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State Agency Says Valley School District Likely Squandered Millions in COVID Money

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An audit of a California school district has uncovered a pattern of questionable spending, Dan Walters says. (AP File Photo/J. Scott Applewhite)
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Stockton has long had a reputation for crime, poverty and civic malfeasance and suffered another blow last week when a searing audit of the city’s school district was unveiled.

Auditors portrayed a system consumed with internal discord that ignored basic rules of financial management and squandered millions of dollars on questionable no-bid contracts – money that should have been used to improve the education of 34,000 overwhelmingly poor students.

The audit was conducted by the Fiscal Crisis and Management Assistance Team (FCMAT), an agency that monitors the financial health of California’s public school systems and helps stabilize those in trouble. It found dozens of instances in which money was paid to outside contractors without competitive bidding and/or in violation of the district’s own policies.

Dan Walters with a serious expression

Dan Walters

CalMatters

Opinion

The centerpiece of FCMAT’s report was a $6.6 million contract given to a company, Alliance Building Solutions, in 2021 for a system to disinfect the district’s schools through the use of ultraviolet rays. One of the district’s trustees, Scot McBrian, arranged a meeting of district officials with the company at a private party hosted by Stockton’s former mayor, Anthony Silva, and advocated the adoption of its system.

From that initial contact, FCMAT says, the district – without ever determining a need for disinfection – went through several irregular processes, culminating in the contract with IAQ Distribution, an Allied subsidiary that at the time had not registered as a business with the state. Although the company was paid – using federal funds meant to overcome the educational ravages of COVID-19 – only small pieces of the contracted work were ever completed.

Contract Irregularities

FCMAT found similar irregularities in contracts the district awarded to nine different law firms.

“Based on the findings in this report, there is sufficient evidence to demonstrate that fraud, misappropriation of funds and/or assets, or other illegal fiscal practices may have occurred in the specific areas reviewed,” FCMAT concluded. “Deficiencies and exceptions noted during FCMAT’s review of (Stockton Unified’s) financial records and internal control environment increase the probability of fraud, mismanagement and/or misappropriation of the…assets.

“These findings should be of great concern to the Stockton Unified School District and the San Joaquin County Office of Education and require immediate intervention to limit the risk of fraud, mismanagement and/or misappropriation of assets, or other illegal fiscal practices in the future.”

This, as noted earlier, is not Stockton’s first civic disgrace. In 2012, the city declared bankruptcy after borrowing heavily to build a marina, a basketball and hockey arena and a baseball stadium of dubious utility. The city also took on more debt to make contributions to the pension system for city employees.

Routinely, Stockton is ranked near the top in crime among California cities and several local officials have been caught up in criminal investigations.

Silva, the former mayor who apparently instigated the school system’s disinfection contract by hosting a party at his home to bring school officials and company representatives together, is one of those officials.

Silva, who ran an organization called Stockton Kids Club, was elected mayor in 2012, the same year the city declared bankruptcy. In 2016, he was arrested for providing alcohol to underage boys and recording them playing strip poker. A year later, he was charged with grand theft, embezzlement, profiteering, misappropriation of public funds and money laundering, and in 2019 pleaded guilty to one charge in a plea deal.

Stockton obviously has an endemic problem, one that its voters and civic leaders have chosen to ignore for decades.

About the Author

Dan Walters has been a journalist for nearly 60 years, spending all but a few of those years working for California newspapers. He began his professional career in 1960, at age 16, at the Humboldt Times. For more columns by Walters, go to calmatters.org/commentary.

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Dan Walters has been a journalist for nearly 60 years, spending all but a few of those years working for California newspapers. He has written more than 9,000 columns about the state and its politics and is the founding editor of the “California Political Almanac.” Dan has also been a frequent guest on national television news shows, commenting on California issues and policies.

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