SAN YSIDRO — A county grand jury investigation of the San Ysidro School District, which in recent years has teetered on the brink of bankruptcy and seen a former superintendent go to prison on a federal corruption charge, has found financial mismanagement that stretches back decades.
The report said the district has “amassed hundreds of millions of dollars in long-term debt with little to show for it.”
It also raises the question of whether massive amounts of documents were destroyed to hide evidence of widespread misconduct.
Released Tuesday, the report zeros in on the district’s use of money from Proposition C, a $250 million bond measure, as well as financing it acquired with Certificates of Participation, or COPs.
Proposition C was approved by voters in 1997, before the state began to require citizen oversight of general obligation bond funds. With 1 in 7 eligible voters casting ballots, it was passed by some 900 voters. At the time it was the largest school bond victory in California history. COPs don’t require voter approval. They are issued on a vote of approval from trustees.
The grand jury found there are no adequate controls in place to track how bond, COP and state grant money is spent.
According to the report, between 1997 and 2015, the district issued nine bond series totaling $217 million, and approved six COPs totaling $67 million. And while San Ysidro used $23.7 million as intended in the bond measure to construct Vista Del Mar School, which opened in 2012, the report also found bond money was misused at times to pay for travel and administrative expenses.
It also cites a questionable land deal involving 20 acres of environmentally protected property that the grand jury believes should be further investigated.
Superintendent Julio Fonseca, hired last June, welcomed the report, saying the district agrees with the findings.
“The audit confirms what we have already discovered from our own internal assessments,” he said in a statement. Fonseca said the district has turned the corner, however, and new trustees have been working to correct many of the problems cited in the report.
The report finds former administrators withheld information about expenditures and bond obligations from the school board, improperly spent bond money, entered into contracts without board approval, and that former trustees themselves failed their fiduciary responsibility by neglecting to govern properly. It faults trustees for not holding school officials accountable for not following laws, regulations and board policies.
The grand jury also points a finger at the county Office of Education, saying it did not provide San Ysidro with adequate financial guidance and oversight when it came to bond and certificate issuance and approval.
Music Watson, the county office’s chief communications officer, issued a statement Tuesday saying the grand jury misunderstands the laws governing its role in providing financial oversight to school districts.
“As a result, the grand jury came to some erroneous conclusions in assessing the adequacy and appropriateness of our oversight of and guidance to the San Ysidro School District,” she said. “County office review and oversi ght is provided in addition to annual independent outside audits of each district’s finances and internal controls. We strongly disagree with the characterization of our fiscal oversight as anything other than rigorous and active.”
The district’s relationship with the county office turned contentious last year with indignant trustees lashing out during a board meeting at the administrator appointed by the county office in 2013 to work with the San Ysidro on its tangled finances. Frustrated by the fight to get on better financial footing, they suggested the adviser, Lora Duzyk, was complicit in the district’s money crisis by not raising questions on spending decisions that range from architectural plans deemed unnecessary to legal fees paid out to the district’s former lawyers.
After years of being in negative certification, meaning it could not pay its bills in the current and two following school years, San Ysidro turned its finances around in the 2015-16 school year under the leadership of new board members and a new superintendent. The precarious financial state had left it at risk of being taken over by the state.
In addition to money problems that came to a head in 2014 when teachers walked off the job for three days, the district has struggled to bounce back from the “pay-to-play” corruption scandal that swept through South County school districts three years ago. Former Superintendent Manuel Paul was indicted on state and federal charges, and sentenced to two months in prison for taking money from a contractor who wanted to do business with the district.
May 24, 2016
The San Diego Union-Tribune
By Christine Huard
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