An auditor's report released in September 2013 found illegal banking activity at Ringgold High School. The school district abolished the program in June 2012, ordering related banking activities to cease and closing the programs account with a $4,000 deficit.
The high school banking class, known as First Tiger Bank, gave students the opportunity to work through a club to gain banking knowledge. The class began in 2004 and was offered once a semester for 10 years.
First Tiger Bank was organized to provide students with financial experience by approving lunch money loans to their peers. The program operated outside its purpose when it began providing loans to faculty members ranging from $100 to $2,000, according to the Georgia Department of Audits findings.
Ringgold High principal Sharon Vaughn assigned Robert Snyder to teach the banking class in 2006. He was the last teacher to teach the class, according to the Catoosa County school board.
The program allowed students to open savings accounts and interest-bearing certificates of deposit. Investments to the bank were received from faculty, students and outside sources, according to the auditor’s report.
The auditors report is as follow, “During the year under review it was noted that the School District was operating a banking program at a high school. The banking program's original intent was to provide students with experience of approving lunch money loans to fellow students. Students could also open savings accounts. At some point the program began providing loans to faculty members ranging from $100 - $2,000. The program received funding from faculty, students, and outside sources by ‘investing’ with the bank. Investments were made in either a six or twelve month certificates of deposit that earned interest between 7-percent to 10-percent.”
The unsuccessful banking program was abolished by school district management and ordered to cease immediately. The program’s account ended $4,000 in the red, which the principal paid for out of the school’s operating account, according to audit findings. School board officials noted the principal paid the amount out of discretionary funds that are not taxpayer money.
“Approximately two years ago it was determined that First Tiger Bank was operating outside the original purpose of the club,” said school superintendent Denia Reese. “The banking class was no longer offered, and I directed principal Sharon Vaughn to discontinue the program. The principal used her discretionary funds, which includes profits from vending machines, to close the program. This action resulted in the system receiving a finding from state auditors.”
However, the expense was not considered educational since the program operated outside its original purpose. Auditors noted the use of money was in violation of The Official Code of Georgia Annotated (O.C.G.A.) §20-2-411 that states school funds shall be used for education purposes.
Auditors also noted a violation of Official Code of Georgia Annotated (O.C.G.A.) §7-1-241, Restrictions on Engaging in Banking Business. State auditors recommended the school district implement policies to ensure school programs are operating in accordance with Georgia law with appropriate monitoring for compliance.
The auditor’s report includes a response from the Catoosa County Board of Education. In the response it was noted that management closed the program and related bank account upon notice of the banking program’s activities. It further set in motion a process to collect any outstanding debts to reimburse the unallowable expenditure from the School's Operating Account.
In order to prevent future findings of such nature, management will continue to monitor school activity bank accounts through monthly reviews and internal audits. Management approval is now required for any bank account opened, closed or changes made to authorization. Additional safeguards were also put in place by the board of education including finance meetings and disclosure requirements.