When the school board finally approved San Diego Unified School District’s budget last month, Chief Administrative Officer José Betancourt went out of his way to thank the finance staff for their work.

He said he was proud of one fact in particular: For three years in a row, the district had balanced its budget.

Sort of.

I just got back from a meeting of the district’s Audit and Finance Committee, an advisory body that provides guidance to the school board. One of the items on the agenda involved an investigation by the National Science Foundation and the U.S. Attorney’s Office.

Here are the details as I understand them: Between 1999 and 2005, the district received several grants from the NSF, which came with conditions about how the money could be spent. Then, the NSF Office of Inspector General decided to audit the school system, to see whether the money was spent correctly.

It turned out that the school district didn’t keep all of its records showing the details of how some of the money was spent — $7.5 million in particular. So the U.S. Attorney’s Office launched an investigation.

In March, the district received a letter from the federal investigators saying that they had a list of $1.5 million of “unallowable expenditures.” It makes no mention of the other $6 million. The district says it already paid back $400,000 of the unallowable expenditures — though it also doesn’t have the records to show that, other than an auditor’s report.

It says it has requested documents from the NSF that should also clear up the other $1.1 million. But here is the kicker: The NSF says it didn’t keep the record either.

So, the bottom line is that the district may be on the hook of repaying at least $1.5 million, money Chief Financial Officer William Kowba said has not been budgeted for next year.

And what about the other $6 million? Here is what the district wrote in a one-page report handed out today:

Though the U.S. Attorney has requested additional information concerning $1.5 million of the grants, they have not informed us that the balance of $6 million has been approved.

If the district is on the hook for any of the money, the budget won’t be balanced after all.


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