Case #0121

Stockton Unified School District:

A Failing Grade in Public Trust

The Stockton Unified School District Board of Trustees, in conjunction with the Superintendent and administration, must make difficult decisions and implement stringent policies and procedures to prevent deficit spending from rendering the District fiscally insolvent. According to FCMAT, the AB139 Extraordinary Audit will be completed in 12-18 months. If the results of the Extraordinary Audit indicate financial mismanagement, misuse of funds or insolvency, the result could place SUSD in State receivership administered by the San Joaquin County Office of Education. Receivership could include the termination of the Superintendent and suspension of the Board of Trustees as a decision-making body.

Summary

The following is the report conclusion verbatim (highlights added):

With deficits approaching $30 million per year by fiscal year 2024-2025, the financial forecast for Stockton Unified School District is dire. Expenses that would normally be paid with ongoing funding sources are instead being covered by one-time ESSER funds; many of these expenses will continue once the limited-time funding expires in 2024. Grants, which can be a valuable tool in implementing key projects, are not being managed appropriately. Leadership and staff with the experience to address these critical issues are departing the District, necessitating the hiring of outside consultants to cover essential duties and train Business Services staff. The District has yet to develop a master plan that indicates how the combined ESSER funds totaling $241.5 million will be spent by 2024 and a master plan that addresses the challenge of the projected deficits.

The Board of Trustees, who are charged with the responsibility to make decisions in the best interest of the District, community, and students, often makes crucial decisions with minimal data, knowledge and consideration. A lack of transparency and apparent conflicts of interest exist. District, State and federal guidelines and policies are regularly overlooked. These multiple failures reduce District staff and public trust and confidence in the District.

At a time when SUSD is considering a bond measure for the November 2022 ballot, addressing the above issues promptly and decisively is essential.

The Stockton Unified School District Board of Trustees, in conjunction with the Superintendent and administration, must make difficult decisions and implement stringent policies and procedures to prevent deficit spending from rendering the District fiscally insolvent. According to FCMAT, the AB139 Extraordinary Audit will be completed in 12-18 months. If the results of the Extraordinary Audit indicate financial mismanagement, misuse of funds or insolvency, the result could place SUSD in State receivership administered by the San Joaquin County Office of Education. Receivership could include the termination of the Superintendent and suspension of the Board of Trustees as a decision-making body.

One-time funding can temporarily mask an ongoing operational deficit. The Board of Trustees needs to remove this mask, demonstrate genuine duty of care and proactively confront the challenges of managing the District with only ongoing funding sources. In order to best serve the students and families of the District, Stockton Unified School District must prepare for critical financial issues now and in the future.

Complaints allege the Stockton Unified management and board of trustees were not using funds in the best interest of students, families

“With deficits approaching $30 million per year by fiscal year 2024-25, the financial forecast for Stockton Unified School District is dire,” the San Joaquin County grand jury says in a new report.

46-page report identifies numerous financial and oversight problems; SUSD and SJCOE release statements

According to the report, the school district did not fully comply with a subpoena issued by the grand jury as part of its investigation.

Grand Jury report paints dim picture of SUSD’s financial situation