Audit finds school clerk stole $587,784

Lack of oversight allowed a former Cedar Rapids school district employee to steal more than a half-million dollars in district funds.

Jamie May, 42, embezzled $587,784 from the district between 2002 and 2009, according to a report from the State Auditor's Office released Friday.

The amount is among the largest in school theft cases in Iowa, said Tami Kusian, a certified public accountant who is an investigator with the auditor's office.

In a news conference Friday, school Superintendent Dave Benson said the district is committed to public accountability and improved district operations.

Cedar Rapids police began investigating the theft after a confidential informant said May had been depositing large amounts of district cash into her personal bank account. May was placed on administrative leave with pay in mid-August 2009 and fired in September. She was arrested Aug. 26 on a first-degree theft charge.

May, who had breast cancer, died Nov. 1 of cardiac arrhythmia. The Linn County Attorney's Office dismissed the first-degree theft charge after May's death.

According to the audit, May disguised bank withdrawals as “change requests.” Change requests are used when cash is needed to make change at district events, such as a school bake sale.

May replaced the money she took by depositing payments for student registration, transportation and other fees into the district's account without recording the payments.

“She was able to have complete control of funding cycles,” Kusian said.

The auditor's report found that May deposited $465,013 of the district's money in her personal account from May 2003 to August 2009.

May's annual salary was $27,958, according to the district's salary list.

After the theft was discovered, the district requested an independent investigation by the State Auditor's Office. The office reviewed transactions from July 1, 2002, through Aug. 24, 2009.

“We went back to when we had good records,” Kusian said.

May was hired by the district in 1999 as an accounts receivable clerk, which gave her access to thousands of dollars on a daily basis.

District records showed certain fee accounts consistently came in under budget, but the matter was never investigated. Instead, school officials trimmed the following year's budget, according to the auditor's report.

“Clearly, there was a weakness in internal controls,” said Steve Graham, the district's executive director of business services.

While there is no guarantee that something like this can't happen again, the district will attain the highest level of checks and balances possible, Graham said.

“I'm satisfied we are moving in the right direction,” Benson said.

The district will cover the loss through insurance and restore money to the appropriate budget accounts. Insurance also will cover the state auditor's $11,500 fee.

The district also will attempt to recover its $10,000 deductible from May's estate.

Graham said he doesn't know if the district's annual employee dishonesty insurance payment - $2,500 per year - will increase because of the theft.

Benson will recommend to school board members that the insurance amount credited to the district's general fund be used for property tax relief for fiscal 2011. The proposed levy rate is currently $15.67 per $1,000 assessed valuation.

“It would probably be in the neighborhood of a 10-cent reduction (in the) rate,” Benson said.

It is unknown what happened to the money.

Betty Hutton of Cedar Rapids, May's grandmother, said May never spoke to the family about the allegations.

Assistant Linn County Attorney Jason Bessler said the focus of the investigation was more on what May took rather than on how she spent the money.

According to city records, May bought a condominium at 1920 Rockford Rd. SW in December 2005 for $99,950.

“We will never know why,” Graham said. “That is just not possible for us to ever understand. That is a question that perhaps only Jamie May can fully respond to.”