Audit of Sweetwater Union High School District Finds Evidence of Fraud

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Evidence indicating fraud, misappropriation of funds, and other illegal fiscal practices by the hands of current and former employees was found in a state audit of the Sweetwater Union High School District (SUHSD).

The evidence was the result of an 18-month investigation into the district's financial woes by the state's independent Fiscal Crisis Management Assistance Team (FCMAT).

The scope of the audit included the district’s use of Mello-Roos money, possible manipulation of the 2017-2018 budget through the use of unsubstantiated negative entries, and potential delays in posting effects of payroll transactions.

County Office of Education (COE) Superintendent Paul Gothold presented the audit to SUHSD's board during a virtual meeting Monday night.

The 80-page report concluded the district violated board, policies, government code, education code, and security law.

The audit recommends the County Office of Education (COE) notify the San Diego County District Attorneys Office, the California Superintendent of Schools, and the state controller.

“At this point it is up to the district and law enforcement, local and federal, to decide if they want to pursue anything based on any findings in the FCMAT report," FCMAT Chief Executive Officer Michael Fine said. "Otherwise, it is left up to the local district’s board to deal with any findings it sees fit.”

District spokesperson Manny Rubio said the district has already started making changes to correct its path.

“We thank FCMAT for their review and have already taken several steps to ensure corrections within our system. Given that tonight is the first we’ve seen of this report, we will continue to review and ensure that we take the proper steps going forward," Rubio said.

The SUHSD board also addressed it's now $43 million budget shortfall at the meeting. Severe district-wide cuts made the news as the district tried to balance its budget earlier this year, before the coronavirus pandemic flipped education operations upside down.

Rubio said SUHSD is waiting on the state to pass its budget, which should happen soon, and the district will then have 45 days to revise its own.

A $30 million deficit was first discovered in 2018 and since, the district has been cutting positions and programs and offering early retirement.

Last August the district refused a no-risk loan from the COE to help it payback $12 million borrowed from the Mello-Roos fund, saying it was in position to repay its debt to the Mello-Roos, with interest, by 2020.

The district was criticized by many for borrowing the funds -- which come from taxes on homeowners and is supposed to be used for construction, renovation and modernization of schools in the district -- to meet day-to-day operating expenses and many questioned the legality of the practice.

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