An investigation into allegations of mismanagement of the West Contra Costa Unified School District’s (WCCUSD) school construction bond program has found misspent funds, inconsistent budget reports, noncompliance with district policies and potential conflicts of interest. Results of the investigation, a forensic financial audit, were presented during a Board of Education subcommittee meeting at Alvarado Adult School last Thursday.
Investigation subcommittee member and former WCCUSD Citizens Bond Oversight Committee chairperson Ivette Ricco said the bond money was not spent when and how it should have been. “Now we have nothing left,” she said.
Funds in the bond program, created by a series of six bond issues approved by voters between 1998 and 2014, are designated for school construction and improvement projects. In April 2015, district accountant Dennis Clay released numerous documents—including project budgets, contracts, expenditure data and meeting minutes—indicating possible financial mismanagement of the $1.6 billion program.
In late January, the WCCUSD School Board approved the audit, which was completed by accounting firm Vicenti, Lloyd & Stutzman, LLP. The Federal Bureau of Investigation and Securities and Exchange Commission conducted separate investigations of the bond program beginning in 2014.
The accounting firm’s nearly 1,500-page report noted instances of misspent money, such as $106,150 paid to SGI Construction Management from July 2008 to July 2013 for sick, vacation and other time off not authorized by the firm’s contract with the school district. It described instances of board approval of over-budget contracts, including a $98,800 contract approved for a DeAnza High School project with a budget of $62,425. And it detailed bond program budget summaries in which the beginning balance of one report did not match the previous report’s ending balance.
“What really deeply troubles me is the sloppiness, the lack of checks and balances,” said school board trustee and investigation subcommittee chair Liz Block. “What it makes me wonder is how widespread is this?”
The VLS report includes recommendations to address financial mismanagement and enhance accountability, such as regular fraud and ethics training. The firm also suggested the Board of Education create a Recommendations Implementation Task Force.
The investigation is complete, said Ernie Cooper, a partner at VLS, “but that’s not where it stops.”
Responses to the report’s presentation at least week’s meeting were mixed.
Ben Steinberg, a former district parent, said the report was a “total vindication” and urged the community to accept the report, its findings and recommendations.
Don Gosney, a retired senior general foreman and union president and current co-director of The Ivy League Connection, a local scholarship program, said he had “great concerns” about the audit report, because of errors such as a table including Richmond Middle School, which does not exist in the school district.
The VLS report flagged the The Ivy League Connection, which was founded by school board member Madeline Kronenberg and former school board member Charles Ramsey. The program received more than $1 million in donations from district vendors from the 2008-2009 through the 2014-2015 fiscal year, and provided benefits to three children of school board members.
Kevin MacQuarrie, a principal architect with WLC Architects, a WCCUSD vendor, said that the report “completely misrepresented” his firm, whose work was “scrupulously vetted by the district during the entire project.”
Block said “sloppy” work and inadequate practices played a large role in the spending mismanagement, and that blame should not be placed solely on vendors, architects and project managers. “We can’t just look at one group to blame for this,” she said.
There is currently $160 million remaining non-earmarked funds in the bond program, and Ricco predicted the district will “need another billion” dollars to meet its construction goals.
The forensic financial audit investigation cost nearly $1 million, but Block said it was money well spent. “I think we’re moving in a positive direction,” she said.
The Clay Investigation Subcommittee will present the audit report to the district’s Board of Education on Sept. 21. The subcommittee will also recommend that the board form a task force to implement the report’s recommendations.
An earlier version of this story stated that there is $225 million remaining in the WCCUSD bond program; the correct figure is $160 million in non-earmarked funds. The story also stated that the FBI and SEC investigated the program in 2015; the investigation was launched in 2014. Don Gosney’s professional title has been changed, to retired senior general foreman and union president.