CONCORD — A grand jury has found a crisis in leadership of the Mt. Diablo school district imperils the agency, based on several issues that came to light last year.

But the district says the findings — which include bills paid without board approval, payroll tax penalties and improper handling of contracts — are no surprise. In fact, most of the panel's suggestions are already being implemented, said board President Gary Eberhart.

"When you look through their recommendations," Eberhart said Monday, "we've done probably 90 percent of them already."

The grand jury began investigating the district after receiving several complaints from area residents last summer, said forewoman Leslie Lea. It concluded that former Superintendent Gary McHenry controlled board agendas, failed to provide the board with adequate financial information and inhibited the exchange of information between departments, which led some staff members to resign.

The panel also found that McHenry did not forward some contracts to trustees and that he paid a disputed legal bill for nearly $110,000 without required board approval. The jury recommended that the board president be involved in setting agendas, trustees receive training regarding their responsibilities and that board members receive more details about financial transactions.


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In addition, jurors recommended that the district's legal counsel report directly to the board, that the legal department be expanded and that contracts should routinely go before trustees.

While district officials agree that leadership problems existed in 2008, they say a new board majority and recently-appointed interim superintendent Dick Nicoll had already identified the issues raised and had taken actions to rectify them.

Eberhart and board Vice President Paul Strange work with Nicoll to prepare meeting agendas, board members receive detailed financial and contract information and payroll procedures have improved, Nicoll said. The general counsel now reports directly to the board and the legal department is expanding, with more contract and billing oversight. The district is also cooperating with an Internal Revenue Service audit, which may last until November. Nicoll said he believes payroll taxes in 2006 and 2007 were paid, but that paperwork was filled out improperly.

The district will respond to the grand jury report by June 24, Nicoll said. "We're taking it seriously and we believe we've addressed most of these issues already," he said.