City explains purchasing process

Shakopee Valley News

It's not just the school district feeling the effect of former Shakopee Superintendent Rod Thompson's alleged misuse of district credit cards — it's the city, as well.

City staff gave a presentation during the Shakopee City Council meeting on Tuesday on the city's purchasing system. While the presentation was in part informational on the system adopted earlier this year, the other intent was to assure residents that the system and purchases are under a watchful eye.

"To me, it seems like the general public made it pretty clear that in their eyes, the school board was responsible for what happened at the district," Councilor Matt Lehman said. "How do we assure that doesn't happen at this level and how do we give the public confidence that this body is overseeing that?"

Thompson was arrested in late 2017 on 21 charges that he stole and embezzled nearly $74,000 in school district funds over five years. He faces a maximum 125 years of imprisonment and $311,000 in fines.

The city's automated purchasing system, called Tungsten Workflow, was implemented last year and requires multiple approvals before the purchase itself is finalized:

• For purchases up to $5,000, approval is required by the authorized purchaser and the department director.

• For purchases from $5,000 to $24,999 approval is required by the authorized purchaser, department director and city administrator or a delegated representative, like the assistant city administrator.

• For $25,000 to $99,999, approval is required by the authorized purchaser, department director, city administrator or a delegated representative and the city council.

• For purchases of more than $100,000, approval is required by the authorized purchaser, department director, city administrator and the city council.

"We have multiple sets of eyes that look at the same document and have to basically sign off on everything that comes through," City Administrator Bill Reynolds said. "It's not just one, it's not just two, sometimes it's not even three — it's four or five different people, depending on that particular level of invoice."

How the policy is set up lessens the likelihood for fraud, Reynolds said.

"If there's a fraudulent situation, you've got four people in different departments on multiple levels that would have to sign off on the fraud," Reynolds said. "If there is some fraud there really is going to have to be some collusion."

If an accidental purchase is made on a city card, the purchaser has 30 days to refund the city. City card users must also supply receipts for purchases within 30 days. If a receipt is lost or damaged, purchasers fill out a form listing the date, purchase, cost and reason for purchase.

"I have great comfort in knowing that we have good procedures and processes in place," Finance Director Darin Nelson said.

City staff also does a monthly financial review before the Shakopee City Council.

"If somebody wants to commit fraud, they can always commit that," Nelsons aid. "That's an inherent risk. You try to circumvent that as much as you can."

Councilor Jay Whiting said the process is conducive to protecting public funds.

"I do think we have a lot of levels of protection here," Whiting said.

On top of a strict process that every city employee follows, the culture is different at the city level, Assistant City Administrator Nathan Burkett said.

"We have a real culture of 'If you see something wrong, you need to say something to somebody,'" Burkett said. "I don't think that culture is the same as it was at the school district."

Since the city is funded by tax dollars, staff has more responsibility to make sure the process is transparent, Reynolds said.

"We want to make sure that we are good stewards of your tax dollars," Reynolds said. "We have a higher moral responsibility to make sure that we use those funds wisely and that we are accountable for those funds."

The council also:

• Set the public hearing for the Canterbury Commons Tax Increment Financing District for March 6.

• Purchased four skidsteer loaders for $16,000, two snowplows for $23,000, two marked patrol vehicles for $57,000 and a rotary mower for $108,000.

• Accepted concrete pavement improvements to fire station no. 1.

• Renewed the school resource officer agreement.

• Designated the Shakopee Valley News as the city's official newspaper for 2018.