The Morgan Hill School District will be reviewed by the Fiscal
Crisis
&
amp; Management Assistance Team, beginning possibly next week,
as a result of a request by Santa Clara County Office of Education
Superintendent Colleen Wilcox.
The Morgan Hill School District will be reviewed by the Fiscal Crisis & Management Assistance Team, beginning possibly next week, as a result of a request by Santa Clara County Office of Education Superintendent Colleen Wilcox.
“Certain allegations were presented to me by a citizen, and based on those allegations and because of the county’s expanded fiscal scope in response to fiscal crisis management, I asked for a review,” Wilcox said. She said she could not divulge the nature of the allegations at this time. School Board President George Panos said Thursday that the board welcomes a review.
“Any time an outside agency raises the word ‘audit to a district or its Board of Trustees, it certainly catches everyone’s attention,” he said.
“But in light of this district’s desire for responsible candor in these economic times, we welcome any opportunity to improve our accounting processes.
“It’s like getting a second medical opinion. If a closer look finds problems, let’s fix them, find a cure.”
Morgan Hill School Superintendent Carolyn McKennan said she will also welcome the FCMAT team.
“We look forward to any information that will be helpful to us,” she said Thursday. “Other eyes from outside the district, we look forward to their oversight. I think the allegations are significant enough that you want an agency not associated with the district or any other organization to give us their unbiased opinion. I hope this will help bring an end to the allegations that have been made against employees of our district.”
McKennan said she and the board were notified by telephone Thursday morning of the impending probe.
“Official notice came to us today,” she said. “We knew the request had been made (by Wilcox), but we did not know if they (FCMAT) would act upon it . This has been in the works for some time, not in our works, but obviously the county had made the request earlier.”
Wilcox said that there is no timeline for completion of the probe.
“It is typically not going to take an extremely long time, but they are going to take the time they need to do a thorough job,” she said. “We want this as well, and we want to come to the outcome and get closure.”
The possible consequences of this review of financial and operational procedures, Wilcox said, naturally depend on the findings of the team.
“There is a whole range of potential consequences,” she said. “We may have simply a recommendation, a procedural recommendation, that certain changes be made. A recommendation from me might not have any legal implications. We might recommend that they make certain procedures more transparent or more efficient.
“Then there is a whole range of consequences if there are any legal findings, designated steps, anything from requests to change procedure so that something becomes more evident to identification of an error, intended or not, and asking them to correct it.”
In a letter dated Dec. 18, an assistant superintendent with the Santa Clara County Office of Education (SCCOE) requests the deputy executive officer of the state Fiscal Crisis & Management Assistance Team (FCMAT), based in Petaluma, to conduct an audit.
The letter names Harlan Warthen as “a concerned citizen that resides in the district” who “has forwarded information to us regarding certain practices at the district about which he has concern.” The allegations, according to the letter are “gross mismanagement of public funds, violations of state contract code, education code and the Brown Act along with harassment of minority employees.”
The letter also alludes to possible fraud on the part of McKennan.
Warthen, a dedicated board-watcher, acknowledges he sought the review.
Warthen said he is disturbed by what is going on in the district.
“I tell you honestly, I’d love to be proven wrong,” he said Thursday. “But the underlying thing, the thing that got me concerned and made me decide on this course of action, is the obvious lack of financial management. When you sit in the audience (during board meetings) for a year and a half it doesn’t take many meetings to see that there is something wrong. The inability of the senior board members to really realize what’s going on, that just blew me away.”
On the FCMAT website, there is a general list of “predictors” the agency uses to determine whether intervention is necessary. They include: general fund encroachment, deferred maintenance neglected, no long-range plan for facility maintenance, litigation against district, staff unrest and morale issues, failure to maintain reserves and salary and benefits in unrealistic proportions. There are 11 predictor categories mentioned, each with at least four specifics.
“It’s like a checklist for our district,” Warthen said. “Personally, I just think it’s time that someone, some unassociated third party, comes in and takes a look. I don’t think the district is capable of taking a hard look at itself.”
Wilcox said the expanded role of the SCCOE came about through an Assembly Bill 139, and state Education Code 1241.S(b) and allows the county office to have more oversight of individual districts.
“In this case, I asked FCMAT to do the review because I believed it would be better that a neutral party look into it,” she said. “Under normal circumstances, the county office may have looked into on our own. We chose to pursue it with a group of experts who are very well-versed in school finances paperwork.”
The composition of the review team has not been announced.
Board member reactions on Thursday indicated a desire for the facts to come out.
Trustee Shellé Thomas said she would like to know what the involvement of the board is in the procedure, and she is ready to learn the outcome of the audit and go forward.
“These are questions people have been asking,” she said. “It is time we answer the concerns of the community, put everything in the open and move forward.”
Trustee Tom Kinoshita said he agrees with Panos. “I am very open to this audit,” he said. “Anything that lays out the facts is good.”
Trustee Del Foster does not think the audit is a cause for concern.
“This is just another type of audit,” he said Thursday. “We have curriculum audits, we have financial audits, this is just another one we need to go through. If it reveals things that need to be corrected, then they will be corrected.
“However, if my staff is asked to do anything other than something directly benefiting the students, I see that as an issue. But our books are open, I have no problem with people looking at them.”
Trustee Amina Khemici also welcomed the review.
“I with this was different – that we didn’t have to go through this,” Khemici said Thursday. “This is a chance to get some answers to questions people have. It’s a very good thing. It will help to clear up the situation we’re in.”
Last month, the annual district audit found that fiscal reserves have dipped below 3 percent. The district has pulled money from economic uncertainty reserves to fund ongoing expenses. Reserves are 1.7 percent of the general fund. The district was allowed to dip into these reserves without penalty last year, but the audit report recommends the balance be built up to 3 percent again.
With K-12 education funding statewide up in the air and unknown operating costs for the new Sobrato High School, trustees are expected to be looking at additional cuts for the 2004-05 school year.
The current fiscal year budget is approximately $70 million.
