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Grand Jury Report Eviscerates San Ysidro School Bond Program

While criminal charges against former San Ysidro school officials focused on gifts from contractors, the Grand Jury report highlights lapses in San Ysidro’s bond spending and record-keeping.

The San Ysidro School District’s dark days were even darker than previously known and compromised the school bond program, according to a new County Grand Jury report.

Former district officials misspent school bond funds, double paid vendors, spent $45 million on an ill-advised land purchase and fulfilled few promises made to voters who approved a $250 million bond measure in 1997, according to the report released Tuesday. About $376,900 removed from the bond fund may still be unaccounted for.

“Prior SYSD boards did not perform due diligence and disregarded their fiduciary duty, approving expenditures from bond proceeds for purposes other than those listed in the ballot measure,” the Grand Jury wrote. “The district has amassed hundreds of millions of dollars in long-term debt with little to show for it.”

San Ysidro’s superintendent Manuel Paul and board member Yolanda Hernandez were among 18 people convicted in a wide-reaching corruption probe by the San Diego County district attorney that concluded in 2014. Hernandez was one of five public officials forced from office in the South Bay, and Paul spent time in prison for a separate federal corruption charge.

While the criminal charges focused on gifts from contractors, the Grand Jury report highlights lapses in San Ysidro’s bond spending and record-keeping.

The 19-person citizen jury recommended an independent forensic audit.

District officials say one is already under way, and concurred with the thrust of the report, acknowledging former administration members destroyed records and mismanaged district finances and bond funds.

“There was poor fiscal management by former district leadership,” San Ysidro School District Superintendent Julio Fonseca said in a statement. He said the current administration “is working to become truly transparent” and “is wholeheartedly committed to not only correcting the errors of the past, but building a strong financial infrastructure for the future, while also building trust within our community and providing the highest quality educational opportunities for students.”

Fonseca said the employees who wrongfully destroyed records are no longer employed by the district.

The Grand Jury’s findings – made with the help of county auditors – take aim at former administrators, like longtime business chief Dena Whittington, saying she approved contract amendments and change orders without board approval. Whittington, who resigned in August 2015, did not immediately respond to a request for comment.

In addition to San Ysidro officials, the Grand Jury lobbed criticism at County Office of Education staff brought in to oversee the beleaguered border district after it earned a negative budget rating in 2012. The jury concluded officials – like fiscal adviser Lora Duzyk – “did not take an aggressive enough role in correcting problems” while fending off a state takeover. Duzyk declined to comment

“We strongly disagree with the characterization of our fiscal oversight as anything other than rigorous and active,” the County Office of Education said in a statement. “We are always looking to improve our operations, including the public’s understanding of the role of the County Office of Education, and will carefully consider the Grand Jury’s recommendations.”

San Ysidro passed a $250 million bond measure in 1997 known as Proposition C, and has sold at least $142 million of those bonds to date. While Vista Del Mar Elementary School was built for more than $23.7 million and opened in 2012, Beyer Elementary – demolished in 2012-13 – remains an empty lot.

District officials issued $45 million in debt to buy 20 acres of land and pay for the construction of Ocean View Hills School, but a portion of the property was environmentally protected, saddling the district with mitigation costs.

“The decision to purchase this property is suspect and should be further investigated,” the jury report says.

Officials took on another $97.5 million in debt in recent years to pay off earlier debt, some on Duzyk’s watch, which she should have advised against, according to the Grand Jury.

District officials also borrowed $18 million from the bond fund to pay for payroll and other needs.

The district was also chided for paying financial advising firm Dolinka Group to both advise on and execute bond sales, a practice that “may create a conflict of interest.”

The jury also confirmed what’s been known for a while: That former district employees destroyed district records. The school board ordered an internal investigation into the matter, but no records show any investigation occurred.

The jury claims the school board at one point approved the destruction of 215 boxes of documents, “but there is no record of what was destroyed.”

Many records that do exist, the jury claims, are sloppy and filled with errors.

The jury offered a few words of praise amid the litany of complaints.

On the upside, the district recently hired a consultant to create a new financial reporting system that will eventually allow the district to track all major revenue and expenses for state grants, bonds and other debt.

The district may create its first citizens bond oversight committee to look after the remaining $108 million.

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