A State Auditor review of North St. Paul finances found more than $15,500 in credit card purchases by the Ramsey County city over 3½ years were improperly documented, and others — including a subscription to streaming service Paramount+ and a possible political committee donation — lacked evidence of being a proper use of taxpayer money.
Review of North St. Paul city finances finds $15,500 in improperly documented credit card purchases
Purchases, including a Paramount+ subscription and a possible donation to a political committee, lacked evidence of being a proper use of public money. The city attorney said Tuesday there is no evidence of fraud or theft.
The Minnesota Star Tribune
September 4, 2024 at 9:49PM
The city discussed the review, which was sent to staff and elected officials in May of last year, at a City Council meeting Tuesday night. While council members were aware of the report, City Administrator Brian Frandle said in an email that he believes this is the first time it has been discussed as an agenda item.
City Attorney Soren Mattick told the council Tuesday the city found no evidence of fraud or theft in the transactions, but “the report wasn’t a clean bill of health for the city.”
“It showed that the city was spending money and not properly documenting it ... which causes concerns, because, as you well know, the city can only spend money on proper public purposes and things that are statutorily authorized as stewards of the public’s money.”
The auditor’s findings
North St. Paul made news for financial problems in 2021. An independent audit of the 2020 calendar year found some credit card purchases “lacked proper supporting documentation to be in compliance with city policy and statutory requirements.” Then-City Manager Scott Duddeck admitted to billing the city $2,400 for personal family expenses. He resigned after then-Council Member Scott Thorsen asked for an independent review of city finances.
State Auditor Julie Blaha’s office took up the case, analyzing city financial documents between December 2017 and May 2021. In a May 2023 letter to city staff and elected officials, it outlined three findings:
- $15,590 in purchases lacked receipts or itemization required by city policy and state law. More than $5,700 of those were made by the former city manager at “construction-related retailers.”
- Some credit card purchases lacked evidence that they “fall within the city’s legal authority to expend public funds,” including Apple cloud storage tied to a personal email account, plus a Paramount+ subscription; possible donations, including to a political action committee affiliated with public power companies that appeared to be listed as union dues; cabinets for St. Paul College and spending on events like employee recognition and holiday parties (a prohibited use of taxpayer funds).
- Lack of controls and policies made it difficult to determine whether expenses were appropriate, such as spending on TVs, phones and phone accessories, and iPads purchased with city credit cards without a policy to ensure they were for city business. Purchases made with city credit cards were shipped to non-city addresses, including homes and a storage locker.
The auditor’s office acknowledged that there had been city personnel changes since its review began, including a new city manager, finance director and some City Council members. The letter made several recommendations, including requiring itemized receipts, per city policy and state law; properly documenting and tracking electronic devices and ensuring their delivery to the city; and taking other steps to ensure purchases are clearly made for appropriate city purposes.
The city’s response
Mattick told the City Council that North St. Paul has cooperated with the auditor’s office and in its own review has not found evidence of city spending on personal items. He said the city recovered electronics that were shipped to homes.
“The good news is that the money wasn’t spent necessarily inappropriately, the bad news is you did a really bad job of documenting how that money was spent and it needed to be improved, and I believe the city has,” Mattick said.
He said the auditor’s office considers the case closed and the Ramsey County Attorney’s Office is not pursuing criminal charges.
Mattick said the city located most of the missing receipts and verified others through a combined look at credit card information and tracking down the products. He said the city determined the purchases were appropriate uses of funds.
“There was no concern that city money was being used to for personal gain or anything. It just was a really bad job of documenting the city expenses,” he said. Under city policy, purchases without a receipt are considered the responsibility of the purchaser. He said the city didn’t find instances where recouping costs was necessary.
He acknowledged the issue with spending money on things like employee cakes and flowers for funerals.
”The city knew they couldn’t do that, and that practice has been ceased,” Mattick said.
Mattick said the city had improved staff education and beefed up policies and enforcement before the state auditor’s report came out. Frandle said policies are being followed and taxpayers should know the city is being a responsible steward of taxpayer funds.
Thorsen, the former council member who asked the auditor for a review, said Tuesday night he is not satisfied with the city’s response to the auditor’s findings and would like to see specific policy changes outlined to the public and more transparency surrounding the issue and the city’s finances.
“There’s been a huge violation of public trust,” he said. “Fifteen thousand dollars is a big deal to me and a lot of people, you know, we’re getting bashed with inflation and taxes and fees. Everything’s going up, up, up.”
The motorist who died was a Korean War veteran who once owned an antique store in Paynesville, Minn.
