The San Diego County Board of Education placed long-time County Superintendent Randy Ward on administrative leave as they initiate a forensic audit in the wake of a lawsuit claiming Ward was engaged in self-dealing.

At the monthly meeting of the County Board of Education on Wednesday, July 13, several teachers spoke about concerns raised in a lawsuit filed last week by the California Taxpayer Action Network (CalTAN). The lawsuit alleges that Ward asked for and received an amendment to his contract in 2014 that connected his pay raises to those given to teachers and classified employees of the County.

“Randy Ward negotiated his own raises while he was directing his staff to cut our salaries,” said Jeff Scarlett, a teacher in the San Ysidro School District. “He lied to us when they said there was no money to pay us, when they were hiding millions of dollars from our district,” Scarlett said.

Former San Diego City Attorney Michael Aguirre also spoke, asking the County Board of Education to meet to settle a claim made by the San Ysidro teachers union demanding reimbursement for lost wages resulting from contract negotiations back in 2014. Aguirre characterized the County as having negotiated in “bad faith”, and urged the Board to settle the matter without litigation.

After the open session of the meeting, the Board retreated to a private closed session for over two hours. At the conclusion of that meeting, the Board announced that no action had been taken but that a press release would be issued the next morning.

Friday afternoon, the County Board of Education issued a press release stating that “we must act prudently and in the best interest of the County Office of Education”. The Board concluded that it will “therefore immediately embark on a forensic audit to fully understand the issues surrounding the questionable expenditures”, and that “pending the completion of the independent, third party forensic audit, Superintendent Ward will be placed on administrative leave.”

WARD’S PAY INCREASED 16%

The claims alleged in the CalTAN lawsuit stem from an amendment approved by the County Board on June 11, 2014. That change connected Dr. Ward’s pay raises to raises given to county teachers and staff. The language is commonly called a “me-too” clause. Since the amendment, Dr. Ward’s pay has increased from $286,073 to $331,736, or an increase of 45,663, or an overall increase of 16%.

Since Dr. Ward manages and oversees the contract negotiations with teachers and staff, he in effect was also negotiating his own raises. The self-dealing would appear to be a conflict of interest.

Dr. Ward was first hired in June 2006. Prior to his post as County Superintendent, Ward served as a state-appointed administrator when the Compton School District went into state receivership. After serving in Compton for over six years, Ward then served as the state-appointed administrator in Oakland when its schools fell into financial insolvency. Ward spent three years in Oakland leading up to his selection as San Diego County Superintendent.

WARD’S CONNECTION TO SAN YSIDRO

His prior roles as a state-appointed administrator gave added weight to his role in the near takeover of the San Ysidro School District in 2015.

In 2013 after years of financial trouble, the San Ysidro district fell into negative certification, meaning the District could not meet its financial obligations in the next school year. When local schools are found to be in negative certification, state law calls for the county superintendent to appoint a fiscal overseer. Dr.. Ward appointed Lora Duzyk, his Assistant Superintendent of Business Services, to serve in that role.

As the fiscal overseer, Lora Duzyk had the power to approve or rescind any expenditure of the San Ysidro District, and to manage its finances in hopes of avoiding insolvency and a total takeover by the State. Duzyk served in that capacity from early 2013 to the middle of 2015. During 2014, the San Ysidro administration engaged in negotiations with their teachers over a new contract. Claiming the District was near insolvency, Duzyk and the San Ysidro administration called for three consecutive 8% annual pay cuts, totaling more than a 22% reduction in teacher pay.

Teachers rejected that offer and went on strike in October 2014. After four days of a strike, the District reached a compromise that resulted in a 1% raise and a one-time 1% bonus for teachers.  The turmoil of the strike damaged the relationship between the District and teachers, and cost the District an estimated million dollars in lost funding, pay for substitutes, and security for school sites during the strike. During the negotiations, the teachers’ union claimed the District was misrepresenting the true financial situation of the District, and alleged several million dollars were being hidden within the budget.

In the board election in November 2014, two new members were elected and the Board President, Jason Wells, lost his seat on the Board. The new board members were seated in December and quickly looked into the allegations of financial manipulation.

Within a few months, the new Board and administration revealed that several million dollars had been stashed in obscure accounts to make it appear the District was near insolvency. Duzyk was accused of covering up the movement of those funds. With the correct accounting of those funds, and with new state funds in the 2015-2106 budget, the San Ysidro School District recovered from its negative certification and shed the controls of the County and Duzyk.

TEACHERS CLAIM BAD FAITH NEGOTIATIONS

A formal claim was filed by Aguirre on July 1, claiming the misrepresentation of the budget adversely affected the teachers’ contract negotiations in 2014. The claim seeks recovery of lost wages, benefits, and interest for the difference between what the teachers received in their contract and what they should have received had the County and Duzyk not engaged in “fraudulent concealment of funds during negotiations”.

Lora Duzyk has been the Assistant Superintendent of Business Services since 2005. Her role includes financial oversight of the budgets of all 42 school districts in San Diego County. Additionally, Duzyk serves on the San Diego County Treasury Oversight Committee that manages a total investment pool of over $9.3 billion of funds from school districts, community colleges, and the County itself.

“It’s not conceivable that someone with Ms. Duzyk’s experience could have missed the hiding of millions of dollars in our budget,” said Rodolfo Linares, a current member of the San Ysidro School District. “We believe Ms. Duzyk participated in the fraud in order to force our district into receivership,” Linares added.

INDEPENDENT AUDIT

The audit initiated by the County Board of Education will seek to review all financial transactions conducted by Dr. Ward. The Board stated that an independent third party would be retained to conduct the audit.  The removal of Superintendent Ward was seen as a way to ensure unfettered access to the finances of the County Office of Education. Critics of Ward’s hope this will lead to the discovery of self-dealing and an explanation of what really happened in San Ysidro.

“We hope that audit will uncover the truth about what happened with our budget and those responsible should be held accountable,” said Guillermina Sandez, President of the San Ysidro teachers union. “Our teachers were damaged by Randy Ward and Lora Duzyk who took their own raises while taking money away from us,” Sandez added.