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Audit Finds Evidence Of Fraud At Sweetwater School District

The Sweetwater Union High School District central office is shown, Nov. 7, 2018.
KPBS Staff
The Sweetwater Union High School District central office is shown, Nov. 7, 2018.

An audit into the finances of the Sweetwater Union High School District found evidence of mismanagement and fraud, according to a report released Monday by the district.

The audit, conducted by the state’s Fiscal Crisis and Management Assistance Team (FCMAT), found the district relied on incomplete financial information before authorizing a 3.75% pay raise for teachers in 2017 and intentionally avoiding disclosing information to bond rating agencies to secure approval for a 2018 bond measure.

“FCMAT concluded there’s significant evidence to indicate that fraud, misappropriation of funds or assets, or other illegal fiscal practices may have occurred by current and former employees,” said San Diego County Superintendent Paul Gothold, who presented the report at Monday’s virtual school board meeting.

RELATED: U.S. Securities And Exchange Commission Investigating Sweetwater School District Finances

VIDEO: Audit Finds Evidence Of Fraud At Sweetwater School District

FCMAT launched its investigation after the San Diego County Office of Education found major deficiencies in Sweetwater’s budget in 2018. The district’s finances have been in crisis for the past several years. In March, the school board approved layoffs for more than 200 employees to close a $30 million budget deficit.

FCMAT also found that the district borrowed from its own school facilities funds generated by Mello-Roos taxes to pay for operating costs without being able to repay that money.

The report identified system-wide financial issues like “poor fiscal oversight,” “departure from board policy” and the “lack of an integrated financial system.”

RELATED: Sweetwater School Board Approves Potential Layoffs To Close Budget Deficit

According to Gothold, FCMAT’s findings will be sent to the state controller, California State Superintendent of Public Instruction and the San Diego County District Attorney for further investigation.

“We will take the time necessary to fully digest it and read through the 80-page report, determine the best course of action and in doing that we will of course first and foremost consider the best interest of our students, their families, our staff and our community,” said Sweetwater Superintendent Karen Janney following the presentation.

The Sweetwater Union High School District declined to provide additional comment on Tuesday.

“The Sweetwater Union High School District is currently reviewing the report from FCMAT and its findings and recommendations,” said Manny Rubio, spokesman for the Sweetwater Union High School District. “The District takes this report very seriously and will be determining next steps. Given that this matter is still pending, we will refrain from any additional comment at this time.”

Audit Finds Evidence Of Fraud At Sweetwater School District
Listen to this story by Joe Hong.