On shaky ground

Did City College use its foundation to launder public funds for political purposes?
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gwschultz@sfbg.com

The violations were purported to be accidental. Top administrators broke the law in two separate incidents in 2005 when they diverted a total of $30,000 belonging to City College of San Francisco to a local bond campaign committee, although they said it was an innocent mistake.

Now new documents obtained by the Guardian show an apparent pattern to this misuse of public funds. A special audit indicates that on Nov. 7, 2006, administrators from the school district transferred $38,670 to a bank account controlled by the Foundation of the City College of San Francisco, a nonprofit that seeks donations for the school and funds scholarships.

Just one day before, on Nov. 6, 2006, the foundation made a $35,000 cash contribution to the Community College Facility Coalition Issues Committee, which lobbies for and promotes statewide bonds to benefit schools like City College. State law bars City College from using public funds for such political purposes.

When asked about the money transfers, Vice Chancellor Peter Goldstein conceded to the Guardian that $28,670 of the newly uncovered funds were improperly moved to the foundation to replenish the Nov. 6, 2006 contribution, but he referred questions regarding who made that decision to outgoing chancellor Phil Day, who did not return a call.

The firm that conducted the audit, Louie & Wong, based in San Francisco, could find no evidence that the foundation's board approved the contribution, and a lawyer hired by the foundation says the directors were not aware of the transfer of district funds into the foundation bank account at that time.

Although some of the board members later recalled authorizing the contribution, it wasn't reflected in meeting minutes, and the directors say they never intended to launder public funds into a political contribution.

These revelations further damage the credibility of City College administrators, who for several months have undergone an investigation by the District Attorney's Office into political fundraising efforts by the school. Spending public funds to support or oppose a ballot measure or candidate is against California law.

Two school trustees, Rodel Rodis and Julio Ramos, confirmed for the Guardian that the district attorney in recent weeks requested documents related to the transactions and will be interviewing senior administrators at the school soon, presumably including Day, who is leaving for a new job in Washington, DC, as this story goes to press. Both say the trustees only learned about the audit's conclusions this month, although it was completed last summer.

"The way it's always been presented to me is the foundation is supposed to give the district money in order for the district to fulfill its function of educating students," Ramos told us, "not vice versa."

The District Attorney's Office will neither confirm nor deny the existence of such probes, but its investigation has been confirmed by sources and reported in both the San Francisco Chronicle and the Guardian (see "Day's Dilemma," 8/8/07).

Day characterized the earlier diversions from the 2005 bond campaign as a simple misunderstanding when they were publicized last year. His administration wasn't trying to do anything illegal, he wrote in a public statement at the time, and a resulting internal investigation called for by City College's board of trustees seemed to confirm his claim.

"The 2005 campaign was compressed into little more than three months, and as a result of this rush, we made some mistakes," Day wrote in response to the report when it was released in January.

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