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SEATTLE ETHICS AND ELECTIONS COMMISSION INVESTIGATION

REPORT ON COMPLAINT OF MISAPPROPRIATION OF FUNDS AT


MADRONA K-8

May 21, 2013


I. INTRODUCTION AND SUMMARY

On October 1, 2012, the District received an anonymous complaint that LaNita
Thomasson, head secretary at Madrona K-8, was misappropriating school funds for her own use.
It referred the complaint to the SEEC. The SEECs investigation yielded the following findings:
Finding 1: Because Thomasson did not retain records in accordance with District
policy, the SEEC is unable to determine whether funds were
misappropriated.

Finding 2: Thomasson engaged in improper governmental actions when she
discarded documents in violation of the Districts Records Retention
policy.

II. FINDINGS

Madrona maintained a petty cash fund for years in violation of District policy. There is
evidence to suggest that money from that fund may be missing.
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Thomasson, as Administrative
Secretary, was primarily responsible for handling money that came into the office. She did not
keep adequate records of the money she handled. Additionally, she discarded financial records
during an office clean-up in violation of District policy and state law. The Districts Archivist,
who was consulted before the clean-up, reviewed District policy with Thomasson about retaining
financial documents. The Archivist never saw the relevant records Thomasson says she
discarded in the clean-up and would not have approved of their disposal. The resulting lack of
paperwork makes it impossible to determine if money was misappropriated.


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The SEEC looked at deposit records from 2009/2010 through February 2013 to determine this.
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III. DISCUSSION

A. BACKGROUND.
Thomasson is Madronas
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Administrative Secretary, a position she has held since 2006.
She previously worked at Meany Middle School for over 6 years, where she served primarily as
an Assistant Secretary. Thomasson says that she had little financial training, and that the training
was not relevant to the money handling she does. She says that most of the information she has
learned has been through asking other secretaries. Kathie Technow, the head of Accounting, says
that Thomasson would have received relevant yearly financial training. The District has no
training records for Thomasson. Internal audit reports indicate that fiscal training is voluntary.
The principal, Farah Thaxton, started work at Madrona in 2010/2011, and relied on
Thomassons experience as the Administrative Secretary to handle the office financial systems.
When she questioned certain practices, Thomasson would tell her that was the way the office had
always operated. After Thaxton received financial training at the beginning of the 2012/2013
school year, she concluded that many of the practices in the office were incorrect and instituted
changes. While she had no concerns about misappropriation of funds in the office, the earlier
paperwork or process failures meant opportunities for misappropriation existed.
B. THOMASSON FAILED TO FOLLOW DISTRICT CASH HANDLING
PROCEDURES.

1. District Requirements.
Under District policy, all money collected by the school is to be deposited daily in a red
self-locking money bag that is picked up by a District driver and taken to the bank. Inside the
bag, there should be a deposit slip for the bank and a General Fund Deposit Summary Form for
the District Accounting Office indicating the type of general fund deposit being made. Cash and

2
Unlike middle and high schools, K-8s do not have a fiscal secretary.
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checks are to be kept under lock and key until deposited. Receipt forms are to be completed for
all general fund revenues received by the school and should indicate the amount and whether the
amount is in cash or checks. District-approved receipt forms come in triplicate, with one copy for
the person delivering the money, the second attached to the deposit summary, and the third to be
retained in the receipt book. In the case of field trips, teachers may use a class list to document
funds collected from students. This list should be turned in to the fiscal secretary each day, and
the secretary should issue a receipt to the teacher for the money. Exhibit 1, SPS General Fund
Cash Handling Procedures. Sales on behalf of the school, such as yearbook sales, should be
deposited in the general fund account. Any funds collected as Associated Student Body (ASB)
funds must be handled in accordance with procedures listed in the Districts ASB Procedures
Manual. Exhibit 2, SPS Policy 3510, Associated Student Bodies.
Petty cash funds are not allowed at the schools. General fund money is not to be used to
make change or to make any other payments. Exhibit 1, supra. If items need to be purchased, a
requisition form must be completed and sent to the District, which then encumbers the funds to
pay the invoice once it is received. For many items, a school like Madrona can use the Districts
Costco account. A requisition form for a certain amount is sent to the District in advance, and
then a purchase order for an approved amount is sent to Costco. If an employee spends his or her
own money on items and needs to be reimbursed, they must fill out an employee reimbursement
form, attach receipts, and turn in the form to the secretary for submission to the District.
2. Thomassons Failure to Follow District Requirements.
Madrona had a petty cash fund that Thomasson maintained with general fund revenues.
Prior to the current school year, when Thaxton initiated money-handling changes, Madrona had a
petty cash fund that had existed for several years. Thomasson maintained the petty cash fund and
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says the money in the fund came from some of the uniform sales cash and some of the field trip
sales cash and was used to pay for small items or to reimburse the principal, assistant principal,
herself, or others when they paid for items for the school. Thomasson says that she kept all of the
receipts for items paid for with the petty cash fund for the last several years in a folder.
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She says
that she discarded all of these receipts when the office was cleaned up in summer of 2012.
Money was not deposited daily. The only deposit Thomasson was making daily was of
the locked red bag that was brought to the office by the lunch staff containing lunch money
collected from students and the accompanying paperwork. Thomasson says she was not aware of
the rule that all money needed to be deposited daily. She made deposits of the other money she
collected in the office only infrequently. According to witnesses, because Thomasson did not
deposit checks timely, the school community often paid for many items or events in cash. Cash
came into the office for yearbook, uniform, and field trip sales as well as for fines levied on lost
items.
Money was not kept secure at all times until deposited. Thomasson put money that came
into the office into an envelope in her desk drawer or into the file cabinet next to her desk. She
maintained a petty cash fund in an unlocked cashbox in the file cabinet. Her desk drawer was
usually unlocked during the day but was locked at night. The file cabinet may have been
unlocked at times during the day, and the key to the file cabinet was kept on her desk in an area
that others in the office could access. The PTSA would provide the principal with a check at the
beginning of the year for $150 to cover lunch money for students who did not have enough
money for lunch or who had forgotten to bring lunch money. The principal would convert this

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However, on at least one occasion, Thomasson, at the request of the principal, after reimbursing the vice principal
out of petty cash, submitted the vice principals receipts along with a requisition form to the District. The vice
principal was reimbursed, and then he reimbursed the petty cash fund, meaning no receipts could be kept at
Madrona.
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check to bills and coins and give the cash to Thomasson. Thomasson kept some of that in her
drawer. She also kept some of the money in a cashbox or envelope in the file cabinet drawer.
Thomasson, and occasionally the principal or the assistant secretary, would retrieve the money to
give it to kids who needed it.
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Receipts were not given for all revenues received, and copies of those given were not
included in the deposit summary paperwork. Thomasson copied checks that came into the office,
and included these in the deposit records. She says that she gave out receipts for cash that came
into the office when families or students purchased items such as uniforms, yearbooks, and field
trips, or paid fines. However, she and others say that this receipting was not consistently done.
Lists of children who paid for field trips were not kept, and teachers were not given
receipts for the money submitted. Thomasson says she did not need the list of children who paid
for field trips as the teachers took care of that. She did not provide receipts to the teachers who
gave her the field trip money. She says that she kept lists of students for uniform and yearbook
sales, compiled from some information provided to her by the volunteer coordinators for those
sales.
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She did not provide receipts for the revenues she received from the volunteer
coordinators. There are no copies of any receipts for revenues received by Madrona for the
period examined by the SEEC, 2009/2010 to the beginning of 2012/2013.
Deposit summary paperwork did not always identify the type of deposit money.
School yearbook sales revenues were being deposited in the ASB account rather than the
general fund account where they should have been deposited.


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No records were kept on the disbursal of the PTSA lunch funds.
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The volunteer coordinator for the uniform sales for 2009/2010 and 2010/2011 says that she only provided order
form information including payment information to Thomasson on sales that happened at the beginning of the year
and did not provide the order information on sales that happened throughout the year. She would just turn over the
money from those sales.
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3. Problems First Noted with Money Handling.
Thomasson was out of the office on leave from April 12, 2012 to May 21, 2012. During
that time, the assistant secretary notified the principal that some parents had called with concerns
that the school had not cashed their checks. The principal discovered that some of the checks in
the file cabinet were older. She contacted the parents who called and other parents to let them
know that she would be cashing the older checks so that they would not be surprised. She and the
assistant secretary got some help from the Accounting Department and put together a deposit on
May 9, 2012. This was the first deposit of the year to include cash. The cash amounted to
$139.12. Thaxton found the cash in envelopes in the file cabinet drawer. There were no
notations of where the money came from with the exception of one envelope with $5 that had
Orca written on the outside of it, likely from an Orca card fine.
Thaxton had other concerns about Thomassons money handling. She learned that there
was over $2,000 in the schools ASB account that the District had frozen due to Thomassons
failure to submit a budget for the account prior to 2011/2012. Thomasson was also not timely
submitting paperwork for yearbook payments, resulting in budget and billing problems.
When Thomasson came back to work on May 21, 2012, the principal spoke with her
about the problems she saw with the way money was being handled. She instructed Thomasson
that all deposits needed to be made and made timely.
4. The Deposit Summaries.
With the exception of one record of petty cash fund usage, the only available relevant
records before 2012/2013 are those of general fund deposit and ASB deposit summaries. They
do not suggest a problem with checks being misappropriated. Instead, they indicate issues with
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cash deposits. The SEEC looked at the deposit summaries to see what amounts of cash Madrona
had deposited in the last three years and when cash deposits were made.
2009/2010- Records show that in 2009/2010, the year before Thaxton came on as
principal, there were few deposits being made, with only three into the general fund and one into
the ASB fund. Exhibit 3, Madrona 2009/2010-2012 General Fund (GF) Deposit Listings.
Exhibit 4, Madrona ASB Deposit Listings. According to the Accounting Department, this is an
unusually small number of deposits. However, some cash was deposited. The principal deposited
$217 in cash into the general fund when Thomasson was on leave.
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Exhibit 5, SEEC Chart of GF
Deposits. The other cash deposit was into the ASB fund into which Thomasson primarily
deposited yearbook proceeds. Most of the yearbook money was collected by a volunteer, who
turned it over to Thomasson for deposit. That deposit included $676.35 in cash. Exhibit 6, SEEC
Chart of ASB Deposits. In total, Madrona deposited $893.35 in cash for that year.
2010/2011- During this school year, there were six deposits in the general fund account
for uniforms, field trips, and other things. Exhibit 3, Madrona 2009/2010-2012 GF Deposit
Listing. None of these deposits included cash. Exhibit 5, SEEC Chart of GF Deposits.
There was one deposit in the ASB account for yearbooks. The only existing list for
yearbook purchases shows that $785 in cash was collected. Exhibit 7, 2010/2011 Yearbook Sales
List. However, the yearbook deposit also did not include cash. Exhibit 6, SEEC Chart of ASB
Deposits. There were no cash deposits at all for this school year.
2011/ April 9, 2012- In 2011/2012, prior to April 9, 2012 when Thomasson went on
leave, there were three deposits in the general fund account. None contained cash. Exhibit 5,
SEEC Chart of GF Deposits.

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There was a deposit after the end of the school year for $424, made presumably by Thomasson, but it had no
associated paperwork, so it is impossible to tell if it was for cash or checks.
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April 10, 2012 - July 2012 - From April 10, 2012 through the end of the 2011/2012
school year there were six deposits in the general fund account, all containing cash. Exhibit 5,
SEEC Chart of GF Deposits. The first was made by Thaxton and the Assistant Secretary while
Thomasson was on leave. This May 9, 2012 deposit included cash found in envelopes in the file
cabinet. She did not deposit money from the petty cash fund or whatever was in the cashbox.
After Thomasson came back from leave and Thaxton spoke to her about making deposits, she
made five deposits that included $1,707.25 in cash. Exhibit 5, SEEC Chart of GF Deposits. The
cash deposits reveal that more than half of the field trips are paid for in cash. See e.g., Exhibit 8,
6/5/12 General Fund Deposit Ticket 1215 and Associated Field Trip Information. The cash was
coming in contemporaneously with the checks for the field trip, indicating this was newly
collected money. None of the cash deposited included cash from the petty cash fund.
2012/2013 - In 2012/2013, Thaxton instituted money handling changes at Madrona. For
2012/2013 through February 21, 2013, Madrona has had 11 deposits containing $1,251 in cash.
Of that amount, $654.72 came from a first time new book sale at the school, and $191 came from
a first time sale of musical instruments. Field trips normally occur in the later part of the year, so
school officials expect additional cash deposits as the end of the school year approaches.
5. Petty Cash Fund Usage.
Thomasson says that she funded petty cash with a portion of field trip and uniform cash.
However, records show that, at times, most or all field trip and uniform cash was going into petty
cash. It is also evident that Thomasson did not deposit the yearbook cash collected in 2010/2011.
Thomasson says that the fund was used to reimburse staff or to purchase small items. She
says that when she needed to be reimbursed for her own purchases, she would show a receipt for
the item for which she was being reimbursed to the assistant secretary, and then either she would
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get the money or the principal would get it for her. The current assistant secretary, who has been
on the job since 2011, says that she has never performed this service for Thomasson. The
principal does not recall getting money for Thomasson out of this fund either. Thaxton recalls
getting reimbursed out of petty cash for coffee for her monthly meetings with the school
community two or three times during her first two years there, usually for $15.95. She says that
she was not reimbursed for coffee more than five times. In August 2012, Thaxton held a three-
day staff retreat. Thomasson had not sought early approval for a Costco purchase or other
purchases, so petty cash was used to buy items for the retreat. This was unusual. Thaxton did not
recall any other items being purchased out of petty cash. She says it is possible Thomasson paid
for some small items, such as a classroom student award or an item for a staff meeting, out of
petty cash but that most items were paid for with a Costco purchase order.
A Madrona employee, who was in charge of purchasing items at the school for children,
recalls being reimbursed by Thomasson four or five times for about $50 each time out of petty
cash in 2010/2011, because Thomasson had failed to timely file paperwork with the District.
Thomasson says that petty cash was also needed to supplement the PTSA-donated lunch
money reimbursement fund of $150, a fund to lend lunch money to students who have forgotten
or cannot afford their lunch money fee. Much of that money is not returned. Thaxton says that it
is likely that the $150 would not cover the full need for the school year and that petty cash might
have been used for that as well. She says the extra amount would not likely exceed $150.
Thomasson raised new information about the use of petty cash at her final interview. She
says that she gave Thaxton $900 in an envelope from petty cash to keep in her desk at the
beginning of last school year. She also says that she occasionally gave Thaxton sticky notes
throughout that year with notes on the amount in petty cash. Thaxton does not recall receiving
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the $900 and says the drawers in her desk have no locks, so she does not believe she would be
comfortable with having that much money there. Nor does she recall Thomasson giving her
sticky notes. Thaxton says that if Thomasson discussed petty cash with her, it was not formally
or with specific detail.
There is only one set of receipts available for the last three years showing the use of the
money in the petty cash fund. (Thomasson says all the other receipts were discarded in the office
clean-up earlier that summer.) Those receipts relate to the usage of the fund for the three-day
staff retreat from August 28 to 30, 2012. The receipts were included in the October 3, 2012
deposit of the remainder of the petty cash, which Thaxton ordered closed to bring Madrona into
compliance with District money-handling rules. An adding machine tape indicates that there was
$661.11 in the petty cash fund in August 2012. Receipts show expenditures of $505.31 for the
three day retreat, leaving a deposit of $155.80. Exhibit 9, 10/3/12 General Fund Deposit
Summary and Receipts. Thomasson says that the reason there was so much money in the petty
cash fund in August of 2012 was because the yearbook volunteer forgot to give her his last
school day yearbook sales until the summer.
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This means that, contrary to her initial account, she
was placing cash from the yearbook sales into the petty cash fund as well.
6. Evidence of Missing Cash.
The deposits at the end of 2011/2012, combined with the one record we have of petty
cash from August 2012, show that field trips and yearbook sales could bring in over $2,000 in
cash. There is little evidence that such sums were needed for reimbursements, expenditures, or
lunch money. At a school where purchases were often made in cash, surprisingly little cash was
being deposited for several years. That changed after Thaxton spoke with Thomasson about

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Thomasson estimates the volunteer gave her between $400 and $500 in cash and checks. The volunteer believes
that it was closer to $200 for 10 books sold.
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making deposits. Also troubling is the fact that yearbook sales cash was also not deposited from
2010/2011 through May 2012, though Thomasson had not indicated that yearbook sales were a
source of funding for the petty cash fund.
C. UNAUTHORIZED DISPOSAL OF RECORDS.
The only existing receipts for petty cash fund usage relate to the August 2012 staff
retreat. No receipts or copies of receipts for cash received in the office are available either.
Thomasson says most of these records were discarded in the office clean-up at the end of J une
and beginning of J uly 2012.
Thaxton says that she wanted the office area cleaned. She was concerned about
Thomassons understanding of what items needed to be kept or thrown away, so she asked the
District Manager of Records and Archives, Aaren Purcel, to help Thomasson with the clean-up.
She also asked the assistant secretary to help Thomasson. Purcel says that they spent a lot of time
discussing what the school did not need to keep. She says the area was very disorganized. She
says there was no discussion with Thomasson about cash handling, and there were no receipts or
file folders of receipts that were discussed or that she ever saw in the paperwork they went
through. She is used to seeing receipt books from other elementary schools. She says that, under
District records retention policy, receipts must be kept for six years. She let Thomasson know the
general rule that financial paperwork must be kept for six years. She also went over the retention
schedule with her and gave her a copy of it. Exhibit 10, District Retention Schedule. She told
Thomasson that if she had kept something electronically, it did not need to also be kept on paper.
However, she did not tell her that she could get rid of electronic lists that were the only existing
records. She says that she would never tell her to get rid of the documentation necessary for
financial records.
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In spite of this information, according to Thomasson, she decided to discard the
following records in the office clean-up in summer 2012:
All copies of receipts given for money received at the school.
All receipts for purchases to be reimbursed out of petty cash prior to August 2012.
Uniform sales order forms received from the volunteer coordinator that reflected
who ordered uniforms and how much was paid and in what form.
Her own lists of students who purchased uniforms in the office and how they
paid.
Thomassons own paper and electronic lists of students yearbook purchase
information that she compiled from information from a volunteer coordinator or
from her own sales, with the exception of a list from 2010/2011.

II. CONCLUSION.

Finding 1: Because Thomasson did not retain records in accordance with District
policy, the SEEC is unable to determine whether Thomasson
misappropriated funds.

Testimony in this case suggests a small demand for petty cash by the Madrona office.
However, the cash flow when cash began to be deposited suggests that at least $2,000 was likely
to flow into the fund during a year.
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It is not possible on the record in this investigation to say
how that money was spent. However, because records were not kept in accordance with District
rules and policy, the SEEC cannot determine if money was misappropriated in this case.
Finding 2: Thomasson engaged in improper governmental actions when she
discarded documents in violation of the Districts Records Retention
policy.

District policy and state law both require that financial records, like the ones discarded
here, be kept for six years. RCW 40.14.060. Exhibit 10, supra. In this case, Thomasson received
instruction from the District Archivist on which records she could keep and which she could
discard. She discarded the records that would have shown what happened with petty cash. In this

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In May and J une 2012, $1846.37 in cash was deposited. Records from October 2012 show that at least $661.11
was in the petty cash fund in August 2012, meaning that Madrona received at least $2507.48 in cash for the
2011/2012 school year. A better understanding of how much cash should be deposited in a normal year may come
at the end of this school year after all field trip and yearbook sales have occurred.
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case, this violation is a serious one. Destruction of public records is unlawful. RCW 40.16.010.
An improper governmental action is an action that violates state law or District policy. RCW
42.41.020. Thomassons actions constituted an improper governmental action.

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