Minnesota school district tightens credit card policies after audit finds disturbing lack of documentation

A Minnesota school district is re-evaluating its financial policies after a recent audit noted a failure “to meet state requirements for credit card purchases,” according to news reports.

“We don’t have an indication that it was fraudulent; however this is a big risk,” state Auditor Julie Blaha told Gray’s KTTC.com. “This is how fraud can happen.”

The audit chastised Byron Public Schools for lacking itemized receipts for almost $60,000 in purchases and buying more than $4,000 in gift cards without “proper supporting documentation,” according to the news outlet.

Under the new superintendent, Nate Walbruch, the district has replaced all credit cards with purchase cards.

“We started making changes literally the first day,” said Walbruch, who assumed his role in July. “In order for a person to make a purchase, we essentially have to approve the purchase before they can even ring the card through.”

The district also has sued Student Management Services LLC, the company previously managing its finances, arguing it miscalculated projected expenditures such as staff salaries and benefits. 

“Like any person or public entity, if you feel like damage has been done to you, one of the resources in this country is the ability to litigate civilly,” Walbruch said, noting the district’s million-dollar shortfall. “So, that is one of the things we have explored.” 

The company denied any misconduct in its response to the district’s lawsuit, which is seeking $100,000 in damages. A judge will review the case Dec. 23, according to KTTC.com. 

The district, considered “above average” for the state, enrolled about 2,300 students in 2025. 

Financial mismanagement under scrutiny in districts nationwide 

As previously reported by The Lion, multiple U.S. districts disclosed budget shortfalls at the beginning of this school year – often underestimated and needing to be revised upward after more scrutiny. In one example, New Jersey’s Montclair district admitted an $18 million deficit compared to what was previously estimated at $11 million. 

“It is really incompetence, bad accounting and administration’s inability to say no,” said Superintendent Ruth B. Turner. 

Other states reporting financial deficits across various districts include California, Oregon, Washington, Pennsylvania, Michigan and Illinois. 

Many of the districts in financial straits received record amounts of COVID-19 pandemic aid, then struggled to meet rising expenses after the funding ended and enrollment declined.