School district in jeopardy

Academic programs and school construction projects for thousands of students in the wealthy San Mateo Union High School district are in jeopardy, thanks to fiscal mismanagement over several years, a civil grand jury has concluded.

The district's board of trustees "neglected its duties, was fiscally irresponsible, and allowed hundreds of thousands of dollars of public money to be squandered," according to the 37-page report released Wednesday.

The San Mateo Union High School District educates about 8,600 students each year from Hillsborough, Burlingame, Foster City, Millbrae, San Bruno and San Mateo.

The grand jury cited numerous examples of mismanagement in four categories dating back to 2001, including these:

• Consulting overtime: Thousands of dollars were paid out with little or no documentation.
• School construction: The district used false certifications to qualify for $23.8 million in state funds for work at Burlingame, Mills, Hillsdale and Aragon high schools.
• Accounting: Several transfers from the building fund to the instructional fund -- including $1 million lent in February 2006 -- were never repaid, lacked receipts, and may have been an unauthorized use of voter-approved funds under Measure D.
• Improper loans: The district qualified for millions of dollars in state loans, called certificates of participation, by falsely certifying that it had a healthy bottom line in January 2006, and without identifying how the money would be paid back.

"I agree with most of the report," said Liz McManus, who took over the district's financial management last August.

Her longtime predecessor is referred to in the grand jury report by his title only.

"My predecessor, unfortunately, made significant recommendations to the board of trustees using erroneous data," said McManus, who was brought in to set the district back on its feet. "The board made decisions on flawed data."

Since arriving in the district, McManus said she and the board have made several changes, including firing the former auditing firm and requiring monthly reports on the budget and overtime requests.

She said the board has also convened a budget advisory committee of professionals. Its job is to analyze the budget and make recommendations.

"It's been an extraordinarily painful year," McManus said. "Excruciating, really."

Craig Childress, president of the San Mateo Union High School Teachers Association, agreed.

But for the teachers who have been saying for years that the district's financial problems were not the teachers' fault, the grand jury's report is, in a way, gratifying.

"It's validated our position that teachers' salaries and benefits are not the cause of the district's financial woes," he said. "We've said all along that there has been fiscal mismanagement."

The State Allocation Board will decide later this summer what penalties may still be levied against the school district.

The full report can be found at: links.sfgate.com/ZGQ