As a chief financial officer, Ralph Peschek is by definition a steward of funds, expenditures, assets and liabilities. But he also considers himself committed to transparency.
For two years now, Peschek, the William S. Hart Union High School District CFO, has attempted to make the district’s finances more clear, visible and accountable to those few who voice skepticism.
“Part of my vision has been, how do we assure the community has access to information, and how do we make this information useful for everyone,” he said.
This becomes what is important when Steve Petzold is concerned.
Petzold, well known as a community member who demands officials account for the monies to which they are responsible – down to the penny, if possible – often cries foul where school bond measures are concerned.
His latest focus is on Hart’s reporting of Measures SA and V. Measure V, passed in 2001, allowed for $158 million in general obligation bonds to build Golden Valley and West Ranch high schools, Rio Norte and Rancho Pico junior high schools and modernize some existing campuses (these funds have been completely spent). Measure SA, passed in 2008, was a $300 million bond measure to help build Castaic High, auditoriums at Saugus and Canyon highs and other projects at existing schools.
State law requires these bonds be subject to annual financial and performance audits by an independent firm. According to Michael Turnipseed, head of the California League of Bond Oversight Committees and a former member of a bond oversight committee in Bakersfield, a financial audit deals with numbers, while performance audits deal with processes.
“Is the money where it’s supposed to be?” Turnipseed said of the financial audit. “A performance audit is not numbers-driven. Did you follow the process? Did you follow what the bond was going to be? Did you follow the district policies? You’re auditing the work product.”
The location of the audits is where the latest disagreement between Petzold, principal officer of The Center for Truth in School Bond Measures, and the district lies.
In past years, the bond measures’ performance audits have been separate, but the financial audits have been combined into the state-required district financial audit.
“They are supposed to have an annual district audit, and they’re supposed to have a separate bond audit,” Petzold said.
Several district officials, including Peschek, two board members and one bond oversight committee member, maintain that the bond’s financial-audit information is included and the district is compliant with state law. Petzold said he found it, but the Gazette found no specific mention of “Measure SA” in the financial audit (Peschek said it’s called “Fund 21”).
All Measure SA audits are available on the district website (Peschek said the Measure V audits are available at the district office by request). The Hart performance audit is four pages long. Contrast that with the 80-page Bakersfield district performance audit for 2010. Bakersfield’s 2010 financial audit is four pages long, but it’s backed by 34 pages of supplemental material that include every single time the school board did anything related to the bond and the dollar amount.
“This is a bible of everything they did,” Turnipseed said. “I looked at Hart’s and wasn’t overly impressed.”
Does the district need separate financial and performance audits? The problem is the law is vaguely written. Also, said Richard Michael of the website Big Bad Bonds, the law doesn’t specify any penalties, “just the public penalty of ‘Can you trust us? Can we be trusted?’
“Almost all government rules are without penalties,” Michael said. “You have to go to court, and in the end, if you win, the taxpayer pays. It’s a victory.”
And a victory is not always guaranteed, Turnipseed said.
“It all depends on what judges say,” he said. “Some people actually submitted the financial audit, put a new sheet on it and called it a performance audit, and it’s exactly the same, and the people challenged that, and the judge said it’s good enough.”
So, Peschek has called on the district board to increase its clarity in reporting how the funds have been used, and it has responded. He said he plans to have separate financial and performance audits, and he hired the same firm that Bakersfield used.
“When you look at the format (the firm) provides us, that’s a little more detailed,” Peschek said. “That’s what I envision. We have opportunities.”
Petzold remains skeptical, but Hart board member Joe Messina welcomes Peschek’s moves.
“We all support him and are looking for better transparency and better communication when it comes to the district finances,” Messina texted to say, “and we’re happy that his fresh set of eyes help us look at things differently, and because of that, we will have more and better transparency and communication.”