San Jacinto Valley Academy, Inc.

Board Minutes show that during fiscal year 2006-2007, an Academy Board Member, who should have recused him/herself, voted to approve warrants, which resulted in direct financial benefit to two family members. One family member received warrants totaling $5,499 and the other member received a warrant in the amount of $22,000. In addition, the Board Member voted to approve warrant payments totaling $77,190 to a fee-based non-profit organization in which the Board Member is a corporate officer. The Board Member actions are in direct violation of Article VII, Section II – Self Dealing of the Academy Bylaws, that states: “No individual shall vote on any issue, motion or resolution which directly or indirectly inures to his or her benefit financially except as permitted by law. For purposes of California non-profit corporations law applicable to public benefit corporation, a conflicted director must first disclose the nature of his or her interest, and thereafter may be counted in order to qualify a quorum and may participate in the discussion (but not the voting) of such issue, motion or resolution, all as subject to 5230 eq seq. of the California Corporation Code or any successor statute.” Furthermore, the Board Member’s action was also in violation of the Conflict of Interest Code. Board Policy 07-05-3, Articles III specifies Board Members as “designated employees”. Article V states that: “No designated employee shall make, participate in, or try to use his/her position to influence a Charter School decision which he/she knows or has reason to know will have a reasonably material financial effect, distinguishable from its effect on the public generally, on the official member of his or her immediate family.”

On June 6, 2006, the Academy Principal terminated the services of the Parent Advisory Council (PAC) Volunteer Coordinator. On June 12, 2007, the Board dissolved the PAC as well as the School Advisory Committee (SAC) and attempted to replace both parental involvement committees with a Parent Teacher Association (PTA). However, the President of the 23rd District PTA in Riverside County declined to organize a PTA unit at the Academy, due to “lack of cohesive leadership team for the unit, and need for inclusiveness amongst those who may serve as PTA Officers and 2 Chairman”. The Board action is in violation of Section 4 of the Academy’s Charter, that states: “We will use multiple means to ensure parental involvement. First, parents will be represented on the school’s Governing Board, Second, parents will be included on a Parent Advisory Council and a School Advisory Committee, ensuring a voice on important school decisions.”

In March 2007, two Board Members, one Administrator and two Teachers, attended an off-site charter school conference. Expenses for this conference were not paid with the Academy’s business credit card, which had a limit of $1,000. A Board Member paid the conference expenses with a non-affiliated business credit card from a non-profit corporation in which the Board Member serves as a corporate officer. This transaction is substantiated by a reimbursement warrant.

Board Minutes reveal that Board Members, whose terms are expiring, participated in the discussion and voted on their new term of office. A San Jacinto Unified School District Report, dated October 19, 2007, states that “Good judgment would suggest that the individual member abstain while the board voted on his or her new term”.

Even though the Riverside County Office of Education and San Jacinto Unified School District performed their minimum statutory oversight responsibilities, our review of the Academy’s management practices through documents and interviews indicate misuse of public funds. The following examples are cited: • An unlicensed landscape contractor, who is related to a Board Member, was paid $70,000 to install the lawn in the quad area for elementary grade level children. • A Board Member made purchases on behalf of the Academy with a non-affiliated business credit card belonging to another organization. The Board Member then personally charged the Academy an 8.5% administration fee for the use of the card, while also receiving a rebate on the purchase from the credit card company. Payment for the administration fee and rebate were made to the non-affiliated business organization in which that Board Member is a corporate officer. 3 • A purchase request dated December 21, 2006, for $1,225 was approved to buy gift cards for the Board and staff members in violation of Article XVI, Section 6 of the California Constitution. An incorrect expense code was used for this transaction.

During an approved and scheduled teachers’ training session on November 19, 2007, with a paid consultant, the Principal and Assistant Principal removed teachers from the training session to conduct performance evaluations.

The level of safety and sanitary conditions provided by the Academy Administrators for staff and students did not meet the Department of Health and Safety Standards, Local Fire Marshal and Building Code requirements. Listed below are a number of unsafe and unsanitary conditions supported by interviews, a tour of the facility on October 31, 2007 and photographs. • Porta-potties that were used over a two-year timeframe were not cleaned and serviced regularly, which resulted in unsanitary conditions. (Reference photos on pages 8 and 9.) • A wooden ramp constructed to provide access to restrooms located in a temporary trailer failed resulting in a student falling through the structure. • The sports field used by secondary level students consists of an uneven hard clay surface with cracks and crevices. This presents a dangerous condition for playing sports and could increase Academy liability. (Reference photos on .) • After spending over $70,000 for sod and hydro seed, the playground area for elementary grade children shows dirt patches and uneven surfaces with the presence of ridges. These conditions are due to the absence of proper soil preparation resulting in the lack of water retention and nutrients to support and sustain the lawn. (Reference photos on .) • Use of classrooms without receiving a Certificate of Occupancy from the City of San Jacinto.

The Academy does not have a policy or procedure requiring vendors working at the Academy to document arrival/departure time and verification of services rendered. 4

Contracts for services and building projects were awarded without a formal bidding process. Other interested and qualified vendors were denied the opportunity to bid on the job. Documents reviewed indicated: • Bid Splitting – Table 1 below shows the two separate contract amounts and warrant payments to an electrical contractor who performed work at the Academy without formal competitive bidding. The contract amounts are just below $15,000 and if exceeded, require formal competitive bidding. Splitting or separating the electrical project into smaller jobs evaded the provisions of Public Contract Law Section 20116, that states: “It shall be unlawful to split or separate into smaller work orders or projects any work, project, service, or purchase for the purpose of evading the provisions of this article requiring contracting after competitive bidding”. Table 1 WARRANT PAYMENTS TO AN ELECTRICAL CONTRACTOR PERCENT TIME PERIOD CONTRACT AMOUNT PAYMENTS INCREASE July 2006-June 2007 $14,500 $16,300 12.4% Jan. 2007-March 2007 $14,900 $19,040 27.8% TOTAL $29,400 $35,340 20.2% • The business office manager failed to ensure that all expenditures are reported to the Board in the cash flow and budget analysis. • Selecting and paying an unlicensed contractor who did not have the qualifications to perform the work. • In violation of Public Contract Law, Section 20111 and Education Code 39802, The Board during fiscal year 2006-2007 selected a non-profit corporation, in which a Board Member is President/CEO, to provide services that exceed $15,000 without a written contract. 5