Alum Rock to get ‘fiscal adviser’
County superintendent has invoked veto power over the school board with powers to stay, rescind actions
In an extraordinary move, Santa Clara County’s top school official has seized veto power over the Alum Rock Union School Board, launching a tugof-war with the embattled board majority to stop further damage flagged by state auditors, employees and the community.
The authority county Superintendent Mary Ann Dewan invoked earlier this month is rarely used in the state and is reserved for school districts at risk of insolvency or collapse. At issue is whether Alum Rock fits that description — and not surprisingly, defiant trustees hotly dispute such a threat.
Dewan’s declaration in a 10page letter is the latest AlumRock development entangling authorities from Santa Clara County, the state of California and beyond.
“We applaud the letter,” said Camille Llanes-Fontanilla, head of the community group Somos Mayfair and a critic of the board majority. “For over a year and a half parents have asked the board to heed calls to put their students first.”
Dewan — who has been in office only four months — will assign a “fiscal adviser” next week with powers to stay and rescind
district actions. She cited Alum Rock for failing to reconcile books, still lacking its required annual audit for last school year and having “a persistent absence of transparent and prudent board governance” involving fiscal stewardship, conflicts of interest and contracting.
Without mentioning the firm, Dewan was referring to the district’s relationship with Del Terra Real Estate, which manages Alum Rock’s bond construction program. According to a team of fiscal experts Dewan assigned to AlumRock, in less than five years the district has paid Del Terra, led by CEO Luis Rojas, $5.03million. Yet despite its construction binge, several Alum Rock schools still lack need air conditioning and heating.
Michael Fine, who leads the state’s school auditing agency that issued a critical audit of Alum Rock in June, praised Dewan for being proactive. “She sees the board’s actions, inactions and statements as leading the district down thewrong path and likely to fiscal instability,” he wrote in an email.
EsauHerrera, Alum Rock board president, immediately pushed back.
He called Dewan’s move “premature and unnecessary at this point” and said the district’s audit should be ready soon. Herrera directed the board’s attorney, Maribel Medina, to file an appeal with the state.
California’s schools Superintendent Tom Torlakson has until Sunday to respond.
He did not answer requests for comment.
The board’s appeal has sparked outrage.
“This is an incredible overreach by the board president and the general counsel Maribel Medina,” said Alum Rock trustee Andres Quintero, a dissident on a board often split 3-to2. He said the board didn’t approve the appeal, and in fact wasn’t even consulted.
Herrera justified his solo action by the need to respond quickly to Dewan’s move. At least one other trustee, Khanh Tran, approves of the appeal.
Medina issued a scathing response to Dewan, her former colleague at the Santa Clara County Office of Education.
“Mary Ann’s reckless disregard for the facts and law, coupled with her use of SCCOE letterhead to assert unsubstantiated and defamatory allegations is an abuse of her position,” Medina wrote in an email to this newspaper.
Citing conflict-of-interest concerns, Dewan has put on hold Alum Rock payments toMedina and to Del Terra.
Medina was released as general counsel from the county office of education, and also from the Fontana and El Rancho school districts in Southern California — the latter after writing a contract for Del Terra that included millions of dollarsmore than the board intended. She resigned before the board voted to terminate her.
In a confidential memo to the Alum Rock board obtained by this newspaper, Medina noted that if the appeal fails, “the board will need to consider alternative legal options,” and asked that the board discuss initiating litigation at its next meeting.
If Dewan is upheld, the question lurking in many minds is how she and her adviser will react if the Alum Rock board majority fires Superintendent Hilaria Bauer, as has been hinted and feared by many in the past year. Trustee Tran in particular has complained about inept accounting, violations in handling a non-Del Terra contract and “gross negligence” in responding to S&P queries. Dewan’s team and others have said that Bauer and her staff have cooperated with investigators.
Normally an adviser’s “stay and rescind” powers are limited to fiscalmatters. But, Fine of the state’s Fiscal Crisis andManagement Assistance Team noted “instability of leadership (dismissal of the superinten- dent) can be tied to instability regarding financial matters.” That’s been the case with most of the nine districts that the state has taken over — the end game for floundering districts — in 25 years, he wrote in an email to this newspaper. “It is possible that the adviser could address an employment topic.”
County schools superintendents like Dewan have “broad authority that is seldom exercised,” Fine said, and not defined by the courts or Legislature.
In Alum Rock, “The last thing this district needs is more turnover of key staff members,” said Donald Zimring, who leads the experts Dewan assigned to help Alum Rock.
Apart from this wrestling match, Alum Rock faces more inquiries — by the civil grand jury and district attorney in Santa Clara County, and the Securities and Exchange Commission. The district also could see another drop in its credit rating, following S&P Global’s four-notch downgrade last fall.
Alum Rock’s next public forum may be before the Santa Clara County Board of Supervisors, over whether the district may sell $35 million in voterapproved bonds. Because the district lacks a fully approved budget for 2017-’ 18, it requires county approval for a sale.
The question will put supervisors in a tricky position. On the one hand, Dewan, Quintero and Alum Rock community activists oppose the sale now as too costly to taxpayers and as a tool to funnel more funds to Del Terra. But failure to providemore bond revenue leaves Alum Rock without a clear source for looming payments on a $25 million special loan it took out in 2010 to rebuild an elementary school — and could lead to deeper financial distress.
Dewan believes the bond sale should be delayed. She is adamant that she is on the right course.
“I took an oath of office. I have a duty,” she said. “I feel strongly the community is on the right side of this.”