A report from the State Auditor’s Office on Marshalltown Schools shows a more than $645,000 hit after a former district employee failed to perform job duties in a timely manner.

The state investigation was requested by district officials after former district payroll specialist Allison Meyer was found to have not processed payroll tax deposits in a timely manner between early 2017 and mid-2018 to the Internal Revenue Service (IRS), as reported by the Times-Republican on Oct. 28.

Meyer was allowed to resign in lieu of termination effective June 15. The district’s request to the IRS to waive and reimburse $602,963.81 in penalties paid to that agency was denied, according to the report released Thursday.

“The Marshalltown Community School District became aware of the payroll issues as a result of our own investigation last June, that stemmed from gross negligence of duties and a lack of oversight from former district employees,” an official statement from the district read after the report was released Thursday morning.

The employees mentioned in the statement refer to Meyer, as well as her former superiors in the business office.

“The negligence of duties and incompetence would fall mainly on the payroll specialist,” Superintendent Theron Schutte said. “But the lack of oversight would have been from our former finance director and business manager, the people that had supervisory responsibility over that position.”

Former finance director Brian Bartz and former business manager Jody Brintnall both left the district earlier this year. Bartz works at Marion Independent School District and had announced his plan to leave Marshalltown for the new job in January. He left Marshalltown Schools in late March. Brintnall decided to take the district’s early retirement option and officially retired on June 30, which was announced at the Feb. 5 school board meeting.

The auditor’s report says Meyer had a stamp of Bartz’s signature and that stamp was used to OK four of five quarterly payroll reports while Meyer and Bartz were at the district.

“We were unable to determine if the former Director of Business Operations or Ms. Meyer applied the stamp,” according to the report.

Bartz said he was not aware Meyer was using the stamp to sign off on the payroll forms.

“I knew that she had my stamp. I did not know she was using it for those 941s,” Bartz said.

He said he was not aware of any policy specific to the stamp’s use, but said Meyer was not authorized to use the stamp for regular tasks, such as signing off on the quarterly reports in question. The stamp should only have been used in “unusual circumstances” when he was unavailable to sign reports himself, Bartz said.

State Auditor Mary Mosiman said there should have been a policy in place on how Meyer could use such a signature stamp.

“Stamped signatures and electronic signatures are all authorized methods of penning signatures. However, each needs to be used with oversight and accountability,” Mosiman said. “There should be policies and procedures in place as to when a stamp signature is able to be used or an electronic signature is able to be used, so that’s what we’re identifying in the report.”

The report also found Meyer received delinquency notifications for the late reports, yet other district officials were not aware the reports were not submitted in a timely manner.

Brintnall could not immediately be reached for comment. In a previous interview with the T-R Bartz denied knowledge of negligence of duties by Meyer under his watch.

A statement to the T-R from Boliver Law Firm on behalf of Meyer said there were concerns about the auditor’s report.

“We have obtained a copy of, and are reviewing, the Auditor’s report. From our preliminary review we take issue with several of the factual findings and characterizations contained in the report. The report does not accurately reflect the work done by district employees during Ms. Meyer’s employment nor does it accurately address the responsibilities of others besides Ms. Meyer. Ms. Meyer was hired to perform limited payroll functions by then district Business Director Brian Bartz. Ms. Meyer was provided only cursory training, and was never approached by her supervisors or district auditors regarding problems with her work. Indeed, she was told repeatedly that she was doing what the business office wanted her to do. She apologizes if any of her actions or inactions resulted in harm to the school district. That was certainly never her intent,” the statement read.

Current district Director of Finance Paulette Newbold first discovered irregularities in district finances that led to the discovery of the late reports. The state auditor’s report was on the period between Nov. 28, 2016 and June 15, 2018.

The Marshalltown School Board approved the payment of a total of $602,963.81 in IRS penalties during the Sept. 4 and Oct. 1 board meetings. The district paid an additional $13,204.04 to Iowa Workforce Development, Iowa Public Employees’ Retirement System and the Iowa Department of Revenue in penalties and interest.

The district also paid $29,243.26 in “improper reimbursements and undeposited collections,” the report found. Both Schutte and Mosiman said those costs were also due to Meyer’s negligence to report in a timely fashion.

Schutte said the district plans to make a formal appeal of the IRS decision not to waive and reimburse the $602,963.81 paid in penalties to the IRS. He also said the district has made fixes to business office policy and procedure to avoid this kind of issue in the future.

“Obviously, we’ve made a purposeful effort to hire highly-qualified people to be in those positions to begin with,” he said. “We’ve also made sure there are procedures in place to better assure an appropriate segregation of duties.”

Schutte also said the district will have the State Auditor’s Office perform this year’s full district financial audit.

Here is a breakdown of the auditor’s financial findings:

• The State Auditor’s Office found more than $645,000 of “improper disbursements and undeposited collections” and “improper penalties and interest” were made by Marshalltown Schools after an investigation of the district.

• Total paid in penalties and interest by the district: $616,167.85

• Breakdown of penalties and interest: $602,963.81 to the Internal Revenue Service (IRS), $9,365.45 to Iowa Workforce Development, $3,168.17 to the Iowa Public Employees’ Retirement System (IPERS), and $670.42 to the Iowa Department of Revenue.

• Total of improper reimbursements and collections paid by the district: $29,243.26

• Breakdown of improper reimbursements and collections: $12,233.14 in leave time in excess of authorized, $7,118.25 of excess payroll issued to former district employees, $3,081.15 of excess insurance premiums, $2,974.25 of improper payroll issued to current and former district employees, $1,031.73 of improper payroll issued to teachers, $440.20 of excess payments for child support garnishment, $55.92 in interest charges for late payment to Northwest Mutual and $2,308.62 for a district employee’s share of IPERS which was paid by the district.

• Total impact to school district, according to auditor’s report: $645,411.11

For the full report, visit https://www.auditor.iowa.gov/reports/audit-reports/

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Contact Adam Sodders at

(641) 753-6611 or

asodders@timesrepublican.com

Editor’s note: This story was updated the morning of Dec. 14 to include Brian Bartz’s comments.