The Montana High School Association has placed Manhattan High School on probation and fined the school after an investigation into the football coach’s mishandling of fundraising money.

At its quarterly executive board meeting in Helena on Monday, the MHSA placed Manhattan High School on probation for one year, or until the end of the fall activity season in 2014, said MHSA Executive Director Mark Beckman. The school was also fined $200, the maximum fine MHSA can impose.

During the probationary period, Manhattan High School must follow a corrective plan school officials created that was approved by the MHSA. Manhattan officials must provide progress reports to the MHSA at its January, April and September meetings.

The board also directed Manhattan High School officials to provide information on the MHSA’s amateur rules to each sport’s coaching staff, athletes and athletes’ parents and possible penalties for violating those rules.

Earlier this month, MHSA wrote a letter to the Manhattan School District, ordering officials to create a corrective plan in light of head football coach Dale McQueary’s alleged mismanagement of team fundraising money.

A Montana School Board Association investigation said McQueary violated Title IX requirements by possibly paying assistant coaches from fundraising money without the school’s approval and buying meals and equipment for football players with money outside of school accounts.

McQueary, who is an eighth-grade math teacher, was suspended from teaching and coaching on Sept. 19 pending an investigation.

The investigative report said McQueary withheld nearly $8,400 from the school activities account, not depositing cash from players selling $20 discount cards in 2011, 2012 and 2013. The report also said McQueary spent money on equipment and meals without the knowledge or approval of the school district.

At Monday’s meeting with the MHSA Executive Board, the board approved a corrective plan created by the Manhattan School District to deal with the issues raised in the McQueary investigative report.

The plan includes updating polices and procedures for fundraising and purchases, requiring activity advisers to fill out forms and get approval prior to any fundraising efforts, re-training staff in purchasing procedures and repeating a district training on money and accounting procedures.

The plan also calls for prior approval of all volunteer coaches and giving an extra meal to the volleyball team during away games in 2014 to make up for meals purchased out of compliance for the football team this season.

All coaching staff will also be required to attend a Title IX Equity, Eligibility and Fundraising workshop, sponsored by the MHSA, in 2014.

The punishment handed down to Manhattan High School comes just days after McQueary and his wife filed a lawsuit in the wake of the investigation.

The suit, filed Friday in Gallatin County District Court against the Manhattan School District and Superintendent Jim Notaro, includes allegations of slander, deceit, breach of contract, negligence, intentional infliction of emotional distress, undue influence, among others.

McQueary claims district officials never gave him a chance to respond to a preliminary investigative report about him despite verbally agreeing they would.

The report accuses McQueary of withholding $8,400 from the school activities account and not depositing cash from football fundraisers in 2011, 2012 and 2013.

The report said McQueary has either returned cash or accounted for all but $296.

However, McQueary’s lawsuit argues that he retained receipts and accounted for every dollar raised by the football team’s fundraising efforts.

Because of the school district’s actions, McQueary and his wife, Chris, have suffered emotional distress, according to the lawsuit. They are asking for unspecified damages.

McQueary missed five games during his suspension. He was allowed to coach the Tigers’ regular-season finale after a group of players’ parents asked a judge to reinstate the coach.

Gallatin County District Court Judge Mike Salvagni granted the request and McQueary coached Manhattan in its game against Jefferson High School. The Tigers lost 14-12 and failed to make the playoffs.

Whitney Bermes can be reached at wbermes@dailychronicle.com or 582-2648. Follow her on Twitter at @wabermes.

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