May 27, 2016

Grand Jury Scolds Past SY School Leaders

By La Prensa San Diego

By Eduardo Rueda – Investigative Reporterscolds

The San Diego Grand Jury released a report critical of past actions of the San Ysidro School District, citing missing funds, destruction of documents, and an overall lack of financial accountability spanning several years.

The report calls attention to the District’s lax financial controls and lack of oversight by the school board members sitting between 1997 and 2014.

The report lays most of the blame on “staff”, meaning the superintendent and his administrators.  The bulk of the inappropriate activity occurred during the tenure of Superintendent Manual Paul who headed the District from 2007 to 2013.

Several members served for long tenures during that period, including Yolanda Hernandez and Jean Romero, who each served over a dozen years on the board. Other members that served during this period were Raquel Marquez Maden, Paul Randolph, Jose Barajas, and Jason Wells.

The District was involved in a corruption investigation and suffered difficult financial times during the past four years. Manuel Paul was accused of corruption and was indicted for accepting cash from a local contractor. Paul pleaded guilty in 2014 and was sentenced to 60 days in federal custody.

The Grand Jury report cites several examples of financial lapses, including the short-term borrowing of $18 million in bond funds by the General Fund, of which $6.1 million was never repaid; wire transfers of $376,900 of bond funds with no documentation; the deliberate destruction of files by staff to hide their actions; and the failure of past Boards in approving inappropriate bond expenditures.

“Previous boards and the Superintendent failed to implement the usual financial controls required of all school districts,” said current Board member Rodolfo Linares. “I have been trying to clean up this mess since the day I was elected,” Linares added.

The report also calls into question the San Diego County Office of Education’s (SDCOE) role in overseeing the District’s finances. Under state law, the SDCOE reviews and approves the budgets of each of San Diego County’s 42 school districts.

In the case of San Ysidro, the SDCOE stepped in as fiscal overseer in March 2012 when the District fell into negative certification, a level where it may lack sufficient funding in the next school year. SDCOE’s Assistant Superintendent, Lora Duzyk, served in that role until June 2015, where she exercised override authority to correct or stop any unlawful or fiscally questionable actions of the District. During her time as the overseer, Duzyk never raised any of the concerns addressed in the Grand Jury’s report.

“The County Office of Education should have noticed these financial problems at some point during all those years,” commented current Superintendent Dr. Julio Fonseca. “Every budget and bond expenditure is submitted to the SDCOE for approval before it’s paid, so I’m not sure how this ever happened,” Fonseca asked.

Only one current board member that served during that period is still on the Board. Antonio Martinez was elected in November 2012 and served on the Board for only seven months before Manuel Paul took the severence deal in June 2013. Mr. Martinez voted against the severence package.

“During my first two years on the Board, I was alone in fighting against these issues,” Martinez said. “I welcome the Grand Jury’s findings and recommendations, as we have already implemented some and will continue to implement the rest,” Martinez stressed.

Martinez is running for re-election in November of this year.

All of the other board members that served during the period criticized in the report have either chosen not to seek re-election, resigned, or were defeated in their re-elections. Raquel Marquez Maden and Paul Randolph, who each served two terms from 2002 to 2012, chose not to run for re-election in 2012; Yolanda Hernandez resigned after being convicted in 2014 of failing to report gifts from contractors; Jean Romero abruptly resigned in 2014 amid the corruption investigation; Jose Barajas resigned in 2015; and Jason Wells, then President of the Board, lost his re-election campaign in 2014.

Manuel Paul is currently facing a civil lawsuit brought by the District seeking to recover over $200,000 it paid him in a severance package in 2013 while he was under indictment. The District is claiming fraud and misrepresentation in the negotiations of that buyout. The buyout was approved by Board members Jean Romero, Jose Barajas, and Jason Wells. The case is still pending.

Board members that have been elected or appointed since 2014 include Rodolfo Linares and current Board President Marcos Diaz, both elected in November 2014, and Steven Kinney and Rosaleah Pallasigue were each appointed in 2015. Both Kinney and Pallasique would have to run for a full term this November.

The current District administration is headed by Superintendent Dr. Julio Fonseca, who was hired in June 2015. Fonseca has assembled his leadership team under a new structure, eliminating three Asst. Superintendent positions after previous staff members resigned, including Assistant Superintendent of Business Services Dena Whittington, who was criticized in the Grand Jury report for having approved contracts and payments without Board approvals.

Financial processes are now managed by Deputy Superintendent Arturo Sanchez-Macias, a former Assistant Superintendent at Bassett Unified School District in Los Angeles.

Since 2015, the District has regained its certified budget status, improved its bond rating to A+, and has adequate reserve funds. The District serves over 5,200 students in the San Ysidro, Ocean View Hills, and Otay Mesa areas.