St. Paul school district forced to cover $1.9M in improper spending by food service department during pandemic

Josh Verges, Pioneer Press, St. Paul, Minn.
·3 min read

Jun. 23—St. Paul Public Schools was forced to transfer $1.9 million from its general fund Tuesday to cover unauthorized spending by its nutrition services department in the early months of the coronavirus pandemic.

The transfer, which the school board approved without comment, follows a special forensic accounting review undertaken by the district and several findings made by the Minnesota Department of Education during a routine administrative review of the district's 2019-20 meal program.

The food service department typically pays for itself through meal charges and federal reimbursement. But because the department didn't follow spending rules, the district was forced to cover that $1.9 million with its general fund, which pays mainly for teacher salaries and benefits.

"Due to miscommunication, changing (state) guidance, and noncommunication, certain costs and expenses were not properly captured for accounting purposes," reads WayPoint Inc.'s forensic accounting report.

Nearly half the transfer — $913,000 — is the result of continuing to pay salaries and benefits for 343 food service employees who did not work between March and June 2020, when schools were closed and students were learning from home.

"One of the foundational principles governing food service funds is that the expense needs to benefit the food service function. If an expense does not support the food service function, the expense must be funded from a different source," WayPoint wrote. "Here, these employees did not perform any services for the District during the pandemic, but the District agreed to pay them during the pandemic."

In addition, the Department of Education found St. Paul improperly charged $56,000 in security costs to the food service department. Those costs now must be covered by the general fund.

Those two errors also changed the formula that determines how much in "indirect costs" the district can charge to food service. As a result, the district had to transfer another $184,000 from the general fund.

Finally, the general fund must cover $743,000 related to the federal government's "community eligibility provision," which allows schools to give free meals to all of its students if the school reaches a certain threshold of low-income students. St. Paul gave free meals to students from several schools that did not qualify for the provision.

Separate from that $1.9 million, WayPoint also identified $478,000 paid to transportation employees who helped package meals for delivery to students' homes. The district wanted to cover those costs through its food service fund, but the Department of Education said that would not be allowed.

The department said it was "not reasonable" or necessary to pay relatively high rates to transportation workers for work that lower-paid nutrition services workers could have done.

'AMAZING' YEAR WITH 17M MEALS

The accounting mistakes mar an otherwise celebrated year for the district's nutrition department, whose personnel received three of five annual awards from the Minnesota School Nutrition Association.

The district served over 17 million meals during the pandemic by offering meal pickup at schools and using hundreds of school buses to deliver packaged meals to students' homes. In 2019-20, the food service fund balance grew by $1.1 million, to $7 million.

"Getting the staggering quantity of meals prepared and delivered was and continues to be an amazing accomplishment that everyone involved should be proud of," WayPoint said in its forensic report.

Stacy Koppen, who was named MSNA's director of the year for the Midwest region, deferred to district spokesman Kevin Burns for comment.

Burns said in a written statement that the district "voluntarily engaged WayPoint to conduct a forensic accounting review on the Food Service Fund to ensure the District was transparent in its review of the funds. ... All funds have been accounted for and at no time were funds missing from either account."

The district's fiscal 2022 budget totals $908.3 million.