A San Luis Obispo Grand
Jury investigation into the Paso Robles school district budget crisis found it
was caused by rampant administrative mismanagement and a lack of financial
oversight, according to a report released on Tuesday.
The Grand Jury report
“looks at failures in leadership and management that precipitated the recent
crisis, and provides a detailed illustration of how a school district can
inadvertently fail its students and the community it serves.”
The investigation was
“self-generated, prompted by news reports, in accordance with government guidelines
for the Grand Jury,” the report said.
Paso Robles schools are in
the midst of recovering from serious financial issues that came to a head in
late 2018, when the district’s budget reserve dipped below 1% to about $300,000
and Superintendent Chris Williams resigned suddenly.
Williams oversaw and
directly contributed to the district’s fiscal problems by overspending and
overestimating income — a situation made worse by administrative turnover, the
Grand Jury report said.
School board members
failed to provide needed oversight, and the county Office of Education was
unable to intervene in time to prevent the district’s financial decline, the
report said.
“This trifecta of
abdication or dereliction of duties, mismanagement and leadership failure was
evident in hearing from individuals and reviewing the documents requested by
the Grand Jury in search for the truth of just what happened in Paso Robles,”
the report said. “The circle of blame is a large one that offers a cautionary
tale from which every school district can benefit.”
WHAT HAPPENED TO $6
MILLION IN RESERVES?
Paso Robles schools had a
budget reserve of 10.4% at the end of the 2014-2015 fiscal year, when Williams
was hired. By the time he left, the reserve had dropped to about four-tenths of
a percent — well below the state’s 3% reserve requirement.
The Grand Jury identified
seven factors that contributed to the reserve loss: miscalculated average daily
attendance (ADA), improper transportation cost calculations, disallowed food
service expenditures, accounts payable errors, poor planning for pension and
salary increases, unplanned legal settlements and fees, and a failure to
consider the costs of new programs.
Williams created new
programs to draw students — including the Visual and Performing Arts Program
and elementary and middle school athletic programs — that were assets to the
district, but required additional staff and were ultimately not economically
sustainable.
“While the objectives were
good, the methodologies for achieving the objectives were problematic,” the
Grand Jury report said.
The district overestimated
and miscalculated its ADA numbers, which failed to rise to projected levels.
The district also had four chief business officers in four years.
Williams, himself, twice
briefly held the chief business officer position in an acting capacity.
“Beyond lacking the
experience for this role, it left a serious gap in accountability with no
systems for checks and balances,” the report said of this situation.
SCHOOL BOARD FAILURES
The school board failed to
check Williams’ spending, likely out of a “desire to support the programs
promoted by the new superintendent,” the report said.
“Board members relied on
information coming from the superintendent and his direct reports and either
did not bother to verify it or had no means to verify the information,” the
report said. “As a result, a majority of the trustees routinely approved
expenditures not supported by the budget.”
Some board members also
had family members who were district employees, which may have led to conflicts
of interest. The situation “(jeopardized) the ‘arms-length’ relationship
preferred in such situations” and caused “accusations of preferential treatment
being given to certain employees.”
The county Office of
Education wrote letters to Williams and Field Gibson, who was board president
at the time, informing them of the district’s deteriorating financial
situation. However, Williams and Gibson did not pass the Office of Education’s
concerns on to the other trustees, and county staff reached out to the board
directly.
The Office of Education
eventually brought in a financial monitor to help repair the budget after the
agency’s outreach failed.
WILLIAMS’ GOLDEN PARACHUTE
When Williams resigned, he
negotiated a settlement package of more than $226,000, which was approved by
the trustees, including three members who were at the end of their tenure on
the board, according to previous Tribune stories.
The county Office of
Education later found Williams actually wasn’t entitled to this money, and
newly elected board members rescinded the agreement. The district’s financial
monitor — who should have been part of the initial negotiations — also wouldn’t
approve the settlement, the report said.
County Superintendent Jim
Brescia helped negotiate a payout that was half the amount of the original
settlement, which was necessary to avoid a lawsuit, according to the report and
previous Tribune stories.
POOL COMPLEX ‘UNLIKELY TO
BE REALIZED’
Williams’ quest to build
an aquatics complex also drained about $1.5 million in Measure M bond funds after
he “prematurely purchased pool components and committed to an aquatic complex
without a fully developed plan and a way to pay for it,” the report said.
The board approved the
purchase of Italian stainless steel pools in January 2018, even though the district
had not secured the millions of dollars in funding necessary to complete the
project. Independent fundraising efforts also yielded only a fraction of the
money needed, far less than Williams and other leaders projected.
The pools are still being
stored in metal containers on district property, although the aquatic center
project is “unlikely to be realized,” the report said.
GRAND JURY RECOMMENDATIONS
The Grand Jury provided a
list of 16 recommendations to help prevent similar economic crises in the
future. The suggestions include the following:
- Change district policy to prevent the superintendent from serving simultaneously as the chief business officer.
- Require comprehensive training for new hires responsible for accounting and business operations.
- Require district employees and board members to disclose potential conflict issues.
- Consider collaborating with the city of Paso Robles to use already-purchased equipment to upgrade municipal pools.
- Conduct audits of Measure M bond funds and 4A Foundation funds dedicated to the aquatics complex.
District officials
released a statement in response to the Grand Jury report, which “corroborates
many of the findings of the district’s own internal investigation.”
“The past failures are
inexcusable,” the statement said. “Steps have been taken to rectify the
problems and the district welcomes the recommendations of the Grand Jury as the
new board to be seated December 15 begins its work. The current board will be
reviewing the findings and providing any additional background to assist the
district with its response to those findings, and with insight on additional
reforms based on the recommendations.”
San Luis Obispo Tribune
BY LINDSEY HOLDEN
November 19, 2020
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