Adversity: After Embezzlement, a Test of Strength
Discovering that their veteran treasurer had stolen funds from the group, parent leaders opted to stick it out and face up to the underlying causes. Their response made them PTO Today's 2007 Parent Group of the Year for Outstanding Effort To Overcome Adversity.
Parent Association of Lincoln School
Location: Port Washington, Wis.
Community: population 10,000; suburban
School size: 400 students, grades K-4
Annual budget: $25,000
When the outgoing treasurer wouldn’t turn over the financial records to her successor, the parent leaders at Lincoln Elementary in Port Washington, Wis., tried not to grow alarmed. “I thought, OK, it’s a hard thing to give up after doing it for so long,” says Marchell Longstaff, president of the Parent Association of Lincoln School.
Unfortunately, the reason for this reluctance eventually became apparent: During seven years in office, the treasurer had stolen almost $40,000 from the PALS accounts. “To say that we felt shock is an understatement, given who this person was and what she had done for our school,” says Longstaff.
Over the 2006-07 school year, PALS officers had to untangle this mess to assess exactly how much money was taken and when, work with law enforcement to build a case, explain the situation to angry parents, and put procedures in place to ensure it would never happen in the future.
And they did all this while carrying on with business as usual, including a bingo and karaoke family event, family movie nights, and a courtyard beautification, as well as starting chess and comic book clubs and kicking off a new readathon fundraiser.
They kept their focus on the mission of PALS, which is to support, nurture, and enhance students’ education. They were determined to stay committed to the children and not let the situation interfere with that commitment.
Still, it was a painful process. Carrie Ehrlich, who stepped into the difficult role of treasurer, admits that the hours and hours spent trying to reconstruct years of financial data was “way more than any of us anticipated.” Longstaff calls it “a very emotional and stressful period for all of us.”
The investigation began after the new officers finally did receive some partial records from the previous treasurer. Red flags immediately went up when a bank statement didn’t match, a new account had recently been opened, and thousands of dollars were unaccounted for. They contacted the bank, still believing that the problem was a mix-up or an overlooked secondary account. What they discovered instead was that the former treasurer had created fictitious financial transactions and documents. At that point, PALS contacted the police.
Because the previous treasurer’s husband was a police officer, though, the case was turned over to the sheriff’s department before making its way to the district attorney. Bank records were subpoenaed, and PALS officers worked with detectives to reconstruct seven years of financial transactions. Throughout this time, because they were helping build a legal case, the PALS officers could not reveal much to the school’s parents. Yet at the same time, there was a great desire to be very open with parents who wanted answers. “At first, we couldn’t call a special meeting because we were advised by the police department not to,” Longstaff says.
Finally, two months in, they were able to meet briefly with parents to share some basic details. “There was very limited information we could give; that was frustrating for a lot of parents,” Ehrlich says. “But as soon as we had any information that needed to be shared, we shared it and did so in a public manner. Our goal was to reach all parents and community members so that accurate information was communicated.”
Of great importance to the board was concern for the previous treasurer’s family, particularly her children. “We informed everyone in a manner that wasn’t slanderous or negative or inaccurate because we had no intention of making this person look bad,” says Ehrlich. “She did a lot for our school. It’s hard for some people to keep that in mind.”
The treasurer was charged in February and pled guilty in July to two felony counts, for the fraudulent deposit slips and the money that was stolen. She was sentenced to three years’ probation for one count, plus nine months in local jail but with release time for work and child care for the other. Many parents have voiced unhappiness with what they see as the light sentence.
Rebuilding Trust
When a similar situation happened at another area school, the parent group leaders resigned and the parent group folded, leaving the principal to deal with the fallout. In contrast, the Lincoln officers hung in there. “Everybody knew that it was the right thing to do and that it needed to be done,” says Longstaff. Ehrlich, the treasurer, says, “If it wasn’t me, it would have been another parent volunteer.”
Perhaps the most amazing outcome is that PALS has recovered all the money that was misappropriated. “We got all the money back and were paid up front,” Ehrlich explains. “We didn’t have to hassle for it. That’s one of the conditions we asked for. Another school in the district that was also going through this stuff had to wait for restitution payment.”
It also resulted in a districtwide revision of policies related to how parent groups handle money. “The superintendent, the entire district office, the school board, PALS, the school community—all of these groups were very instrumental in helping everyone understand there was a better way for us to manage some of the budgeting issues,” says Lincoln Elementary principal John Taylor. “We’re very interested in maintaining a good, open, trusting relationship with all parents so that people are not fearful about being involved.”
Rebuilding that trust started with a critical examination of how PALS conducted its business. “Nobody ever saw the financial records before,” Longstaff says. “That’s the downfall of a lot of parent organizations, we’re coming to find out. In a volunteer position, you tend to trust the people that are there. Financial reports were submitted at every meeting. Everything seemed OK. There was always enough money there for things needed. But it takes an event like this to highlight the need to put double checks into place.” One such precaution is that dual signatures are now required on checks. And for each fundraiser, two people are required to count the money together and to initial what they counted on a newly created form. Deposits must be made in a timely manner, too.
Parent involvement did ebb last year, though it’s hard to say whether the financial scandal was the reason. “Attendance was down a little bit, but that’s a typical kind of thing,” says Longstaff. “There are years you don’t have the parent volunteers; schedules and jobs change. It’s hard to say that one caused the other. It did hurt that this happened. But everybody was happy that the money was found and that the situation was being resolved properly and not pushed under the table. Ninety-five percent of parents through the whole thing were supportive of the board and what we’ve gone through.”
Teachers were supportive, too. Longstaff remembers one teacher standing up at a meeting and stating that at no time had any child gone without because of one person’s dishonesty. “It made us feel good,” she says. “And we’re going to make sure that it doesn’t happen again.”
Advice from PALS for dealing with a financial scandal:
- Consult with your board members first to be sure that a problem exists.
- Contact local authorities.
- Be careful about the information you give to parents so that you don’t jeopardize the investigation.
- Be as open with parents as you can, and make sure every parent receives whatever information you can share.
- If you reach a point where a deal is possible, ask for quick restitution of funds.
- Take necessary steps to safeguard your group’s funds, such as dual signatures for every deposit.
