An 80-page audit that found significant evidence of fraud and misappropriation of funds in the Sweetwater Union High School District was turned over to the San Diego District Attorney’s office on Tuesday.
The previous night, County Superintendent of Schools Doctor Paul Gorthold presented the Sweetwater Union High School District School Board with the findings of the audit conducted by the Fiscal Crisis Management Assistance Team (FCMAT), an independent state agency.
“There is significant evidence to indicate there was fraud; misappropriation of funds or assets may have occurred by current or former employees,” Gothold said during the virtual meeting.
San Diego County contracted with FCMAT to do the audit because of its concerns about fiscal mismanagement. In its findings, FCMAT said the district administration, including the superintendent, a former chief financial officer, the director of fiscal services and the district’s bond-program financial adviser “prepared, reviewed and/or presented financial information to the governing board” that had deficiencies that resulted in "violations of board policy, government code, education code and securities laws.”
For 18 months, FCMAT investigated a three-year period of the school's finances running from July 1, 2016, to June 30, 2018. FCMAT determined that the district borrowed money from Mello-Roos funds -- which are supposed to pay for school facilities -- and did not pay the money back as required; and that the district delayed or omitted negative budget entries, like payroll, making it look like its budget was balanced. According to the audit’s findings, the district then used that inaccurate information to give employee raises it could not afford and to support the sale of bonds, misleading potential and actual investors.
“All of it is bad,” said Nick Marinovich, chairman of the bond-oversight committee, “but what I’m most familiar with is how they misled financial markets … so they wouldn’t have to reveal how bad the budget was. That is fraud!”
“It’s certainly egregious,” said community member Maty Adato, who said that she has tried for years to get the district to acknowledge it had a problem. “You’re manipulating the numbers to look good. That’s fraud.”
Superintendent Karen Janney said the district “already has taken several steps to ensure corrections within the system, and it would continue to review and ensure proper steps are taken going forward.”
The San Diego County Office of Education declined to comment until the district has a chance to respond to the audit, which it has 15 days to do.