By Matt Krupnick
Contra Costa Times
Posted: 06/27/2011 02:40:25 PM PDT
Updated: 06/27/2011 06:24:55 PM PDT
Peralta Community College District trustees made years of sloppy investment decisions that have cost taxpayers millions, an Alameda County grand jury said Monday.
In its annual report, the civil investigative panel said elected board members -- nearly all of whom remain in office -- in 2005 began essentially rubber-stamping ill-advised recommendations by former Chancellor Elihu Harris and other administrators.
The risky decisions -- trumpeted by the district at the time as bold and innovative -- unnecessarily boosted the cost of Peralta's retirement benefits to more than $750 million, the jury said.
"The board's decisions were not as conservative as is fiscally appropriate for trustees of public funds," jurors wrote. "The board had a duty to make conservative financial decisions regardless of the appeal of the market."
Jurors also noted the district has, in the past year, begun fixing its massive financial problems, which had drawn warnings from accreditors, credit-rating agencies and the state. Peralta leaders this year brought in consultants and new administrators to help untangle the complicated dealings, and district officials are negotiating contracts that would require employees to help pay for the debt.
The report confirms the district is improving, said Wise Allen, who has been Peralta's interim chancellor since Harris -- a former Oakland mayor and state legislator -- was ousted by the board last year following a Bay Area News Group investigation of his leadership.
"We welcome the report," Allen said. "We think it's a positive report."
But jurors were anything but positive about the roles played by Harris, former budget chief Tom Smith and trustees. Board members simply accepted the "exotic, high-risk" investments advised by Harris and Smith, the jury wrote, and then failed to keep a close eye on the funds.
"The board and district suffered by following the ineffective leadership of the previous chancellor whom the board had appointed," jurors wrote.
Board President William Riley, the longest-serving trustee, did not respond to phone messages left at his home and mobile phones. A spokeswoman for the state community college chancellor also did not respond to phone and email messages.
Trustees should not be blamed for Harris' failures, Allen said.
"The trustees are laypeople," he said. "If you give them bad information, you're going to get bad decisions."
Matt Krupnick covers higher education. Contact him at 510-208-6488. Follow him at Twitter.com/MattKrupnick.
http://www.mercurynews.com/breaking-news/ci_18362456?nclick_check=1
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