NATIONAL CITY, Calif. – A recent external audit detailing financial improprieties sent shockwaves through the Sweetwater Union High School District, leaving the district in flux with its superintendent on paid leave and the school board president stepping down.
The audit found evidence of potential fraud as well as evidence the Sweetwater Union High School Board potentially lied about its finances to get approved for bonds. It is an issue that came to light after the San Diego County Office of Education noted the district might be in financial trouble, triggering an audit by California’s Fiscal Crisis and Management Assistance Team.
A 79-page report released last week found that in Feb. 2018, “the CFO and financial advisor took a course of action that was designed to avoid disclosure of information to the credit rating agencies.”
“They went to the financial markets purposely where they wouldn’t have to reveal the condition of the general fund when they borrowed money,” said Nick Marinovich, chair of the Citizens Bond Oversight Committee.
“We are like a watchdog, a watchdog for taxpayer money,” he added. “After they spend their money, we say, ‘You’ve made your decision, this is what we think.’”
On Wednesday, the district’s board voted 3-2 to approve a plan to lay off 223 employees and place Superintendent Karen Janney on paid administrative leave, according to the San Diego Union-Tribune. Board President Frank Tarantino, who voted against removing Janney, also stepped down during the virtual meeting.
“As evident in the vote of the action taken in closed session it’s my feeling that the board deserves a leader that supports this action,” Tarantino said.
Marinovich said when schools need bond money for construction projects, they typically go to financial lenders for funding. He said those banks want to understand a district’s finances prior to getting involved.
“You kind of want to know who you are dealing with, what is the financial condition of the district?” Marinovich said.
The district looking at allegations of fraud now has fewer than 15 days to respond to the audit. The Securities and Exchange Commission or District Attorney’s Office also potentially could get involved with the process.