District seeks legal opinion on audit findings of financial misconduct

District officials have authorized the spending of up to $50,000 for a legal team to evaluate misconduct accusations regarding a $12 million rebate account kept hidden from the public for nearly three decades.

The board of trustees voted during their May 12 meeting that board president Daisy Tong will collaborate with the district’s general counsel—without the involvement of other board members—to review recommendations for legal services.

Trustee Philip Yarbrough voted in favor of Tong moving forward with general counsel but emphasized urgency in selecting a legal team.

“It’s the only way I’m going to get a legitimate legal opinion that I can then use to discipline those who are responsible,” stated Yarbrough via text after the meeting. “The forensic audit was good enough for me, but not for the others.”

Tong argued against any change to the process. “I’m taking these issues diligently, and I’m going to take them in the way they need to be dealt with currently…I will move with the speed I feel is accurate.”

The Board Fiscal/Audit Review Committee, comprised of three BOT members tasked with examining the district’s financial reports, met on May 6 to assess the district’s response to the findings of the independent audit. While the district does not deny the existence of the fund, it refutes that any wrongdoing occurred.

“The auditors frequently made assumptions about facts not in evidence,” said Vice Chancellor of Business Services Iris Ingram, reading from a presentation at the committee meeting. “There are also misinterpretations of state law in the audit report and of board policy and administrative procedures in the audit report.”

The audit report concluded that the refund account, which was set up to receive rebate receipts from an insurance nonprofit public agency called Alliance of Schools for Cooperative Insurance Programs, had held millions of taxpayer dollars. The district used the funds to pay for miscellaneous purchases as far back as 2010 and even a legal settlement in 2018.

The largest withdrawal of nearly $2 million was used to balance the district’s budget in 2020.

“No funds were missing or misappropriated,” said Ingram.

The audit had also concluded that the involvement of former RSCCD vice chancellors, John Didion and Peter Hardash, as ASCIP executive members was a conflict of interest.

A name displaying the Former Vice Chancellor of Business Operations/Fiscal Services, Peter Hardash, appeared in the Board Fiscal & Audit Committee Zoom meeting. Hardash changed his display name to the initials PH after an el Don reporter asked for comment.

Didion served as ASCIP’s president from 2000 to 2010; Hardash was a member of the executive committee from 1997 to 2020.

“This was appropriate, as members of the board must also be full-time employees of JPA member districts,” said Ingram. The district also claimed that quarterly statements were given and that statements were accounted for.

After the presentation, Yarbrough asked Ingram if she had notified the annual auditors of the money in the fund.

“No, I would not have specifically called out that amount or that fund to the auditors, because they audit all of our funds,” said Ingram. She also stated that in a budget of over $300 million, $7 million is not “considered material.”