Morning Report: Charter Scandal Exposes Holes in State Processes - Voice of San Diego

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Morning Report: Charter Scandal Exposes Holes in State Processes

A3 charter school
District Attorney Summer Stephan discusses the indictment of several people tied to an alleged scam involving the charter school management company A3. / Image courtesy of NBC San Diego

Just one process in California is designed to act as an early warning system when financial shenanigans are going on inside schools. It’s a yearly audit, by a “state-approved,” “independent” auditor, according to the Department of Education. 

But the auditors are not exactly independent, reports VOSD’s Will Huntsberry. Auditors are hired and fired at will by the schools they are supposed to be auditing. 

“The term state-approved is also something of a misnomer,” reports Huntsberry. “To qualify as an approved firm, the State Controller’s Office must only verify that the potential auditors are accountants in good standing with the California Board of Accountancy. No special training or vetting required.”

Newly released transcripts from a grand jury proceeding into an alleged $80 million charter school scam also show that the audits are not designed to dig deeply into a charter school or school district’s finances. 

(You may remember the DA’s office recently charged 11 people in connection to the dealings of a company called A3 Education. Prosecutors say two men were the ringleaders in an operation that siphoned $80 million of public education money into companies they controlled.)

“They’re not designed to catch fraud at all,” said one state official of the audits. 

Under questioning, one of A3’s auditors admitted that people in his line of work are hamstrung by the information that schools provide them. 

The company’s “responsibility is to provide all the documents that are related to financial activity,” the auditor said. “If management decides not to provide some information, and that information results in misappropriation of assets, stealing, basically, then we, as auditors, there are no procedures to uncover that.”

A state official also suggested several changes that could improve the auditing process. 

SDSU to Make Formal Mission Valley Purchase Offer Monday

In a conference call with reporters Thursday, SDSU President Adela de la Torre announced that the university had unilaterally decided to get out of its confidentiality agreement with the city of San Diego. She and top aides also made it known that they would be presenting the City Council with a purchase offer for the 132 acres around the stadium in Mission Valley Monday. 

She also announced that she would support paying for at least part of the contested Fenton Parkway bridge long envisioned as a necessary outlet for vehicles in Mission Valley. This appears to be a shift from the university’s earlier determination, in its environmental impact report, that the bridge isn’t something it would pursue to mitigate traffic impacts of its construction. 

She reviewed the history of appraisals of the property and compared them positively to the latest, which values the site at $68.2 million (after deducting the cost of constructing the 34-acre river park and stadium demolition). 

“The estimated cost of the 34 acre river park is $30 million. We will also be building additional parks, including hike and bike trails. SDSU is excited to do this for the benefit of all San Diegans. Let’s all win,” de la Torre said.

The City Council has scheduled a meeting for Monday afternoon on the topic. 

Hotel Tax Hike, Take 4,938

The campaign to raise hotel taxes to pay for a Convention Center expansion, homeless services and road repairs officially relaunched Thursday.

At a press conference, local leaders, union members and homeless service providers literally lined up to support the March 2020 ballot measure.

Deacon Jim Vargas, CEO of Father Joe’s Villages, emphasized the need for a reliable funding source to support homelessness programs, hinting at the campaign’s likely focal point in coming months.

Mayor Kevin Faulconer, who has made the measure his top priority, hailed the coalition of union, business and political leaders who have coalesced behind it and the thousands of new jobs expected to come along with the Convention Center expansion.

But like Vargas, he put the spotlight on the homelessness funding it could pull in.

“The time is now to get this done – all of the work, all of the votes – for what will be the most important measure that’ll be on the March ballot,” Faulconer said. “It’s not only about the thousands of jobs that you just heard, the infrastructure and the roads, but the most important issue that is facing our city: the issue of homelessness – and for the first time, a dedicated funding stream.”

Last year, supporters of the measure estimated it could bring in more than $6 billion over 42 years, including $276 million for homelessness in its first decade.

The city’s new homelessness plan released this week estimated the city would need $1.9 billion over the next decade to stem the crisis.

In Other News

  • Total emissions and per-person emissions have increased in San Diego, according to this cool interactive tool from the New York Times.
  • Councilwoman Monica Montgomery spoke with KPBS about her ongoing efforts to give more power to the watchdog agency that monitors police misconduct.
  • Montgomery, along with Council President Georgette Gómez and Councilman Chris Ward, also released a joint memo Thursday calling for a moratorium on the installation of any more “smart streetlights,” amid surveillance-related concerns over the devices. As VOSD’s Jesse Marx reported in April, current and former City Council members said they were in the dark on the ability of police to access information collected by the streetlights when they greenlit their implementation. Montgomery, Ward and Gómez say the moratorium should be in place until the Council can adopt a policy outlining how and when data from cameras on the streetlights can be used, to prevent potential privacy violations.
  • Carlsbad Councilwoman Barbara Hamilton has resigned her seat, effective immediately, after previously saying she would stay through the end of the month. She cited frustration with the Council’s inability this week to appoint a successor as part of her reasoning. The Council could still take another run at filling the seat by an appointment, or it could sit empty until a scheduled election. (Union-Tribune)
  • County Supervisor Nathan Fletcher was officially voted chair of the Metropolitan Transit System Thursday, taking over from Gómez as she runs for Congress and the agency pursues a potential tax measure to increase transit service in 2020. (Union-Tribune)
  • The Sweetwater Union High School District announced Thursday that it’ll have to cut $14 million more from its budget than it estimated in June, bringing the overall cuts to $24 million out of the district’s $395 million budget, the U-T reports. The cuts are necessary because of a scandal first reported by Will Huntsberry last year, in which school officials overspent their available money by $30 million.
  • Remember One Paseo, the dense development in Carmel Valley that became a yearslong fight and was eventually shaved nearly in half as part of a compromise? The first apartments there are open. (Union-Tribune)

The Morning Report was written by Will Huntsberry and Andrew Keatts, and edited by Sara Libby.

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