$3.24 million misplaced, misused

Additional details emerge following FBI operation at superintendent's home


Shock and confusion permeated Edgar County after FBI agents searched the home of Paris Union School District 95 Superintendent and Memorial Elementary principal Jeremy Larson on Tuesday, June 13. Now, more details concerning the unexpected investigation are floating to the surface, and it seems financial negligence was the impetus behind the search.

The day after federal agents finished canvassing Larson’s home at 709 Ten Broeck Street, the Illinois State Board of Education (ISBE) released a statement to The Prairie Press, revealing a staggering $3.24 million in federal grant funding had been misused or improperly accounted for. While the press release captures the essential pieces of the puzzle, three detailed reports from the ISBE reveal the scope and severity of the issue.

According to one of the reports, one of the first protocol violations occurred in fiscal year 2020 when District 95 submitted an expense report for a recent batch of federal grant funding. The first expense report, submitted on May 21, 2020, made use of all the available grant money, which was paid out on May 29. However, a budget amendment submitted Feb. 16, 2021, moved the funds to different accounts for different uses. A new report was submitted May 31, 2021, but the expenses cited in the budget were not paid prior to the release of the grant funding.

“The invoices presented to support the use of funds had not been paid as of May 31, 2020, resulting in grant funds being received in advance of incurring the costs,” the ISBE report reads.

Additionally, the approved budget did not list any items over $500, but multiple water fountains costing $1,087 were purchased with money from the grant.

Similar violations ensued, all of which are detailed in the ISBE’s audit of District 95. The reports note several instructions to correct mistakes and comply with accounting and reporting procedures were not followed and the same issues were repeated over the course of multiple years.

The district’s records were also in violation of the Code of Regulations [200.302 (b)(3)] stipulating how grant expenditures must be tracked. The ISBE documents state the district often mixed and merged funding received from federal grants with general funds instead of tracking grant expenditures in separate ledgers and records.

“Expenditures were not recorded in separate general district ledger accounts to account for the use of the grant funds. Expenditures were included with general district expenditures,” according to the report.

Smaller violations continued into fiscal year 2021 but increased in frequency. The report stated money spent from grant funds did not always support the program intent or expenditures were based on projected budgets rather than actual costs.

In total, the questionable costs amounted to $109,999 in fiscal year 2021 in the accounts listed in the report. $23,452 in funding was earmarked for third-grade classroom supplies, but only $534 in classroom supplies were properly recorded in the ledger.

Many salaries and wages paid using grant funding were found to be insufficiently documented, and sometimes out of line with the grant's original purpose.

Former Mayo principal Kyle Shay received a $30,000 stipend “with no supporting documentation for the purpose of the payment.” The payment was in addition to the approved wages Shay was to receive as an administrator of the grant account. According to the report, the payment was made at Larson’s request.

An additional grant for preschool-only classrooms was invested in a Memorial Elementary classroom which serves pre-K through second-grade students. Part of the funding was diverted to make another unapproved $30,000 payment, this time to Carolyn Wenz Elementary School principal Megan Carrol. Per the report, Carol’s contract did not include responsibilities under the grant and for a program that was not in her building.

Wages for Erika Hollis, an instructional coach, were claimed, but only partially recorded in the grant ledger. The remaining funds in the grant ledger recorded payments to Shay and Carrol earmarked with “registration pay and civil rights reporting coordinator” and “registration pay” respectively. Funding was also used to pay upwards of $13,000 in summer wages to 36 staff members on March 30, 2021. No timesheets were presented to confirm if the work was relevant to the grant’s objective or if the work was even completed.

The laundry list of violations continues on for 35 pages in the ISBE’s initial report and records a significant jump in unallowable spending in fiscal year 2022:

  • $100,000 in grant money was used by several staff members to purchase school supplies on Amazon with “no way to determine which items are related to the grants,” according to the report.
  • A $211,250 ESSER I grant was received by the district, but the only invoice recorded in the grant ledger was for 900 Chromebooks – a cost nowhere near the total amount of funding requested.
  • $266,184 in grant funding was paid to workers who had yet to complete their work, a violation of federal regulations, and who were uncertified in the type of work supplemented by the grant.
  • $121,890 in additional school supply expenses were submitted for reimbursement under grant funding, but only $28,247 worth of transactions were accounted for in the appropriate ledger.
  • Money from a Title I grant to support core subjects of math, language arts and reading was used to purchase supplies for high school athletics, art, band and nurses’ supplies.

The report also keeps an account of repeated failures by the district to keep a proper inventory of physical items purchased through grant money, and many expenditures of $5,000 or more were made without prior approval through a budget.

In addition to the $1,589,611 in questionable expenses found in the fiscal year 2021 and 2022 programs, a second report identified $1,653,609.11 in unallowable funds dispensed from District 95’s Food Service Account.

Some of the expenses listed are earmarked for items such as computer equipment, replacement doors, paint, laptops, Wi-Fi, cooling towers, gift cards, bike racks and more. These purchases were made on behalf of the district but not related to the objectives of the grant used to make them.

Additionally, two unallowable salaries, totaling $113,840, were paid out of the food service account.

It is unknown if Larson, who claims credit for “writing and submitting key grants” on his LinkedIn profile, used any grant funding for personal use. Regardless, the misuse of funds within the district, the lack of accurate accounting of grant funding and the lack of explanation for discrepancies in wages and salary payments are all concerning behavior according to the report.

“The grant recipient appeared to circumvent established internal controls, policies, and procedures for the procurement of goods and services,” the initial report claims. Part of that claim involved not following board policy required contract services valued at more than $25,000 go through the bidding process.

As of the time this article was written, no official statements have been issued by Larson or District 95.

Board president Kevin Knoepfel previously said legal counsel advised against the issuance of any statements.

The ISBE has set a June 30 deadline for District 95 to develop a plan to repay the grant money.

Larson, superintendent, District 95, money, FBI, grants