At close-of-business Tuesday, an official at San Diego Christian College emailed parents and students alleging our investigation about questionable expenses “presents information regarding SDC that is inaccurate.”
It is the policy of inewsource to correct all mistakes in reporting immediately. However, in this case, despite our requests, the college would not say what was wrong with the story.
Robert Jensen, the vice president for advancement and administration, who wrote the letter to parents and students, did not respond to our call Wednesday asking for details. We then reached out to the executive office of the college, Kelly Buchanan, executive assistant to the college’s president, told inewsource that officials had no comment and referred us to the school’s attorney, Tracy Warren.
Warren did not respond to phone calls by the time of this publication.
Our story published Monday found San Diego Christian College, a private, nonprofit school in Santee, can’t account for more than $20 million in expenses that are supposed to be detailed on its public tax returns.
The money was spent from in fiscal years 2012 to 2014, but recorded only as “other” in tax documents. School officials could not explain how the money was spent.
In September, inewsource sat down with the college’s chief financial officer, Steve Chaney, to discuss the school’s history and its finances. Following are excerpts of the interview, edited for brevity and clarity.
Missing attachments in tax documents
Megan Wood: I'd like to talk about San Diego Christian College’s 990 (tax return) for Fiscal 2014. I had a question about “other expenses.” Although required, they're not listed in Schedule O.
Steve Chaney: Well we have to electronically file this. Because we have over 250 instances of filing a report. An instance could be a W2, a1098, a1099, quarterly returns...
Ultimately the detail ... didn't get broken out on the Schedule O because of a system glitch. I called the IRS and they said don't worry about amending it because there's nothing owed.
MW: Did they give you any documentation when you reached out to the IRS?
SC: No.
MW: No tracking number or anything for the issue?
SC: I didn’t ask them. I have a tracking number for the filing. In their opinion there's no issue. What information did you want to know?
MW: I wanted to see a breakdown of these expenses.
SC: Other fees for services. How much is it?
MW: $6.3 million.
SC: I don't know. I'm going to have to refresh my memory if that’s what you want to know.
Accreditation, lawsuits and student concerns
MW: I wanted to go over a few things that I came across and give you a chance to respond to them. In April 2016, the WASC Senior College and University Commission (accrediting agency) said their team is concerned about the financial sustainability of the institution given the expenses related to the recent move, a less-than-aggressive fundraising program and troubling composite scores.
In 2016, a food vendor claimed to be owed more than $100,000 in a lawsuit. Then in 2017, a vendor claimed to be owed money, I believe it was for rent. In one of those lawsuits, a plaintiff described the school's conduct as “reckless, willful and in conscious disregard” of their rights. I’ve interviewed a former teacher and a student who said they were frequently told there was little money for hiring new teachers, sporting equipment, things like that.
Taken together, this looks like there are a lot of financial problems with this institution. Should students be worried about the future of the school?
SC: No, and let me tell you why. We just had a review from WASC recently, probably within the last six months if that. Maybe even sooner (inewsource fact-check: The last accrediting review was in March 2016). I'd have to give you the exact date. It's my recollection. I’ve learned enough testifying before people you always say it’s my recollection. It’s very recent but we got a glowing review. When we came out of the June 2014 year, remember we had that loss that made our (composite financial score) 0.1, we told everyone in the community we have a two-year process to get out of this.
Have you ever like, when you leave your parents home and you go get that first apartment or that first home and you're like, “Oh my goodness I gotta buy the drapes, I gotta buy this, I gotta buy that, I gotta buy everything.” It costs a lot more, right? … We knew this but it was things that happened that are one time, what we call extraordinary events.
So we were very transparent with this community, saying we have a two-year plan of where we’re gonna be completely back to where we were. So the plan has been just a little bit longer than we thought, but we are just now in the process of reverting that... This institution is on solid footings. WASC gave us an eight-year confirmation. An eight year. Nobody gets higher than eight years. They go up to ten, but now nobody's getting more than eight years...
There are other things I can’t talk to you about because of disclosure, stuff that you brought up. It would involve personnel issues, it would involve settlements to some degree, not huge ones. We’re talking minor.
Audit findings
MW: In the audited financials for Fiscal 2014, there are several things found not in compliance with the Department of Education and other federal requirements. In your experience, do you think that's a lot? What they found?
SC: For the financial Aid, yes. We did agree to that. That's why we hired Clifton Larson Allen. Because we wanted a national firm. They are experts in Department of Education and in higher education… So they are top level. Because of the changes that we went through with the leadership and that entire department and then hired in a consultant. I'm going to refresh my memory on the timeline for that.
But because of that, the board with the audit committee decided that we would leave Capin Crouse which had been doing our audits for years because they were associated with the church…
But, when we went through this change, came here on campus … Clifton Larson Allen found these issues. Now the journal entries that you referred to — the payroll — there was a response to all of those. So you didn't see the response because we disagreed with those ...Our payroll is reviewed by multiple levels before it's ever processed.
… If you would have looked at our managerial reports years before with Capin Crouse year after year after year: perfect, perfect, perfect, perfect, perfect.
When we came over here decided as a management team and as a board and leadership team we said we want to have somebody come in and really scrutinize every part about it. Because when you have a financial aid department completely have turnover and student accounts complete turnover, you're like, let’s just get everything right. And that was our desire. We had nothing to hide.
And Clifton Larson Allen did a great job for us. We put everything into place and into action and we really leveraged the value they gave us.
MW: So why did you not continue with that firm the next year?
SC: Because we didn't want to pay another $100,000 a year fee….
