SAN MATEO — The San Mateo Union High School District Board of Trustees neglected its duties, was fiscally careless and allowed thousands of dollars in public money to be wasted, according to a San Mateo County Civil Grand Jury report released Wednesday.

This was one of three disparaging reports from the grand jury this year on the district. The two prior reports covered the district's problems with fiscal mismanagement and construction contracting procedures.

Among alleged problems listed in the 37-page report are a lack of documentation for back overtime pay, inaccuracies and false certifications in state grant applications, improper transferring of district funds and approval of financing with excessive interest and fees.

Superintendent Samuel Johnson, Jr., who is retiring at the end of the month, said the district and its legal counsel are in the process of reviewing the report.

"We need some time to absorb this report," he said.

Trustee Marcia Cohn-Lyle also said she needed more time to review the report as well before commenting on specific issues.

"There were a lot of recommendations made, and we will try to follow through with them," she said.

One of the problems described in the report could cost the district millions in penalties from the state, according the grand jury.

It says in April 2001, the district had inaccuracies and false certifications in a grant application for state bond money to pay for construction at Aragon, Burlingame, Hillsdale and Mills high schools. In order to receive state bond funding, a school district must certify to the State Office of Public School Construction that it has entered into binding contracts for 50 percent of the work shown in the plans. According to the grand jury, the district's former chief business officer told the state in applications that it had entered into the required contracts. But later audits by the state board revealed this was false information.

Now the district may have to forfeit state funds, pay penalties exceeding $2.8 million and $100 hourly charges for reexamining previous applications, and lose the right to self-certify future applications.

The grand jury recommended the district create better policies for applying for grants so things like thisdon't happen in the future.

The report also outlined problems the grand jury found with documentation supporting more than $88,000 in back overtime pay for the former executive assistant, who continues to do contracting work for the district.

According to the report, the district's counsel told the trustees that they had to pay back overtime to the executive assistant as long as it could be documented. This would include daily records of hours worked. However, the grand jury said it was not given this documentation after numerous requests.

The jury recommended the district ask its attorney about the legality of the agreement with the assistant, which was made when Tom Mohr was superintendent, as well as a review of the overtime payments to determine their adequacy.

Furthermore, they suggested the district review its compliance with labor laws pertaining to relationships with administrative employees, and establish better policies for consultant agreements.

Craig Childress, president of the San Mateo Union Teachers Association, said he found this information about the consultant "unnerving."

It speaks to the action and nefarious activity that's gone on in the district," he said. "It's troubling to think that something like that can go on and be presented to the board as something legitimate."

Another problem focused on in the report involved the district's accounting practices. In 2006, after the San Mateo High gym suffered water damage, the district transferred $1 million from its building fund to the general fund to pay for the damage. This is legal as long as the money is paid back to its original fund. But the grand jury could find no evidence that the money was ever returned to the fund.

Trustees interviewed by the grand jury were unaware of these interfund transfers, and district staff said they appeared as line items in the budget approved by the board. 

The grand jury recommended the district repay the money to the building fund and ensure that all future interfund transfers are properly authorized by the board. Furthermore, it suggested the board establish better policies for issues related to interfund loans.

The report went on to criticize the board for taking out loans for construction that resulted in excessive interest and fees. Furthermore, it states that the superintendent and chief business officer erroneously certified the district's financial situation so they could receive these loans.

In light of these problems, the grand jury recommended the board receive more education in school district finance and accounting.

Superintendent Johnson said a majority of the board members have received finance training, and the district's staff does advise them on issues.

The grand jury report says if the board had not made all of these financial mistakes, it might have been able to pay the salaries of the 16 teachers and 36 classified staff who were laid off last fall.

Childress agrees that the teachers are not the source of the district's financial woes. The district and teachers spent months bumping heads over medical benefits in their contract. They finally came to an agreement last month essentially giving the teachers the health care package they demanded.

"In a nutshell, it's really validating our position that the teachers' health care cost is not what's draining the district financially," he said.

Staff writer T.S. Mills-Faraudo covers education. She can be reached at (650)348-4338 or tmills@sanmateocountytimes.com.