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Lack of oversight, massive spending and even larger deficits continue to plaque SUHSD

Posted at 6:01 PM, Dec 18, 2018
and last updated 2018-12-18 21:04:50-05

CHULA VISTA, Calif. (KGTV) -- The perfect storm. A lack of oversight, massive spending and an even larger deficit. Those are all the ways the Sweetwater Union High School District is being put on blast by a new analysis by the Fiscal Crisis and Management Assistance Team.

In a review of the district’s budget woes, the team's CEO Michael Fine presented Sweetwater’s school board with details on how the district ended up in its dire financial situation.

Fine said the district has mismanaged its money for many years, even suggesting that specific accounting errors were “intentional” and part of a “cover up.”

The report also found that the district didn’t comply with public disclosure requirements. So what does the future look like? According to the analysis, the district is projected to keep spending at a deficit at least through 2021.

RELATED: Sweetwater Union High School District faces potential fraud investigation

According to the report, a financial projection shows an expected $10.4 million deficit in the 2019-2020 school year and a $5.6 million deficit in 2020-2021.

The board has yet to approve a plan to fix deficit spending. What’s more, the report found that the county doesn’t have access to the district’s financial system, blocking access to oversight.

The report also found that the district doesn't have controls in place that limit access to its financial system. In fact, Fine found that a single employee has "complete access to cash between funds and is given complete access to the county treasury district accounts." It's unclear whether or not that employee has the ability to move money outside the treasury accounts.

After action is taken against the employee, such as the employee being terminated, the district doesn't verify that that employee's access to financial systems is suspended.

TIMELINE: Sweetwater Union High School District's budget woes

Finally, the report found that the district doesn't account for all positions and costs.

Fine suggested the Sweetwater District can do the following to begin the process of climbing out of debt:

1. Cooperate with the County Office of Education: Fine said the county office are “partners” and recommended the district work closely -- and be transparent -- with the assigned fiscal advisor.

2. Invest in business office staff: Fine believes the district’s new chief financial officer, Dr. Jenny Salkeld, can be the best resource as they work through the problems.

3. Develop and implement a recovery plan: Fine said, “You cannot kick this can down the road,” when it comes to putting together an adequate plan.

4. Audit cash borrowing and cash position: Fine suggested Sweetwater thoroughly evaluate its cash management, including the sources from which money is borrowed.