STOCKTON, Calif. — A school district teeming with poor business practices, an inadequate duty of care, a lack of transparency, and headed toward a multi-million dollar budget shortfall is the picture painted of the Stockton Unified School District (SUSD) by the San Joaquin County Grand Jury in a new report released Friday.
The report says that SUSD, the largest school district in San Joaquin County and the 15th largest in the state, is headed toward a shortfall of at least $30 million by the fiscal year 2024-2025.
As a result of the grim outlook, the state's Fiscal Crisis and Management Assistance Team has been brought in to conduct an audit of the financial issues faced by SUSD to avoid a potential state-ordered takeover by the San Joaquin County Office of Education (SJCOE).
"The Grand Jury found multiple examples supporting the conclusion of poor business practices, inadequate duty of care by the administration and Board, and lack of transparency to the public and Board, potentially risking the District’s solvency," the report says. "If SUSD continues to operate as is, the District deficit will likely escalate."
The 46-page report also looked at the school district's Board of Trustees and found conflicts of interest, a lack of preparedness for meetings, and an inability of trustees to recall how they voted on major school district contracts.
According to the report, many board meeting minutes were not publicly posted and the district did not fully comply with a subpoena issued by the grand jury to obtain meeting recordings and minutes.
"The Board of Trustees, who are charged with the responsibility to make decisions in the best interest of the District, community, and students, often makes crucial decisions with minimal data, knowledge, and consideration," the report says. "A lack of transparency and apparent conflicts of interest exist. District, State, and federal guidelines and policies are regularly overlooked."
Among the dozens of recommendations, the grand jury is calling on the district to update its financial software to be in line with the county office of education's software, used by all other districts in the county.
The grand jury also recommended that SUSD begin approving board minutes at the following meeting, create a policy and procedure for tracking adjustments to contracts, reinstate a Grant Development Office that was shuttered by the district in a February 2021 restructuring, and implement a policy requiring the district's contracted legal firms to provide detailed billing information and develop operational budgets that address the projected deficit spending.
Other recommendations outlined by the report calls on the district to avoid conflicts of interest on its school board, optimize public information and transparency, and adhere to the board of trustee policies when it comes to creating meeting agendas, filing consultant forms, asking for requests for proposals and candidate screenings in recruitment efforts.
The school district has 90 days to respond to the recommendations and findings outlined in the report.
"Some of (the district's) decisions have been based on very minimal information. For instance, during the COVID, era that we're in, they have received monies that are one-time monies, to assist the district with COVID-related issues. They have taken that money and applied it to ongoing expenses and we were not able to find that they have a plan for how to pay those expenses," said Linda Bradshaw, the jury's foreperson. "Once those COVID monies are exhausted, that is a big issue. They're looking at the possibility of a $30 million dollar deficit and unless they address that, and get some solid plans in place, on how to manage the financial aspect of the district, they're facing a real risk of insolvency."
For Bradshaw, public awareness of the report is quintessential to solving the district's issues and holding officials accountable.
"The public needs to be urged to read the report. You know, if they don't read it, they may not really realize that there could be problems within the district," Bradshaw said. "The grand jury is made up of 19 citizens that are watchdogs, for the public, for taxpayers, for the constituents of the district, and it just tells me that there are some ongoing problems that need to be addressed."
The report comes one week after the school district's superintendent, John Ramirez Jr. abruptly resigned citing a need to care for his elderly parents.
Ramirez had served as superintendent for just over a year proliferating a "revolving door" of superintendents at the district, as described in another grand jury report released last year.
In their July 2021 report, the county's civil grand jury described SUSD as a district of "dissension, dismay, and disarray."
The 2021 report highlighted poor leadership in the district, a disregard for policies and procedures, inappropriate complaints, deficient transparency, and poor trustee behavior.
The state agency's audit of SUSD is expected to be completed in 12-18 months, according to the grand jury report released Friday. Depending on the results of the audit, the district could be placed in state receivership which would include the termination of the superintendent and the suspension of the Board of Trustees.
The San Joaquin County Office of Education released a statement to ABC10 Friday saying that they are committed to their role of supporting the county's 14 school districts.
"The SJCOE is currently reviewing the findings in the Grand Jury report concerning Stockton Unified School District that was released today," the statement says in part. "The SJCOE can confirm that it has contracted with the Fiscal Crisis Management Assistance Team (FCMAT) in order to conduct a comprehensive review of the school district. The San Joaquin County Superintendent of Schools initiated the AB139 Extraordinary Audit earlier this year."
SUSD, founded in 1852, boasts an enrollment of nearly 41,000 students at 54 school sites across Stockton, with an 85.8% graduation rate and a $585 million budget.
In a statement to ABC10, the Stockton Unified School District said that district officials are reviewing the report.
"The Stockton Unified School District received the Civil Grand Jury Report. Administrators and the School Board will review it closely," the statement says. "We realize the Civil Grand Jury is made up of community members and we take it seriously. We want to be transparent as we keep students as our top priority."
Read the full report below:
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