TETON VALLEY, IDA – A standing-room-only crowd attended the regularly scheduled meeting of the board of trustees of Teton School District #401 in the district conference room in Driggs on Monday, January 14.

At the meeting, representatives from the Bank of Commerce, Rudd and Company, and Headwaters Construction took questions from the board regarding the fraud incident discovered December 20, 2018.

Also on hand were the school district’s legal counsel, D. Andrew Rawlings of Holden, Kidwell, Hahn and Crapo, P.L.L.C in Idaho Falls, and Varr Snedaker, business manager of Madison School District #321 in Rexburg, who is providing the district with some immediate high-priority operational assistance. Answering questions by phone was Jeff Boice of the claims department of the district’s insurance company, Idaho Counties Risk Management Program (ICRMP).

As announced last week, the district has recovered $484,332.66 of the original amount of $784,000 fraudulently transferred as a result of the ongoing investigations by the FBI, ICRMP and financial institutions. The district’s previous business manager has been removed from his position and applications are being received for his replacement.

Meeting highlights:

  • Rawlings, on behalf of the district, will file a Freedom of Information Act (FOIA) request with the FBI and local law enforcement for all information regarding a $20,000 fraud incident, which took place in March, 2017. ICRMP paid this claim in full, but the district has never received a report for the case.
  • Scott Bond of Rudd and Company said that its amount did not meet the test for materiality, and because the audit determined that the district took appropriate steps in the phishing attempt, the 2017 audit report to TCSD did not mention that incident.
  • The board had many questions for Bank of Commerce Chief Operating Officer Carlan McDaniel, and determined to tighten protocols and its contractual relationship with the bank to prevent any future fraudulent ACH transfer.
  • This month, Snadaker will help the district provide W2s to TSD’s staff of 250 and 1099s to vendors, and complete other time-sensitive obligations that cannot be put on hold until a new business manager is hired. Both Bond and Snadaker encouraged the district to hire someone with governmental accounting experience.
  • Boice explained the kinds of insurance that may be involved in the fraud, the cap of $500,000 if investigations show it is a criminal matter, and the role of AXA XL, ICRMP’s cyber-liability re-insurer.
  • According to Bryer Hastings and Brent Douglass of Headwaters, the contractors’ email system was not hacked as part of the fraud.
  • Progress on the building projects is proceeding as planned, Headwaters reported. The timeline for completion of the two new elementary schools, in Driggs and Victor, is January 2020, with renovations to Rendezvous Upper Elementary and Tetonia Elementary expected to be complete prior to school beginning next fall; the updates to Teton Middle School and Teton High School are projected to be done by spring 2020.
  • The agenda item relating to communication between the board, administration and the Teton Education Association, which represents the district’s teachers, will be discussed at the next Interest-Based Bargaining session between the board and TEA on Monday, February 4 at 5pm.
  • Notice for the board’s emergency executive session held on December 28, 2018 was improperly posted. The board recognized that error and, by motion, declared that that all actions taken or resulting from the improperly-posted meeting are void. The board set a new executive session for February 4, 2019 at 4pm; Rawlings will participate in that meeting by phone.
  • In other routine business, the board: heard public comment that related to agenda items; authorized the vendor-selection process for the Furniture, Fixtures and Equipment portion of the bond project; gave permission to the district’s transportation department to formalize bid requirements to purchase a new school bus; reviewed school and department reports; discussed state and national school board conference activities; and reviewed several new policies as required by state law.

The meeting, which lasted nearly four and a half hours, was livestreamed on the district’s Facebook page and is archived there in two sessions for review by patrons.