Where did the money go and was there fraud? Paso schools will spend $50,000 to find out

The Paso Robles school board will spend up to $50,000 on an independent investigation into the district’s financial crisis and alleged fraud that occurred during the former superintendent’s administration.

Board trustees on Tuesday night voted 5-2 to set aside the funds to pay an accounting firm to conduct a non-audit examination into the district’s reserve loss, $3 million budget shortfall and alleged fraud perpetrated by previous Superintendent Chris Williams’ administration.

The board will engage accounting firm EideBailly LLC to conduct the investigation. Trustees will select three different areas for EideBailly to investigate at a later meeting — the scope of the investigation and the firm’s price tag will determine how much money is ultimately spent.

“It seems to me, this is a small price to pay to get to the bottom of this and restore the public trust,” Trustee Chris Bausch said.

Trustees Joan Summers and Stephanie Ulibarri voted against spending the money, citing the district’s ongoing financial problems.

“This district is, unfortunately, flat broke,” Ulibarri said.

The firm gave an initial estimate of $75,000 to determine “the causes for the reduction to the fund balance over recent history, recommend improvement to policies and procedures and assess fraud risk.”

However, trustees expressed concerns about spending that amount of money, and they decided $50,000 was an appropriate funding cap.

Paso Robles community calls for investigation

Community members at the previous board meeting called for a state audit of the school district, following the release of a public memo detailing misconduct during Williams’ administration.

County Superintendent Jim Brescia said engaging an accounting firm to conduct an independent investigation would be the first step in this process.

The district’s budget reserves dropped to 0.96% in September 2018, far below the state-required 3%. The reserves have since been raised to 2.68%, according to a public memo released on Sept. 18.

The San Luis Obispo County Office of Education earlier in the year required the district to cut $2.1 million from the 2019-2020 budget. Board trustees will also need to eliminate $800,000 in spending from the 2020-2021 budget.

In spite of the district’s financial situation, residents encouraged the board to spend money on the investigation, saying it’s the only way to regain the public’s faith in district leaders.

“The trust that this community needs in this new board — there’s no other way to get it,” said Berkley Baker.

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Lindsey Holden writes about housing, North County communities and everything in between for The Tribune in San Luis Obispo. She became a staff writer in 2016 after working for the Rockford Register Star in Illinois. Lindsey is a native Californian raised in the Midwest and earned degrees from DePaul and Northwestern universities.