CLARIFICATION: The finding addressed here was not a result of the forensic audit. That audit has not yet begun. Instead, city staff discovered the issue, city officials said Friday.

PANAMA CITY, Fla. (WMBB) — Panama City commissioners took action this week to clean up some of their budget problems and voted to replace funds allegedly misappropriated by former department head Michael Johnson. 

A month after Michael Johnson was charged with stealing more than $500,000 from city accounts, Panama City commissioners transferred about $450,000 to the Friends of After School Assistance Program (ASAP).

“During our auditing practices, as well as what we’ve been doing here recently, we found some funding that didn’t follow through with the exact way that it should be spent,” Panama City Commissioner Josh Street said.

Street said funds were transferred from the general fund to the community development fund to compensate for the misuse. Officials said the $450,000 were not stolen by Johnson, but misspent. 

In October, City Manager Mark McQueen said he confronted Johnson about mismanagement issues. He said Johnson resigned on the spot. 

Officials said these funds were spent on ASAP administrative and operating costs. But those expenses were not eligible for community development reimbursement. 

“This isn’t stolen money, this is misallocated money and misspent money,” Street said. “And so we do expect to see more of this as we go through the auditing practices on getting funding to its correct source, making sure it’s spent the appropriate way and in areas where something’s been misspent, we’ve got to return that money to that specific pocket of money.”

Commissioners approved a forensic audit of the city budget three weeks ago. This is one of the first findings to be addressed. Street said this money was misappropriated for eight years. He expects to find more.

“I do expect there’s going to be more to follow but this specific instance is not where money was stolen, it was misappropriated,” Street said.

Johnson is also accused of stealing $470,000 from ASAP and $85,000 from other city accounts. That number could increase, pending the final audit report.