The nonprofit that runs Gilroy’s only charter school, El Portal
Leadership Academy, used $400,000 of retirement funds taken out of
teachers’ paychecks without telling them to pay operating
costs.
Gilroy
The nonprofit that runs Gilroy’s only charter school, El Portal Leadership Academy, used $400,000 of retirement funds taken out of teachers’ paychecks without telling them to pay operating costs.
“Technically, it’s not legal,” said Ben Tan, chief financial officer of the Mexican American Community Services Agency, El Portal’s parent organization. “But we’re talking to staff, telling them that we will make the contribution eventually.”
The Gilroy Unified School District became aware of the issue when a teacher at El Portal wanted access to his retirement money and the funds wasn’t there, sources said. Upon further scrutiny of El Portal’s finances, the district learned that payments into the employees’ retirement funds were lacking, said Enrique Palacios, deputy superintendent. From there, the district contracted with consultants Total School Solutions to scrutinize El Portal’s finances, district staff said. According to a contract signed by Palacios, the investigation could cost up to $10,000.
“It has yet to be determined if El Portal is financially or academically sound,” Superintendent Deborah Flores said.
The nonprofit, whose mission is “to enrich the lives and to advance the interests of the Latino community in Santa Clara County,” according to its Web site, skimmed $400,000 off teachers’ retirement funds – including $140,000 from Gilroy employees – during the past year, Tan said. However, the school district would not confirm the amount missing.
The organization acknowledged their actions and expects to fully refund the teachers’ state retirement accounts – known as CalPERS and CalSTRS – by June, Tan said.
It was unclear as of press time whether the borrowing process was legal or if MACSA staff faced any legal ramifications.
The organization was facing the prospect of cutting programs or employees in the wake of budget cuts and late payments from the state, said Olivia Soza-Mendiola, chief executive officer. To avoid these cuts, MACSA took the money teachers paid toward their retirement accounts and the money the organization would have contributed and instead used it to pay operating costs.
While the intention was and is to pay it back, according to Soza-Mendiola, it is unclear whether they will calculate in any interest associated with the delayed payments. Tan is meeting with district employees to work out a repayment plan and has already deposited a $66,000 payment into the El Portal account, he said.
“Could we have done things differently – we probably should have,” Soza-Mendiola said. “The money was staying within the agency. It’s not that it wasn’t going to get paid, just not in the exact month it was supposed to.”
Teachers at El Portal were not the only ones to find out they had not been getting retirement contributions. MACSA also runs Academia Calmecac in San Jose, where the organization owes staff nearly $250,000, Tan said. Tan said he expects to knock $120,000 of the Academia Calmecac debt by the end of March.
In his 40 years of experience, Jerry Kurr, associate superintendent of business services and administration for East Side Union High School District – which oversees Academia Calmecac – said he’s never seen an employer do this.
“You trust that your employer withholds your taxes and sends them to the appropriate agencies,” he said.
Flores questioned not only the financial decision making at the school, but the dismal academic scores on state tests. The school’s score plunged 66 points from 523 to 457 on a scale of 200 to 1,000 last school year. In that same period, Gilroy High School climbed from 705 to 723, inching closer to the state recommended score of 800. Only three Santa Clara County high schools – two community schools for at-risk youth and a continuation school – scored worse than El Portal.
“Academically, they’re not achieving,” Flores said of El Portal.
However, the organization’s Web site boasts that 100 percent of seniors that graduated from MACSA’s Charter High School Program pursued post-secondary education. These seniors were accepted into various community colleges, trade schools and 4-year universities, according to the organization.
While Soza-Mendiola acknowledged El Portal went through a rough spot last year with a transition in leadership, she said the new principal has brought stability to the school and that the student body – which has the largest percentage of English language learners in Gilroy – is “progressing well.”
“We’re starting to define ourselves in what role El Portal plays in the district,” she said.
Trustees would not comment on the school’s finances, which they said was a closed session item because of possible anticipated litigation. However, Trustee Denise Apuzzo could talk about the organization from her perspective as head of the City of Gilroy’s Citizens Advisory Committee, which disperses the city’s Community Development Block Grants, a subsidy MACSA applies for every year.
“I think El Portal is failing their students,” Apuzzo said.
Apuzzo questioned the organization’s honesty, citing an application for a $25,000 grant in which the organization wrote, “this agency has not been under investigation for any reason.” However, Apuzzo said she knew this was not true given the school district’s investigation. In an e-mail to the city, Soza-Mendiola countered Apuzzo, saying that the organization may be undergoing audits, but it is not being investigated.
Whatever the process is called, district staff said this situation will ultimately be MACSA’s problem to fix.
“We are not going to get stuck with this bill,” Palacios said. “The bill belongs to MACSA, which has to pay its obligations. There is no other option.”
