Mt. Diablo Unified School District Iames W. Dent Education Center*

fiscal year. The respondent agrees with the finding.

The Superintendent, rather than the Board, controlled the agenda for Board meetings and decided what information to give or withhold from the Board. The respondent partially disagrees with the finding. Board members occasionally placed items on the Board agenda.

Some Board members did not have a full understanding of their duties regarding their function and financial responsibility to taxpayers. As a result, they failed to lead and instead, followed the Superintendent's directives. The respondent agrees with the finding. The District has not paid its correct federal payroll tax obligations for several years. In 4. 2005 the District paid a levy of over $105,000 for payroll taxes, interest and penalties. The Board did not approve these payments and was unaware of these issues because financial documents given to the Board lacked adequate detail. In 2008 the IRS informed the District that it may owe $833,000 in unpaid payroll taxes, interest and penalties. The matter remains unresolved as of this writing. The respondent partially disagrees with the finding. The District never failed to pay its federal payroll taxes. • ,

ADP, a private corporation which has served as the District's payroll tax processor, canceled its contract in November 2006, because the District failed to fund the necessary amounts to provide for payment to the IRS. The respondent partially agrees with the finding. ADP did write to the District in November 2006. The District believes that ADP bears partial responsibility for the IRS problems.

The Board approved the creation of an in-house attorney position as a cost cutting measure. It directed the attorney report to the Superintendent. This reporting relationship limited the volume and type of work provided to the Board by the in-house attorney. The respondent agrees with the finding. Between 2002 and 2007, the District paid for work performed by an outside law firm.

The law firm worked without a valid contract. This action violated District policy and the Board was unaware of the situation because renewal contracts were not forwarded by the Superintendent. The respondent agrees with the finding.

District policy dated July 16, 2002, requires Board approval for all bills over $25,000. The Superintendent frequently violated this policy by not submitting bills in excess of $25,000 to the Board. As one example, he unilaterally authorized payment in 2007 of a disputed bill for almost $110,000 to an outside legal firm. The respondent agrees with the finding.

The Superintendent withheld critical financial information from the Board. The respondent agrees with the finding.

The Superintendent inhibited the free exchange of information between various departments within the District. These actions undermined employee morale, and in some cases, led them to not report for work or to resign. Respondent partially disagrees with the finding. Respondent cannot speculate as to the mental processes of employees, and on that basis cannot completely agree with the finding. .

That the Board consider approving any unauthorized contracts retroactively to adhere with policy. The recommendation has already been implemented. If and when District staff discovers unauthorized contracts, they are brought before the Board. Sincerely, Greg Rolen General Counsel .