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Poway Unified Officials Might Have Stumbled Upon New Financial Crimes

District officials recently found documents showing $149,495 paid to a special retirement fund for 15 employees. What they can’t find is board approval for the payments. They’ve turned the materials over to the district attorney’s office.

For years, top Poway Unified School District administrators received thousands of dollars in extra compensation apart from their regular paychecks, newly discovered district documents show.

District officials said they cannot find evidence the board ever approved of the payments, which could be legally problematic.

District officials recently found documents showing $149,495 paid by the district to a special retirement fund for 15 employees while gathering records to respond to a California Public Records Act request from Voice of San Diego.

The payments spanned from 1998 to 2014 and typically totaled $3,350 or $3,600 per person each year. Former superintendent John Collins received at least $14,150 over the years, and current assistant superintendent Mel Robertson received at least $15,300, according to the documents.

A gap in the documentation from 2003 to 2010 makes it unclear if any payments were made those years. If they continued, the total amount paid by the district to the fund could be closer to $239,000 to $383,000, before the plan was terminated in March 2015.

The payments are now being scrutinized by attorneys for the school district, and school board approval for the payments – required by law – has yet to be located, said Poway Superintendent Marian Kim-Phelps.

The records were also turned over to the district attorney’s office, which charged Collins in August with four felonies for misappropriation of public funds for leave time and unrelated payments he took as superintendent before he was fired in July 2016. Collins is also being sued by the district in civil court for alleged fraud and breach of fiduciary duty, among other things. Collins has pleaded not guilty to the criminal charges, and has broadly denied the allegations in the civil suit.

A spokeswoman for the San Diego County district attorney’s office declined to say whether prosecutors are investigating the retirement plan payments.

“We really want to be transparent. We want to ensure that we put in best business practices … that there are checks and balances, so that if there is anything that is happening that is not legal or in compliance with board policy or board approval, that we address it and take action to correct it,” Kim-Phelps said. “We are taking it very seriously and we are looking into what other things are potentially out there, but you don’t know what you don’t know.”

A recent audit identified internal control deficiencies at the district, but did not flag the retirement payments. “They didn’t identify this, because I don’t think they knew about it,” Kim-Phelps said.

The payment documents were recently found in the desk drawer of an employee in the district office. It is not clear if the payments were included in employee compensation routinely reported to the state controller, or outside parties like Transparent California, a group that tracks the compensation of public employees, officials said. The payments are separate from regular salary and pension plan contributions.

If no school board approval exists, the payments could amount to a misappropriation of public funds, or could run afoul of state conflict-of-interest laws that prohibit self-dealing. Records show the assistant superintendents of business services and human resources approved the payments for themselves and their colleagues over the years.

The plan was initially created for assistant and area superintendents, a document signed by two assistant superintendents in January 1999 shows, but another document lists some directors and Collins as plan participants during Collins’ tenure as superintendent in 2012 and 2013. Another record showing a $900 payment in 2014 has a handwritten “confidential” notation.

Collins did not respond to questions. His attorney, Paul Pfingst, also did not respond to emails. Collins’ superintendent employment contracts signed in 2010, 2011 and 2014 do not appear to mention the payments.

The school board voted to terminate the plan – known as a “profit sharing” Internal Revenue Code 401 (a) plan – in March 2015. The staff report at the time said, “currently there are no contributions authorized or being made to this plan. Leaving the plan open simply incurs costs.” There is no indication employees ever contributed funds.

Robertson, who oversees learning support services, is the only employee to receive payments who remains on the district payroll today.

“Because I was not on Cabinet when the Board approved the 401(a) plan, I was not part of the process when this was discussed at the Cabinet and Board level,” Robertson said in an email. “My understanding is that it was initiated in the 1990’s and has been administered since then, under three Superintendents. It was also my understanding that in 2014, when I signed my first contract, the contribution was then rolled into my salary.”

Awareness about the importance of school board approval for employee compensation was heightened last year, when the state Supreme Court ruled a former school district superintendent in Beverly Hills misappropriated public funds by directing extra pay to one of his subordinates without school board approval. Poway Unified officials cited the case in Collins’ dismissal charges.

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