A state agency has discovered weaknesses in the financial practices of the San Dieguito Union School District that could make it harder for the district to prevent internal fraud.
These weaknesses, according to a report of the state budget crisis management and assistance team, include a lack of checks and balances to ensure that the budget, payroll, and number of employees add up correctly, and that ‘a person does not have control of the entire financial process, which could make it easier for mistakes or manipulations to occur.
Because of these conditions, the agency rated San Dieguito as “high” risk in its ability to maintain fiscal solvency —in other words, to meet its long-term obligations and remain financially viable.
But Michael Fine, CEO of the agency that audits school districts and charter schools, said he thinks the issues identified in the findings for San Dieguito are relatively easy to fix.
“These are all important issues…I’m not trying to minimize them, but they can also be solved quite easily,” he said.
The agency, which audits districts and charters to root out potential fraud, also studies schools and districts upon request to show where they need to improve their financial practices.
The San Dieguito report is the only study the Fiscal Crisis Management and Assistance Team has released on a San Diego county district or charter since 2020.
In November, Cheryl James-Ward, then superintendent of San Dieguito, requested the study. James-Ward was fired in late June after two and a half months of controversy over comments she made linking the academic performance of Asian students to an influx of wealthy Chinese immigrant families.
The report adds an additional layer to the many issues facing San Dieguito, a district of 12,700 high school students in 10 schools that has struggled with political division and unrest since 2020.
The agency’s identification of problems with the district’s financial management does not mean it has found reason to believe there is fraud, said Robbie Montalbano, intervention specialist with the team. of management and assistance of the tax crisis and co-author of the study, during the presentation of the results. at a San Dieguito school board meeting late last month.
“But we’re addressing it because obviously having good controls and practices in place prevents it from happening,” Montalbano said.
Tina Douglas, who was the district’s associate superintendent of business services and became acting superintendent in April, told the agency that she and other staff were tackling the issues outlined in the study, including the lack of checks and balances.
According to the report, district staff do not regularly check that the budget, payroll and number of employee positions match. The same employees who receive the checks are the ones who distribute them, and the same employees who create the invoices are the ones who receive the payment. Experts recommend segregation of duties to prevent potential theft or manipulation.
“There is a possibility of problems there when you have the same person in charge of requesting the check and sending the check,” Montalbano said.
Payroll and accounts payable are not reviewed by a supervisor before final processing, according to the report. The San Dieguito Business Department could not provide documentation to show who has access to the district’s financial system. And staff upload some payroll information to an unsecured Excel file before uploading it to the payroll system.
“It’s possible to make changes to this file, and no one will know about it,” Montalbano said.
The agency also found that San Dieguito does not regularly train directors who manage budget and finance, and that not all board members have been trained in budget and governance at least every two years. year.
The agency also discovered several factors that increased San Dieguito’s fiscal solvency risk, including the high turnover of superintendents. San Dieguito has changed superintendents three times in the past year and a half.
“Any time there’s turnover in superintendents and CEOs, there’s a higher risk of a budget crisis,” Montalbano said.
San Dieguito also failed to conduct a thorough analysis of how it would be able to afford employee wage increases, according to the report.
Douglas said she plans to report progress in resolving the issues identified in the report to the school board later this month.