A Small Pot of School Funds Is Regularly Mismanaged and Sometimes Abused

This post has been updated.

When it comes to school budgets, it’s easy to get blinded by the big numbers — San Diego Unified plans to spend $1.3 billion operating schools this year; in November, voters will decide on a $3.5 billion construction bond.

But the margins outside of school staff salaries — paychecks and benefits account for more than 90 percent of San Diego Unified’s operating budget — and construction are thin. Inside those margins is a slice of money that comes up nearly every year as chronically mismanaged and ripe for abuse: Associated Student Body funds.

ASB funds, as they are commonly known, can be a meaningful boost for individual schools. Accounts top $1 million at some high schools. The money comes largely from student group events, like bake sales or carnivals, and regular school events, like football games. In theory, the money is at least partially controlled by students and spent fully for their benefit. In practice, the funds are often mismanaged and sometimes spent on staff-only events like parties or teacher training, according to a recent internal audit and public discussions of its findings.

“It is so unfair for the kids,” Dan McAllister, head of the district’s audit and finance committee, told staff members at a meeting earlier this month. “It’s easy for adults to prey on these funds and basically use them like slush funds.”

Susan Jarrold — the lone auditor in the district’s auditing department after downsizing in recent years, although officials say another auditor is in the process of being hired — confirmed a lack of quality control and consistency with the accounts in her presentation to committee members. One staff member is responsible for overseeing the ASB account at each school, she said. At high schools, this is a dedicated finance clerk. But at elementary schools, the person overseeing the account often performs several other jobs, such as school nurse or attendance clerk, and may have no background in finance.

“Our bookkeepers [at each school] have control on everything,” said Jarrold. The district wants “to split duties” to put better checks on these bookkeepers, she said. Among the problems highlighted in the report, a lack of receipts and no dual counts of cash came up repeatedly.

District officials created a video to teach school finance workers how to improve, but Jarrold highlighted the need for even more training.

Problems with ASB funds, by all accounts, are a never-ending issue across the district, the county and the state. Bill Wright served on the audit committee for several years up until 2015, and told me the issue of better training comes up every year.

“We spend thousands of dollars on auditing ASB accounts and it’s still a problem,” he said. “They come in here every time and say, ‘Oh we need to train them better.’” He added, “It’s hard to find who has been held accountable on the issue.”

The problems that particularly goaded McAllister and other committee members were the comingling of ASB accounts with teacher accounts, the most widespread problem identified in the audit, and inappropriate expenditures, which included spending money on teacher development, an item that is budgeted for in the regular district spending plan.

At the time the audit was conducted, the district didn’t forbid comingling, as long as teacher funds were specially earmarked in the accounts. But Crowe Horwath, an accounting firm that helped perform the audit, told the district it should stop the practice.

Spreckels Elementary School received negative marks for every category that the audit evaluated. Longfellow K-8 and iHigh Virtual Academy, an alternative school, received the second and third most negative marks.

Here’s how the 24 schools surveyed in the audit fared:

One of four schools that were singled out for inappropriate expenditures will get a deeper audit because of “questionable disbursements,” according to the report. Jarrold did not identify which school would face further scrutiny.

Despite repeated calls for better training over the years and persistent problems associated with ASB accounts, committee members hoped for a future when San Diego Unified might be a guiding light.

“If we can figure this out, this can be a positive story we have to tell as a district and we can be an example to others,” McAllister said.

Clarification: This post has been updated to reflect that problems with ASB funds were revealed both in the audit itself and in public discussions of the audit.

Correction: A previous version of this story misspelled Dan McAllister’s name.