Santa Clara County District Attorney Dolores Carr said her
office will launch a formal inquiry into whether administrators of
Gilroy’s only charter school broke the law when they temporarily
skimmed $400,000 from employees retirement funds.
Santa Clara County District Attorney Dolores Carr said her office will launch a formal inquiry into whether administrators of Gilroy’s only charter school broke the law when they temporarily skimmed $400,000 from employees retirement funds.
“The allegations appear very serious,” Carr said. “We need to do our own investigation and the best way to do that is to request an audit.”
The audit – which Carr plans to refer to the Santa Clara County Office of Education by the end of the week – will examine how the Mexican American Community Services Agency misused its charter school employees’ retirement contributions to pay for salaries and programs.
Since most criminal cases are forwarded to the district attorney’s office by law enforcement officials, Carr said her office still needed time to familiarize itself with MACSA’s situation. Based on the limited information she had so far, Carr said she did not feel comfortable commenting on whether MACSA’s actions would warrant criminal charges.
However, county Office of Education staff pointed out that the Gilroy Unified School District is already investigating MACSA’s finances.
“The district has already taken the first step to determine the magnitude of how much has not been contributed,” said Cathy Grovenburg, assistant superintendent of business services with the county Office of Education.
GUSD will pay consultants Total School Solutions up to $10,000 to scrutinize El Portal’s finances and expects to have the results in time for a March 19 school board meeting, said Enrique Palacios, GUSD deputy superintendent of business services.
“It needed to be done,” said GUSD Superintendent Deborah Flores. “We’re not going to delay the audit while we figure out who’s going to pay for it. We need to have confidence in these numbers.”
MACSA staff acknowledged that the agency skimmed about $400,000 from its employees’ retirement accounts over the last year, including about $140,000 from employees at the 160-student El Portal and about $250,000 from employees at Academia Calmecac in San Jose. However, the school district want to conduct its own investigation to corroborate these figures. Flores said the district’s legal counsel is managing the audit, which is not yet complete.
“We would recommend that (the district attorney) go to the school district, because they are the closest to El Portal,” Grovenburg said. “That would be the best first step. It’s good to know Gilroy is looking at this and has hired a consultant.”
Palacios and Flores said the school district would cooperate with the district attorney if contacted.
“We’ll do whatever they tell us to do,” Palacios said.
In the more than 20 years Palacios has been in public education, he said he has never seen any school district or charter school do what MACSA did.
“From a school district’s perspective, we would never do this,” Palacios said. “Never.”
School districts – and independently run charter schools like El Portal – are obligated to deposit retirement contributions into the appropriate account and not withhold them for other purposes, Palacios said.
“It’s a moral issue,” he said.
In a letter to the editor, Chief Executive Officer Olivia Soza-Mendiola wrote that the funds were used to prevent layoffs and that her agency is working with CalSTRS, a teacher retirement fund, to make good on late payments. She said her agency expects to fully refund its employees by June.
According to her letter, Soza-Mendiola blamed the nonprofit’s lack of funds on a cash flow problem stemming from the delayed sale of a piece of property and the slow-to-pass state budget. The nonprofit implemented a 25 percent wage reduction and laid off employees to cope with the financial strain, she wrote. When lawmakers passed the budget, MACSA received the necessary funds to make a $66,000 payment toward its Gilroy employees’ accounts, she wrote.
But teachers and school district staff said the retirement contributions have been behind for more than a year, not just the last few months when the state budget was up in the air.
“If the state budget was having such an impact, these problems would have only been going on the last few months,” Palacios said.
Though Soza-Mendiola was not available by phone and did not answer questions e-mailed to her, she also wrote in the letter to the editor that MACSA is current on this year’s payments to CalSTRS and will immediately make whole the retirement fund of any employee who wants to cash out their retirement prior to June.
District staff said the nonprofit processes its own payroll, but Flores said the district will be monitoring the charter school’s finances closely in the future.
“But ultimately, it’s important to point out that it’s their payroll, their responsibility,” she said.
