Administrators with the Santa Clara Unified School District improperly received thousands of dollars for performing accounting tasks for two outside agencies -- work done during normal work hours, an independent audit has concluded.
The audit was performed at the request of the Santa Clara County Office of Education after its employees noticed questionable payments to the school district's business officials.
"There is sufficient evidence to demonstrate that fraud, illegal acts and lack of internal controls appear to have occurred," wrote auditor Michael W. Ammermon, a certified fraud examiner based in Laguna Niguel in Southern California. He reviewed payments for 2009-10 and 2010-11, and sampled payments made in 2008-09.
However, it's possible the alleged fraud is actually a disagreement over accounting methods and the definition of a manager's regular work hours.
The payments in question came from two agencies. One, the South Bay Area School Insurance Joint Powers Authority, is a consortium of 12 school districts that together self-fund liability and property insurance. The other, the Silicon Valley Transportation JPA, provides legally required busing for special-education students for six school districts.
Santa Clara Unified charges a fee for its employees to handle the accounting for both agencies. Together, the payments amounted to about $41,000 in each of the two years audited. Until sometime in 2011, the payments
Payments from the two agencies were paid to Assistant Superintendent for Business Services Jim Luyau, Budget Manager Kimberly Nguyen, Accounting Manager Patricia Eagels, Director of Bond Projects Roger Barnes and Transportation Manager William Noftz.
Ammermon alleges that the employees tried to hide the payments. But Santa Clara Unified Superintendent Bobbie Plough said, "We don't see that. Everybody knew they did the work, everybody knew they got paid."
Barnes, who retired in December, said administrators were being paid for extra work they did beyond their job descriptions.
Ammermon said that if that was the case, then administrators should have been doing that work outside regular work hours, but time stamps on papers show the JPA work was done during regular hours.
The five employees in question are all managers. "These are exempt employees, they don't have regular hours," Plough said. "They stay until their work is done. And they did all their work."
Barnes said some of the agencies' work couldn't be done at other times. "My duties had to done in conjunction with board meetings I was already attending," he said. "I couldn't tell everybody, 'Hold on, let's do this over lunch or after 6 o'clock.'"
Doing JPA work during the day just means that managers did their other work after hours, Barnes said.
District employees, including teachers and administrators, may receive stipends for extra work such as attending meetings. Plus, he said, JPA board members from other school districts all knew that Santa Clara managers were being compensated for their accounting work.
Payroll taxes were deducted from the payment, he said. "There was no attempt to conceal it."
County schools Superintendent Xavier De La Torre is scheduled to present the audit's findings at the Santa Clara Unified board meeting Thursday night.
The County Office of Education is involved because it issues warrants, similar to checks, for payments owed by school agencies.
"We take this report very seriously," Plough said, but the district is consulting with its attorney, Richard Noack, about how to handle it while balancing employees' due process rights, she said.
Contact Sharon Noguchi at 408-271-3775. Follow her at Twitter.com/NoguchiOnK12.