A grand jury charged with investigating the financial collapse of the Richmond (Calif.) Unified School District has laid most of the blame for the district’s plight on its school board. In its report, the grand jury also criticized former Superintendent of Schools Walter L. Marks for utilizing “unsound management practices and unjustified budgeting techniques” to advance reform programs that the jurors said the district could not afford.
But, the jury concluded, the ultimate responsibility for the district’s need to seek bankruptcy protection earlier this spring belonged to a school board that failed to control the district budget. The board, it said, overspent after succumbing to “a large dose of wishful thinking” and pressure from school employees’ unions and community groups.
“In the final analysis,” the Contra Costa County grand jury said in the report late last month, “the local school board has final authority over its budget.”
The grand jury exonerated Mr. Marks, who is now superintendent of the Kansas City, Mo., schools, and the school board of any criminal wrongdoing in connection with the district’s financial troubles. It noted that no legal penalties are provided for the failings of either the superintendent or the board.
“The price is paid largely by the students of the district,” the jurors’ (report said.)
the 19-member jury, which was empowered to act as a public watchdog and to issue criminal indictments if warranted, began its investigation of the 31,000-student Richmond district last fall after it became clear that the system might require a financial bailout from the state.
After Gov. Pete Wilson of California refused to agree to a $29-million loan package, the district filed for protection under Chapter 9 of the U.S. Bankruptcy Code in April and announced that it would close its schools. District parents sued over the closings, and a superior-court judge last month issued a landmark decision ordering the state to keep the Richmond schools open. (See Education Week, May 8, 1991.)
The decision, which the Governor has appealed to the state supreme (court, resulted in the state’s lending the district $19 million and averted a shutdown of the schools.
The grand-jury report said Richmond Unified’s bankruptcy filing “was the culmination of several years of failure by the district’s board of education to exercise effective and prudent control of financial affairs.”
“While members of the r.u.s.d. board over the past several years have been well-educated individuals with community-service records,” the report said, “the board, as a whole, lacked adequate expertise in the management oversight of a multimillion-dollar enterprise.”
“The primary motive of members in seeking election,” it added, “was to influence educational, not financial, policies and practices.”
More specifically, the grand jurors said, the board failed to adequately question Mr. Marks when he proposed to enrich the curriculum and establish magnet schools, and made the “erroneous” claim that the changes could be funded by federal and state grants.
The superintendent’s plans were implemented without careful cost calculation, the jury’s report said, and “in the process the superintendent greatly enlarged headquarters staff, changed responsibilities of staff members, and overrode control procedures.”
“There are no legal penalties for this type of mismanagement, no matter how damaging the consequences,” the report noted.
Although the district’s revenues increased by about 49 percent be tween 1986 and 1990, its expenditures rose 76 percent during the same period, with the annual deficit increasing from $1.4 million in 1987 to $18.1 million in 1990.
Driving the deficit, which totaled $29.5 million for the period from 1986 to 1990, were a 25 percent increase in certified staff members, the granting of salary increases that could not be funded by the state, excessive equipment purchases, and the use of long-term borrowing to finance operating deficits, the grand jury said.
The Contra Costa County superintendent of schools, as well as annual audits, warned the district of increasing deficits, the jury added, but the board consistently accepted Mr. Marks’s revenue projections and pending proposals without making an independent effort to verify them.
The report laid some blame for L Richmond’s financial woes on the ate, asserting that California’s financial requirements for school districts, combined with its “irresponsible” delays in providing them with estimates of their state aid, “make sound financial planning and oversight at the district level extremely difficult.”
The state’s system of funding all school operating expenses also fails to provide adequate or equitable funding and thwarts local control of schools by denying districts control of their revenues, the grand jury said. The jurors recommended that school-board members be required to undergo training in financial man provided by county offices of education, and that the county education offices conduct public meetings in advance of school-board elections to tell potential candidates of members’ financial responsibilities.
The grand jury also recommended that county superintendents work more closely with district school boards to keep their budgets in line, and that district boards take pains to hire administrators who are skilled in financial management. Betty Allums, president of the Richmond Unified school board, said last week that she thought the report “was fairly stated in the sense that it didn’t put all of the blame on Marks.” She also suggested that the board, county, and state shared responsibility for the district’s financial woes. Ms. Allums said she had looked to the state and county for guidance in resolving the district’s financial problems and “it just didn’t happen.”
A spokesman for Mr. Marks said the former Richmond superintendent believes most of the blame for the district’s financial collapse belongs to the state legislature because of its failure to provide adequate funding.
