Why are Paso schools in crisis? Favoritism, bloat, and maybe stolen assets, district says

The Paso Robles school district answered its critics last week in a wide-ranging memo that addressed the origins of its financial crisis, rumors of favoritism in hiring and allegations of administrative bloat, all while leaving one key question unanswered.

Were funds or other assets stolen or otherwise used for personal gain as part of the district’s crisis?

The response, according to the memo, is “pending.”

But more information could come as soon as Tuesday night when the school board will meet in closed session on a personnel matter, Superintendent Curt Dubost told The Tribune on Monday.

The memo — drafted by Dubost, School Board President Joel Peterson and Board Trustee Chris Arend — addresses the tumultuous year that followed the sudden resignation of Superintendent Chris Williams last November, when details of a $3 million budget shortfall came to light.

It was distributed during an impromptu Sept. 18 meeting with a group of concerned residents who raised questions during the public comment period at a school board meeting.

Dubost said the 10 a.m. meeting — scheduled during a time when many people are at work — was intended to include only a few attendees, but additional residents showed up after it was publicized on radio station KPRL.

As a whole, the memo shows that the former district administration promised programs and facilities its budget couldn’t handle and created a fiscal crisis through irresponsible spending.

Now, with a new superintendent at the helm, officials want to move the district forward amid continued community questions regarding the events that led to the crisis.

Administrative bloat

The memo is on the agenda for Tuesday’s school board meeting. It candidly answers community questions about the district’s financial issues and reserve depletion, accusations of misconduct by Williams and his administration and spending on athletic facilities.

“It was written from a point of view of, ‘Let’s get everything out there so we can move on,’” Peterson told The Tribune on Monday.

The district’s financial problems — which first came to light when budget reserves were revealed to have dropped by half in early 2018 — were primarily caused by faulty accounting and overspending, according to the memo.

“The problem with the shrinking reserve began in 2015-16, but the board was repeatedly presented with budget reports and verbal assurances that reserves met minimums and problems were being addressed,” the memo reads. “A majority of the members of the previous board trusted that input.”

The district also developed a problem with administrative bloat. There were 47.3 administrators working for the district during the 2013-14 school year — that number ballooned to 73.2 during the 2017-18 school year.

There are currently 67.4 administrators working for the district, down from 69.4 in 2018-19.

Overspending and imprudent purchases

The memo attributes many of the district’s financial problems to considerable administrative turnover — there were multiple chief business officers, directors of financial services and directors of human resources during the last four years.

Williams came into the superintendent role with big district ideas that ultimately promised programs, facilities and new positions the district couldn’t sustain, said Peterson and Jennifer Gaviola, deputy superintendent.

Budget errors and attendance overestimations then created a financial vacuum, Gaviola said.

Excitement about new district initiatives and a lack of reliable financial advice contributed to the board’s inability to act as a meaningful check on Williams, Peterson said.

“It wasn’t a situation where the board was simply green-lighting things because someone told us to,” he said.

Peterson admitted some of the actions the board took at that time were ill-advised, such as purchasing two stainless steel pools before a long-awaited aquatics center was fully funded.

The materials remain in storage, and the warranty may expire before the pools are built, according to the memo.

“Buying it at the time we did was not prudent,” Peterson said.

A new administration moves on

The memo also states most accusations of corruption within the previous superintendent’s administration are unfounded.

All of Williams’ hires were qualified for their positions, even though “established positions for posting and recruitment were not always followed” and positions were filled by friends from out of the San Luis Obispo County area.

“Also, hiring was not always necessary and certainly wasn’t affordable,” the memo reads. “... We are also aware that there is the perception that employees were not always treated fairly, and personnel moves may have been overly influenced by personal relationships as opposed to a totally objective process.”

Moving forward, Peterson wants to restore the public’s trust in the district and improve transparency and communication by better involving the community and “getting the right people in here to help make decisions.”

Dubost said he would hope the community “would give Joel and the others some credit” for owning their mistakes and trying to correct them. It’s time to move forward while remaining cognizant of past mistakes, he said.

“We’re dedicated to fixing things and making it better,” Peterson said.

The school board meets Tuesday at the district offices, 800 Niblick Road, beginning with closed session at 4:30 p.m.

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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.