By Kimberley Beatty | Republished from Voice of San Diego
As a member of the Poway Unified School Board for almost four years, I have received many inquiries about the board’s decision to terminate Superintendent John Collins and initiate legal action to recover funds he improperly took. This was the culmination of two separate audits over the last several months.
While I am glad that these bad acts have come to light, improper actions have gone unquestioned for far too long by school board trustees who are charged with financial oversight. The responsibility for these bad acts lies squarely at the feet of school board members who failed to do their job.
Over a year ago, I wrote an op-ed about the board’s authority over the school district and its role overseeing the budget. I called out self-dealing, conflicts of interest, backroom deals and other improprieties by the superintendent and others. I received harsh criticism and remained unsupported by a board majority all too willing to remain in the comfortable position of supporting the status quo.
From the day I was sworn in, it was clear to me that proper business practices were absent. At that first meeting, our board was approving a multimillion-dollar bond issuance and no one could give me a straight answer about what it was going to cost. We were also given a presentation by the bond underwriter, whose interests lie with bond investors, not taxpayers, and with whom we are supposed to have an arms-length business relationship. But our facilities planning director often referred to them and the other financial consultants as “my finance team,” as if they were part of district staff.
Later that week, I was called into Collins’ office and told that I was being hostile with staff at the board meeting and made them feel as though I didn’t trust them.
Every attempt to require accountability was met with obstruction, derision and reprisals. This included my questioning of a $56 million construction contract that was buried in the board agenda with a group of routine items for approval. The contract was upped by $1.5 million just six weeks after approval, even though it had a guaranteed maximum rate. For three months, Collins ignored my request for an opinion on the legality of diverting millions of Mello Roos special property tax dollars for use in non-Mello Roos areas. When a reporter inquired, the district’s lawyer suddenly produced a legal opinion that was backdated three months.
My attempts to implement best business practices and competitive processes by doing away with no-bid contracts were stymied. After gaining board consensus to stop decades-long sole-source contracting for our bond underwriter and financial adviser, the district produced a request for qualifications that was so narrowly tailored that only one other private vendor qualified in each case.
Out of all of California, the only other financial adviser that happened to qualify was located eight miles down the road from our current financial adviser, Dolinka Group, whom we have used for two decades. I called out this rigged process, to no avail. I also expressed ongoing concerns about the many hats Dolinka Group wore and obvious conflicts of interest in overseeing every aspect of Community Facilities Districts Special Tax administration, and acting as both special tax consultant and financial Adviser for every bond transaction. In 2014, I was opposed to extending Dolinka Group’s contract as financial adviser and administrator of the community facilities districts because of continued conflicts of interest and lack of oversight. I wanted to start bringing some of this work in-house. Of course, staff stated that wasn’t feasible – and the rest of the board agreed. Recently, Voice of San Diego reported that in less than three years into its new five-year contract, Dolinka Group has charged over twice the contract limit.
In 2014, I was the lone vote against renewing the superintendent’s contract. Above all else, I insisted on integrity of the process. But that was not to be. The board had to get a new lawyer when its original attorney violated attorney-client privilege by sending my questions and concerns about the contract directly to the superintendent. Attorney Dan Shinoff, the district’s general counsel, was then assigned to represent the board in contract negotiations. It should have been clear to the rest of the board that even though he was supposed to be working in the interest of the school district, Shinoff was helping the superintendent. In fact, he inappropriately sent the board’s draft contract to the superintendent, and two weeks later Collins forwarded the contract to the board with changes. The resulting contract was very favorable to Collins, with a higher termination threshold and other benefits. My protests led to the removal of some, but not all of the changes. The “me too” clause – in which Collins was granted the same raises as management and teachers – remained.
Since the beginning, I found Shinoff’s actions highly troubling. My first encounter with him was February 2013 when the capital appreciation bond report was released. That evening, 30 minutes of a closed-session board meeting was spent with Shinoff and Collins spearheading an effort to stymie my desire to gain clarity on this issue. It was nothing short of a bullying session. The community has yet to be given honest answers as to what happened. In my opinion, that 24-page, $130,000 report was garbage.
Over a year ago, I proposed a new deputy business administrator position. This “strong deputy” would report directly to the board, in order to preserve lines of integrity and ensure unfiltered information. The need for this position was in recognition of a lack of proper business protocols. After less than two months on the job, I found out that our planning director, who was in charge of $2.5 billion in serviceable bond debt, had no oversight and no accountability. She did not report to our chief business officer and her office was several miles from the district office. She apparently reported directly to Collins, who had previously been the chief business officer himself. A chief business officer in a neighboring school district told me at the time, “when there is no oversight and no accountability, I have to suspect fraud.” It took months to get our board to even acknowledge this lack of oversight.
In addition to significant long-term bond debt and approximately $45 million collected each year in Mello Roos special property taxes, we have a $376 million operating budget. Yet we have no employee with an MBA or professional business experience, aside from on-the-job training. This should come as a shock, yet our board is aware of this.
In a continued effort to bring greater oversight to our frequent multimillion-dollar bond issuances, early last year I enlisted the San Diego County Treasurer-Tax Collector’s office to review a series of bond refinancings totaling $164 million. The county’s chief deputy treasurer formerly worked as a bond underwriter for a decade and had offered to provide their staff as a “value-added resource.” When I stated at our board meeting that I had arranged to meet with their office, our financial adviser immediately scheduled a meeting without notifying or including me. He also apparently never told the county he would be bringing our district’s planning director, whose behavior at that meeting was later described in a letter as “combative and confrontational.” I am told that was a softened description. As anticipated, their office concluded that costs of issuance were high.
In addition to moving forward with hiring a qualified business administrator, we must re-do the request for qualifications for bond financial advisers and underwriters and finally stop using the same vendors who gave this community a toxic capital appreciation bond. Once and for all, we owe our community a proper investigation into the billion-dollar bond.
After repeated attempts by Board Member Charles Sellers and myself to discontinue using the Shinoff law firm, it is time for my fellow board members to join in this action. If a $2 million settlement action against him, a data breach fiasco, self-serving legal memos, skyrocketing legal bills and restraining order attempts hidden from the board weren’t enough, what is?
While it is good that our board came together unanimously to take action, accountability is many years overdue. The root cause of systemic corruption in a public agency is an elected board unwilling to carry out its fiduciary charge of oversight.
While board members need to do a better job of carrying out their fiduciary duty, so too do other state agencies. When I was the sole voice calling for accountability, I should have been able to turn to outside agencies to report improper, corrupt or illegal actions. Yet a California School Board Association consultant told me to simply “trust” our lawyer. I told her our lawyer was part of the problem. I reached out to local and state officials, mostly to no avail. Some limited interventions were taken, such as preventing the superintendent from commandeering settlement negotiations. The state has abdicated its responsibility of oversight of local governmental bodies. While everyone supports “local control,” enforcing the law shouldn’t have to be dependent on a board majority’s will. When bad acts are left unchecked, they become accepted business practices.
Moving forward, if we can implement organizational efficiencies and significantly curtail the overuse of private consultants by hiring qualified personnel, I believe we can save close to 10 percent of our operating budget. That would mean about $30 million for smaller class sizes, arts, music, PE, libraries, robotics, sports, band, orchestra and everything else that amounts to a quality education. If we can show greater financial acumen and responsibility with property tax money dedicated to capital projects, then we can start rebuilding the community’s trust.
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