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Public Disconnect – Public funds used for personal purchases

Kane Co. (ECWd) –

It is clear that illegal spending has been going on for so long, with so many of our public bodies, we now have people insisting those actions are legal.  Some of these very people are broadcasting such views over the radio in what appears to be an effort to garner more listeners with total disregard for all logic and application of the law.

A particular local (Kane County) broadcaster has taken the position that personal purchases on a school P-Card (purchase card) is not a criminal act.

As a back to reality contribution to citizens that want to understand what the law really says, I will share the same information I shared with the broadcaster as well as additional evidence that shows their claim to be totally baseless in the law.

(720 ILCS 5/33E-16)
Sec. 33E-16. Misapplication of funds.
(a) An officer, director, agent, or employee of, or affiliated in any capacity with any unit of local government or school district commits misapplication of funds when he or she knowingly misapplies any of the moneys, funds, or credits of the unit of local government or school district.
(b) Sentence. Misapplication of funds is a Class 3 felony.

Each and every educated administrator knows the P-Card is NOT to be used for personal purchases.  When they use it for personal purchases they have violated the above referenced criminal statute.

Some have argued that if they pay it back that makes it OK.  No, that is not true!  Ask the former Pekin, Illinois Mayor.

http://caselaw.findlaw.com/il-supreme-court/1001898.html

The Illinois Supreme Court recently affirmed the conviction of the former mayor of Pekin, Illinois. He was convicted of three counts of official misconduct based upon his use of the city credit card to obtain cash advances for gambling purposes. While the specific fact pattern in this is unique, the legal effects of the case are worth learning. This case could have a reverberating impact on the way that municipal officials in the State deal with public money and credit cards.

In support of our position that P-Card use for personal purchases is illegal you need not look any further than to the 2015 University of Illinois Business Leadership Conference presentation.

Common Forms of Fraud in Higher Ed – First bullet point on page 3 – Personal purchases on the p-card

One of the “Red Flags”,  found on page 18 –  Accidental charges of personal expenses, which is exactly what an administrator at U-46 claimed three separate times.

Those that wish to opine and make us out to be the bad guy need to know it is not about us, it is about a mindset that has financially destroyed this state, as well as our local government.

With the above in mind and a school district that is $566,034,490.00 in BOND DEBT ($566 Million!), how can anyone justify the spending on P-cards that we exposed? 

Not convinced it is illegal to use P-Cards for personal purchase?  Our State Constitution, as outlined in the above case, is part of our laws.

Article VIII of our State Constitution
SECTION 1. GENERAL PROVISIONS
(a) Public funds, property or credit shall be used only
for public purposes.
(b) The State, units of local government and school
districts shall incur obligations for payment or make
payments from public funds only as authorized by law or
ordinance.

When an administrator at a school district spends money on a P-Card it can only be done as authorized by law or ordinance.  In the case of U-46, they have a policy, which is considered an ordinance and that very policy forbids using P-Cards for personal purchases.   The fact that it violates policy and the fact there is no law that authorizes public funds for personal purchases, makes doing so a violation of our State Constitution, which is in fact Official Misconduct as well as the criminal code pertaining to Misapplication of Funds.

And to bring things back to the most basic of legal principals, we turn to Dillon’s Rule. 

Dillon’s Rule is derived from the two court decisions issued by Judge John F. Dillon of Iowa in 1868. It affirms the previously held, narrow interpretation of a local government’s authority, in which a substate government may engage in an activity only if it is specifically sanctioned by the state government.

  • A municipal corporation can exercise only the powers explicitly granted to them
  • Those necessarily or fairly implied in or incident to the powers expressly granted
  • Those essential to the declared objects and purposes of the corporation, not simply convenient, but indispensable

Many have attempted to claim dinners and dinner meetings are essential to the declared objects and purpose of the corporation (public body), however, they forget the last part of it, which is that such spending must not be simply convenient, but indispensable.

We all know dining out on the public dime is not indispensable  and is primarilly done as a matter of convenience, in spite of the fact there is no law, ordinance, or anything else that has been expressly sanctioned by the state government allowing it.

Dillons’ Rule also states, if there is a reasonable doubt whether a power has been conferred to a local government, then the power has not been conferred.   

One of the most basic questions every public official should learn to ask:

  • What statute gives me the power to do xyz? (xyz=what ever action to be taken)

If the public body legal counsel is unable to provide the specific statute, that is the first signal there may be no power conferred.   As Dillon’s rule states, if there is a reasonable doubt whether a power has been conferred to a local government, then the power has not been conferred, which means you cannot do it!

Many wish to attack us for taking what they call a hard line on public spending, however, everyone should know that the primary reason we take the position we do is because of the extensive research we have done.

After reading more case law than I ever imagined I would read, you actually begin to understand how our laws are suppose to work and be applied.

I can remember the days when I thought it was OK for certain spending because I simply did not know.  For example, Toys for Tots.  A great program that helps a lot of needy kids during Christmas.  Local groups came to a Village meeting and wanted the board to donate money towards that cause.  I don’t recall if they did or not, however, what happened years later is my point.

I was asked to serve as our Township Supervisor, which also is by default the Treasurer.  My signature was going on every check, which means I was responsible for every expenditure.  I dove into the books and learned my duties.  It did not take long to understand the importance of Dillon’s Rule, which by the way is printed on the front of the Township Handbooks.

Then the same Toys for Tots group came to our township asking for a donation.  My response was simple.  I believe in the cause and fully support providing a donation as long two things are accomplished and I asked the following.

  1. Can anyone in this room, including those asking for the money, provide me a township statute that permits public money to be given away to a private charity.
  2. If such a statute can be identified, it must be a vote by the board.

There was a moment of silence and then one person asked me the proverbial straw man question, what do you have against Christmas toys for kids?

My questions had nothing to do with my position on Christmas or kids.  It had to do with what I can legally do with taxpayer money entrusted to my care as a Treasurer of the Township.

I learned very quickly those two questions I have applied in my life once again prevented me from doing something that by all measure felt like the right thing, but by all logic failed the test of being legal.

Says Who?

With What Proof ?

We must learn to govern with logic and not emotion. Written laws are the path we must follow and when we take a path void of legal backing we end up getting to the point where we are now with many public bodies in this state.

Our goal is to fix the problem and nine out of ten times, when spending that is inconsistent with law is exposed, we get push back and attacked instead of having the problem simply fixed.

Nothing would make me happier than to close the doors to our operation because people are following the law.

That is all we have asked. 

IL-Leaks

 

8 replies »

  1. Bloomington City ordinance says the Council must approve all spending. I’m sure they would say they can vote for anything they want. They just voted to give $50,000 a year for 5 years to a private museum.

  2. What is with these public entities giving anyone except top management fully open P-cards? Anyone in the private sector knows that P-cards can be restricted to very limited purchases. Why is no one asking that question?

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