President says mismanagement claims are ‘unsubstantiated’
Gilroy – Gavilan College President Steve Kinsella is calling charges of fiscal mismanagement at the school “unsubstantiated,” and will challenge a federal decision to drop the college as financial sponsor of a regional agency the school has hosted for 18 years.
On Monday, Kinsella learned the school would not have its contract renewed to administer an $80,000 federal grant for the Gavilan College Small Business Development Center. The notice – issued by the parent SBDC at the University of California, Merced – means the school also will lose a matching $140,000 economic development grant from the state.
The decision to search for a new host agency comes after months of wrangling between Gavilan and U.C. Merced officials over the community college’s accounting practices. According to a Merced official, the change is necessary to rescue the business center from the college’s outdated accounting practices.
Kinsella acknowledged “it did take a while” to update ledgers tracking various funding streams for the Gavilan SBDC, but he said “it was never stressed to us that you’ve got to do this by this deadline or the grant is in jeopardy.”
No formal appeal process exists and it appears the school can do little beside argue its case to Merced officials. If that fails, the school can enter the general bidding pool in coming months in hopes of restoring its sponsorship of the agency. Although located in downtown Gilroy, the Gavilan College SBDC serves San Benito County, east Monterey County and southern Santa Clara County.
Federal guidelines allow any city, community college or other public agency to receive SBDC grants and channel the funds to local agencies such as the one based in Gilroy.
But it remains unclear if Gavilan College can mend relations with a federal hierarchy that has developed a negative view of its grant management.
Chris Rosander, regional SBDC director at U.C. Merced, pointed out that Gavilan took 10 months to upgrade its accounting practices while two other community colleges required only a month.
“Had they done it quickly – and they could have – we wouldn’t be where we are right now,” Rosander said. “We sent them a letter after our audit [in May 2005] saying things need to be done, and we told them there was a federal audit that needed to be done [in August 2005]. They did not correct it, as evidenced by the federal auditor throwing up his hands and saying this is ‘un-auditable.'”
The accounting issues went beyond paper headaches, according to Rosander, who said the school repeatedly held back funds for business programs and undercut the center’s ability to serve clients.
In past years, the center has met or exceeded “milestone” markers for providing one-on-one counseling and training workshops to people looking to grow a business. But last year, the center only served a third of the 990 people set as its target.
“None of that can be chalked up to lack of interest,” Rosander said. “Most small business centers get close to the milestones or exceed them … There’s a reason for the 33.7 percent and it’s because (Gavilan’s) accounting department kept starting and stopping the funding.”
Kinsella challenged that assertion, saying that “we were getting requests for expenditures that were in excess of the budget” from Richard Gillis, the director of the Gavilan College SBDC.
Gillis has declined to comment on any matters related to funding issues or his relationship with the college administration, but a regional accreditation board singled him out last year for his accomplishments.
Federal officials in charge of small business grants are instead blaming Gavilan College for mishandling SBDC funds and blunting the effectiveness of the program.
Rosander said his superiors at the federal Small Business Administration office in Fresno, as well as auditors at SBA headquarters in Washington, agree on the need to “rebid” the contract for a host agency. The economic and workforce development branch at the California Community Colleges Chancellor’s Office – the source of a matching $140,000 grant to the Gavilan SBDC – feels the same, according to Rosander.
“There’s agreement from top to bottom and sideways,” he said.
The regional center at Merced is one of six lead agencies in California that doles out hundreds of thousands of dollars each year from the federal Small Business Administration. Those monies were administered by the California Trade and Commerce Agency for more than a decade, until the state dissolved the agency during the 2003 budget crisis.
The college never had an accounting issue until U.C. Merced took on oversight, Kinsella said, acknowledging that so far things are not going well with the new administrator.
Said Kinsella: “If you asked, ‘Do we have a bad working relationship?’ I’d say ‘Yeah. We do.'”
