School district defends use of funds

Facing a possible investigation by the state, officials at the Val Verde Unified School District in Riverside County on Tuesday said they were within bounds when they used state bond money to build 5,000-square-foot weight rooms, stainless steel whirlpools in locker rooms and other accouterments even though the district declared it was a hardship case.

Supt. C. Fred Workman said those facilities were essential to help Val Verde’s students achieve and that “black and brown” students in the district deserve to have the same advantages as students in wealthier school districts in neighboring Temecula and Murrieta.

“They have all these things in other school districts,” Workman said. “They were essential in many ways to us to have an adequate program.”

Workman said the district had become a victim in the debate over the adequacy of state funding for new schools and that he feared state officials would try to make an example of the district.

“The bureaucracy is furiously trying to defend itself from a very embarrassing situation,” Workman said. “They are telling people they are paying for 100% of a school, or 50% of a school, when they are paying for 30% or 70%.”

Officials at the state Office of Public School Construction are examining the school district’s accounting procedures and trying to determine if the district should lose as much as $90 million in state aid on future construction projects. The inquiry is focused on a series of special bonds the Val Verde district board issued to cover “cost overruns” on construction projects.

At the same time, officials at the Riverside County Office of Education, which oversees the district, warned the 19,000-student Val Verde district that its “long-term financial solvency” could be at risk because the district now has $136.5 million in outstanding debt.

At issue with the state is the fact that the district’s school board was approving millions of dollars in school construction bonds while, at the same time, it received hundreds of millions of dollars in special state assistance for districts in financial hardship.

Since 1999, the Val Verde district qualified as a “hardship” school district, meaning that it has declared it does not have the revenue or debt capacity to pay its required 50% share of new school planning and construction costs. As a result, the state has paid 100% of the cost of building most of the district’s new schools.

Under state regulations, the state may reduce school construction funding if a district in financial hardship raises money by issuing new bonds, as Val Verde has done.

But in a draft report obtained by The Times last week, officials at the state’s Office of Public School Construction said some “cost overruns” reported by the Val Verde district occurred because the district spent money on elaborate enhancements. Along with the weight room and whirlpool, some of expenses questioned included a state-of-the-art football stadium, a bell tower, separate staff locker rooms and sun shades to protect students while they eat lunch outside.

The two whirlpools in the boys’ and girls’ locker rooms, one district official pointed out, together cost just $6,990 as part of a $67-million high school project that ultimately was $8 million over budget.

The Val Verde superintendent said some of the draft report’s findings were “ludicrous.” The administrator said they never built a bell tower with state funds.

He also flatly denied the state report’s preliminary findings that the district had “overbuilt” its facilities or that it failed to collect the full amount in developers’ fees.

Workman said most of the district’s $136.5-million debt was necessary to cover rising costs of construction materials, labor, land and other expenses.

But some members of the State Allocation Board, which parcels out state funding for the new construction and modernization of local public school facilities, are skeptical about the Val Verde district’s arguments.

Several members of the allocation board said they planned to call for a more thorough investigation into how the Val Verde school district handled state school construction money. The board plans to discuss the matter at its board meeting today in Sacramento.

“You can’t be a financial hardship district and then go and engage in extravagance,” said state Sen. Jack Scott (D-Altadena), a member of the board.

He first asked the staff to look into Val Verde’s activities in March because of “disturbing information” that the district had not been forthcoming about its resources.

“We have a limited amount of money as a state, and it’s unfair to schools that don’t get this financing to then look around and say, ‘Hey wait a minute, they’re spending money on things they don’t need,’ ” Scott said.

State Sen. Bob Margett, (R-Arcadia,) said state funding for hardship districts should provide items such as heat, lighting, restrooms and classrooms.

“It doesn’t mean you have to have weight rooms, it doesn’t mean you have to have exotic landscaping and logos on the sides of the buildings,” said Margett, a State Allocation Board member, referring to some of items he saw on Val Verde campuses during a visit last week.

“Those are niceties -- if the school district wants to put them in, fine. Let the district pick up the tab,” Margett said.

County Office of Education officials expressed alarm about the district’s level of debt in an April 16 letter. The Riverside County superintendent of schools said the district’s outstanding balance of $136.5 million was very high for a district its size.

“This is a significant obligation to be paid from the district’s general fund and could have serious ramifications on the district’s long-term financial solvency,” the county schools superintendent said in the letter.

District officials firmly denied that the district was in financial peril.

Workman said if the state “puts us out of business” by docking future construction money, the district would halt construction on the district’s three ongoing projects and use $82 million in unspent proceeds to pay most of the outstanding debt back.

Boyd also noted that the district has bond insurance that would cover the debt if it faced some kind of unforeseen crisis.

Workman said he did not see any chance the district’s number of pupils would shrink.

He warned that if the state did not provide hardship money to pay for additional schools, the district could end up with a high school meant for 3,000 holding about 6,000 students.

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maeve.reston@latimes.com