An audit of a Hot Springs School District employee found they made unauthorized personal purchases using public funds and overpaid themselves using thousands of dollars in grant money.  

The Hot Springs School District Board of Trustees held a special meeting Monday to review the audit’s findings. Superintendent Gerald Chouinard initiated the review in July after discovering irregularities. Financial consultant Todd Watkins conducted the audit.  

The investigation centered around former school district Clerk and Business Manager Carmen Jackson, who has since resigned. Watkins’ report found she gave herself unauthorized payroll advances, made personal purchases with the district’s credit card and granted herself additional pay and stipends totaling more than $13,000. 

School district attorney Elizabeth Kaleva reviewed the details of the report during the Sept. 29 special school board meeting. She advised board members against making any decisions that night. The information must be available to the public for at least 48 hours before the school board can take any action, Kaleva said.  

The scope of the investigation was limited to one year, from July 2024 to June 2025, since these audits are costly, Kaleva said. District officials used the report as a starting point for further investigation. 

A major finding in the report was a lack of oversight of the school district's business office. In her position, Jackson oversaw payroll, accounts payable, the school budget, and federal and state grant accounting. 

Watkins found there was no supervision of Jackson’s position. He advised that the superintendent should review and supervise payroll reports, payroll checks, timecards and benefits. 

“When there is review there is also an element of internal control provided, particularly for small rural school districts,” Watkins wrote in the report. “Given the absence of review and internal controls, the clerk/business manager was able to do many things that are not typical ...” 

Watkins found it unusual that the business manager had a school district credit card with her at all times. According to the report, Jackson made several personal purchases with it, which were later reimbursed from her personal checking account.  

“It’s not appropriate, ever, for staff members to be using district cards for personal expenses,” Kaleva said. “The repayment is great, but it doesn’t change the fact that it’s never going to be appropriate for individuals to use public money for personal benefit.” 

The investigation also found that several individuals accessed district credit cards without supervision, Kaleva said. Purchases should be pre-approved, and a supervisor should sign off on these purchases, she said.  

“We only went back for one year, but the one thing that is abundantly clear is this has been a practice for quite some time,” Kaleva said.  

Jackson also overpaid herself $13,554.11 in the 2024-25 school year, according to the audit. Based on prior contracts, Jackson was entitled to 1.5% of federal grants to account for her grant management, Kaleva said.  

The school district received $251,726 in grants in the 2024-25 school year, so Jackson should have received $3,775.89. Instead, she gave herself $17,330, according to the audit. She also gave herself a $600 cellphone stipend, which is not included in her contract.  

The report also found $3,285.85 in accounts payable payments were made directly to Jackson.  Around $3,000 of these payments were labeled as medical flex reimbursements, and $280 were labeled as website maintenance payments. Jackson also cashed out unused vacation days without the board of trustees’ approval.  

Trustees voted to revisit the matter again during a special board meeting on Oct. 15, at 7 p.m. The school district attorney suggested three courses of action for them to consider for their next discussion.  

The first option is to hand the investigation over to the Sanders County Attorney's Office and determine whether there’s been a misappropriation of public funds.  

A second option is to request that Jackson pay back the $13,554.11 in overpayment from the 2024-25 school year and leave it at that. The third option is to continue the investigation with the district’s financial consultant and stretch it back to previous years.  

Kaleva noted the third option would prove costly. 

“These are extremely expensive events, and I know you guys don’t have a lot of money,” she said. 

The public has until midnight Oct. 8 to submit their questions and concerns to the school board trustees about the audit investigation. 

Reporter Hannah Shields can be reached at 758-4439 or [email protected].