Law enforcement is investigating after the North Kansas City School District discovered hundreds of thousands of dollars in payments for potentially fake consulting services. 

A compliance report released after the Feb. 24 board meeting as part of the district’s annual audit says the district discovered procurement requirements weren’t being followed for payments to an IT vendor. 

A district IT employee approving invoices for a vendor “had a familial relationship with an executive level employee at this vendor” but didn’t disclose the conflict, according to the compliance report. The district discovered it had been paying the vendor $9,000 per month since fiscal year 2020 for general consulting services. 

A spreadsheet The Beacon obtained in a records request lists 70 such payments from 2019 to 2025 totaling $630,000. 

“Upon further review, it is unclear what the nature of these consulting services included, and if these were valid business expenses paid for by the District, or potential fictitious services the District paid for in error from its General Fund,” the compliance report says. 

The district learned in September that the vendor “was owned in some capacity by the employee’s brother” and determined that the consulting payments may not have been valid business expenses, according to documents included as part of the audit report. 

The district notified law enforcement in early October and said it has provided “unfettered access” to employees and district records, according to audit documents. The district’s investigation is complete, but the law enforcement investigation is not. 

In an email sent to families and shared with The Beacon, Superintendent Rochel Daniels said the issue was discovered when “leadership within the Technology Department identified an ongoing monthly payment to a vendor that abruptly stopped.”

The district “took immediate action, terminating the employment of the individual involved,” Daniels said. “We quickly referred the matter to law enforcement and informed our Board of Education and independent auditors. We contracted with an expert cybersecurity firm to ensure a smooth and secure transition and confirmed that no personal nor sensitive data was compromised. In addition, there was no impact to student learning nor our daily operations.”

Daniels said the district will lose two points on its 2025-26 Annual Performance Report from the state Department of Elementary and Secondary Education because the discovery delayed the release of its audit, which state statute requires to be submitted by Dec. 31. 

The district earned 173 out of 200 possible points on the APR scores released in 2025.

The score deduction “is particularly disappointing and falls far short of expectations,” Daniels wrote, “in contrast with the tireless work of our students and staff who take great pride in how this state report card reflects personal and district success.”

Daniels also said that “a portion of state funding for the past two months was withheld. No services were affected due to high revenues that are typical during this time of the year,” and she expects all the funds to be restored now that the audit has been submitted.

Daniels’ email and the audit documents indicate that the discovery has led the district to examine its policies — and whether they are being followed — more broadly. 

The compliance report notes “internal controls over procurement policy” as a material weakness, meaning “there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis.”

It says the cause of the issue was that “the District did not have proper controls and procedures in place as it related procurement transactions.”

“The lack of proper review over the services and billings received from a specific vendor have likely resulted in the District disbursing funds for services that were not provided to the District,” the report says. “The potential effect of not following procurement policies in place includes the risk that additional unauthorized payments and disbursements have occurred.”

As a result, the district has reviewed vendors who received more than $50,000 during the 2025 fiscal year. It verified that 25 out of the 27 reviewed vendors received proper board approval.

“For the other 2 selections, evidence did not exist” that the district had followed its procurement policy, the report says. 

In a section about planned corrective action, the district said it “is in the process of evaluating current and additional internal controls that will ensure compliance with the District’s procurement policies. Additional procedures or changes to the current policy will mitigate and prevent the risk of unauthorized payments and disbursements (to) vendors.”

The anticipated completion date for that work is June 30. 

In her email to families, Daniels said the district has begun reorganizing the technology department to distribute leadership more broadly.

It also hired a financial consultant to review and strengthen the procurement process, she said, and has ensured payments can’t be issued without attaching a board-approved contract.

During the public portion of the school board’s Feb. 24 meeting, discussion of the audit was brief. Daniels said the board had reviewed the audit in closed session. 

“It’s important to first express that North Kansas City Schools is grateful for every single dollar that’s entrusted to us,” Daniels said. “We see that they represent the community’s investment in our students, our educators and what shared future we can have.” 

Daniels said the audit is a legal obligation, a public commitment to responsible stewardship and an opportunity to improve. 

“This was certainly the case with this audit,” she said. “We found some instances in which the audit revealed processes that could improve.”

Daniels said the district has also made the auditors aware of corrective actions it can take. 

“We understand our role is simply not to just manage public funds, but rather to safeguard them with integrity and great diligence,” she said. “Through a commitment to transparency, accountability and continuous improvement, we strive to ensure that that investment the community makes in us, they get great return on it from our students.”