Board approves audit of $8 million rebate account, postpones sanctions of fiscal chair

District trustees voted 6-1 Monday evening in favor of auditing a newly discovered $8 million financial account while postponing the scheduled sanctioning of board Fiscal/Audit Review Committee chair Phillip Yarbrough for code of ethics violations until the next meeting.

“I don’t really think there is any fraud going on in our district, but I always applaud looking at the numbers because, at the end of the day, we’re here to make sure that our taxpayer dollars are well spent,” said Rancho Santiago Community College District Board Vice President Daisy Tong.

Student Trustee Ricardo Alcaraz speaks about his recent experiences with the board

Earlier this summer, the board was made aware of millions in insurance rebates being managed since 2012 by third-party vendor Alliance of Schools for Cooperative Insurance (ASCIP).

According to reporting in September by the Daily Pilot, insurance rebates were held in trust by ASCIP, intended to pay down future premiums or be transferred back to the general fund at the board’s discretion. Records show that before June 2024 money had been removed 13 times by district administrators without board approval.

Now with Monday night’s vote, a financial audit will be conducted of the account and if any inappropriate spending has occurred.

“I don’t believe that there is anything criminal going on, but transparency is important,” trustee Miller reiterated. “And it also helps us make informed decisions on how those funds are applied. Nobody wants to say, ‘I don’t know’ that’s not a great response. I’m glad we are digging into this rebate and how it is applied within the district.”

Board president Sal Tinajero is the sole dissenting opinion on auditing newly discovered funds

Board approval was not unanimous. Board President Sal Tinajero initially voiced support of the audit during the Board Comments item.

“I don’t think there’s anything wrong, but I think the public needs to know the truth. And so that is why today I’ll be supporting that item,” said Tinajero. Later in the evening, however, he was the only dissenting vote.

With no comment or explanation, the trustees decided to postpone the planned sanctioning of Fiscal/Audit Committee chair and 28-year board member Phillip Yarbrough, who is accused of ethics violations related to calling a closed session to inform the board of the account.

The Daily Pilot reported on how so much money was discovered and how it went unnoticed for so long. Every year our district and those of over 130 other schools districts across the state pay insurance premiums. Companies like ASCIP negotiate with medical providers for favorable rates and handle the accounting of those contracts.

At the end of the year, if the premiums paid exceed the cost of the coverage provided then a rebate is retired to the district. According to ASCIP, most schools would use that extra to pay down the next year’s coverage or withdraw it back into their general fund for reallocation. This was not the practice of the RSCCD board, as they claim they were never made aware of the money’s existence and the fund grew to over $8 million before the board requested a refund check in June.

Yarbrough brought the existence of the fund to the board’s attention earlier this year and said in public statements at the Oct. 14 meeting that the attempt to sanction him is a retaliation. It was initially expected that the board would review and decide on the motion to approve sanctions to strip Yarbrough of all committee positions for a year.

“No one is retaliating against our trustee,” said Tinajero. “Everyone serves on those committees at my discretion. So I have the right to remove or keep someone in any committee. To say that it’s because he is a whistle-blower is so far from the truth.”

Trustee Zeke Hernandez further commented in a phone call on the targeted nature of the sanction: “The financial audit committee has three members. Why would just the chair be sanctioned?”