County angles to take over finances at troubled district
Board president vows to fight request to state ending fiscal independence
Citing multiple shortcomings, Santa Clara County’s top school official is asking the state to limit the fiscal independence of the Alum Rock Union School District, effective July 1.
Jon Gundry, superintendent of the county office of education, cited the district’s failure to track bond spending, among other things that came to light after a critical state audit of Alum Rock earlier this month.
If state schools chief Tom Torlakson grants the request, Gundry’s office would issue Alum Rock’s paychecks and pay vendors, and the district’s accounting would become more integrated with the county office of education system. The office of education also would gain more oversight over Alum Rock spending.
But Alum Rock’s board majority appears ready to do battle over any limit to its authority.
In his letter to Torlakson, Gundry cited Alum Rock’s failure to respond to requests for finan-
cial data and reports, its lack of a district auditor and adequate internal controls, and its failure to track bond fund expenditures.
Lacking internal controls “is a big deal,” Gundry said. “So many things that could go wrong.”
Some of those dangers were detailed in a 150-page report by state auditors about Alum Rock’s management of its multimillion-dollar bond construction program.
The audit, compiled after a six-month investigation, warned that the district is vulnerable to fraud, misspending and mismanagement. It recommended the district end or renegotiate contracts with Del Terra Real Estate, which was paid $3.25 million for 3½ years of management work through last spring.
Alum Rock board President Khanh Tran said Friday that the board will lobby Torlakson to reject the request.
“We know the state superintendent personally,” Tran said, referring to Alum Rock trustees Esau Herrera’s and Dolores Marquez’s relationships with Torlakson. “We’re going to go up (to Sacramento) and ask that he be fair.”
Tran said that auditors from the state’s Fiscal Crisis and Management Assistance Team missed crucial evidence, which the district has since delivered to the Santa Clara County District Attorney’s Office. The district attorney is also looking into Alum Rock and Del Terra.
Tran suggested FCMAT redo its audit.
Alum Rock dissident board member Andres Quintero disagreed. “Given decisions the board majority has been making recently, I would have to agree” with Gundry’s request, Quintero said.
Trustee Karen Martinez agreed. “It’s what our community is asking for — transparency and ensuring that money is being properly spent.”
If the request is granted, the school district still would receive invoices from vendors and payments, but the county office of education could ask to verify documentation and contracts justifying payments.
“If handled properly, it will be of benefit to the district,” said Ken Shelton, former chief business officer of the Santa Clara County Office of Education, and currently advising the office.
Alum Rock would then join the vast majority of districts in the state — including large ones like the Los Angeles and Long Beach districts — that depend on county offices of education for fiscal services.
Alum Rock petitioned for and won fiscal independence in 1992. But in at least the past five years, the district has failed to employ an internal auditor, required to maintain its status.
Being fiscally dependent on a county office of education, Shelton said, “helps make sure public funds are spent according to contract and according to California state law.”
Still, even with more built-in oversight, Alum Rock will remain in charge of its own financial business. Its board will be free to enter into contracts — even if they may be disadvantageous, as auditors characterized those with Del Terra.
Even as parents assail the district for failing to provide basic amenities like heating and air conditioning, Alum Rock already is on its way to launching major gymnasium and multipurpose-room projects at three middle schools, all managed by Del Terra.
Tran said that in Sacramento, “We’re going to present our case. We’re going to say Gundry has his own laundry.” In recent days, Tran has taken to Twitter to accuse the county superintendent of racism, saying he’s attacking a Latino school district and Latino business. Tran also has called critics of the board majority “scripted mobs” and called news reports “fake news.”
Gundry said that earlier this month, before the release of the state audit, he offered Tran some advice. “I said you should proactively give up your fiscal independence before I take it away from you,” Gundry said.
Tran appeared uninterested, Gundry said. “We should have FCMAT come back in and complete its report,” Tran said Friday. “We will have our say with the state superintendent.”
Torlakson has until June 30 to grant Gundry’s request, for it to take effect July 1. It could take a year or more to implement, Gundry said.The next window for a change in fiscal status won’t be until July 1, 2018.