● The I-Phone accessories that were purchased at the Apple Online Store in October 2009.
● November 2009, purchased at Microsoft Store the Windows 7 Home Premium software
application for $213.74.
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4. The State Auditor inquired with certain employees of the School District whether these
items were returned to the District. The employees stated that they did not know if these items
were returned or not, nor did they know that the Superintendent purchased these items.”
Page 8 of the Auditor’s Report notes that “the Superintendent and Director of Secondary
Options school credit cards were used to charge meals that did not require overnight travel. The
cost of these meals was not reported as fringe benefits by the District as taxable wages on the
Superintendent or Director of Secondary Options W-2 Forms for the petition period. Per IRS
Publication 15-B, it appears these meals are taxable as wages to the employees because travel
must be away from home overnight to be an excludable.”
By not complying with School policy and procedure Ross violated Minn. Stat. 609.52
(Theft).
Ross and Kerska by submitting credit card expenditures without the proper
documentation violated Minn. Stat. 609.465 (Presenting False Claims to the Public Officer or
Body) and were personally enriched in violation of School policy and State law.
Minn. Stat. 609.45 (Public Officer: Unauthorized Compensation) – Whosever is a
public officer or public employee and under color of office or employment intentionally asks,
receives, or agrees to receive a fee or other compensation in excess of that allowed by law or
where no such fee or compensation is allowed, is guilty of a misdemeanor.
Personal enrichment as a result of the purposeful violation of School policy and State
statute is the obvious situation in this case. The period of audit was for only 18 months and both
individuals worked for the school for multiple years. The true extent of the amount stolen from
the School District remains beyond this petitioner’s knowledge. Mr. Ross as Superintendent was
the chief decision maker at the school, he held all other employees at the school to the policies
regarding travel reimbursement and purchasing. He clearly did not follow those policies himself
nor did he require his employee and business partner Kerska, to follow them either. This resulted
in the Houston Public Schools being deprived of revenue to fulfill the school’s mission of
education to the District’s children.
A persistent environment for personal enrichment was fostered by Superintendent Ross.
In addition, that personal enrichment was extended to Mr. Kerska. This contention is bolstered
by the fact that the other three school employees with credit cards, the Director of Finance, the
Payroll Director and the HR Director had adequate supporting information to ascertain that all
charges they made were for School District business.
Ross and Kerska deprived the Houston Public School District of revenue in an illegal and
deceitful way. They should be held accountable both criminally and be required to pay back the
School District the fraudulently acquired money.
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