Bad grades

Audit supports allegations of problems with bond money at City College

A much-anticipated audit of City College of San Francisco's spending of bond money finds that school officials promised voters more than they could possibly deliver and then didn't allow proper oversight of hundreds of millions of dollars in public funds.

A minority faction on City College's Board of Trustees has for years sought a performance audit of the school's bond projects, which includes $441.3 million authorized by voters during elections in 2001 and 2005. The audit by Sacramento-based MGT of America was released June 4.

The faction, led in large part by longtime trustee Milton Marks, often publicly quarreled with former Chancellor Phil Day over the matter, arguing that Prop. 39, a state ballot measure that passed in 2000 and made it easier for school districts to get voter approval for bond financing, legally required full annual performance audits of its capital spending on new classrooms, laboratories, a gymnasium, and a performing arts center.

But school administrators denied they were necessary or claimed that the cursory, more limited financial audits done each year met the legal mandate. Pressure on Day's administration finally became insurmountable last year as San Francisco's District 12 state Assembly Member Fiona Ma began threatening to have the state conduct its own audit, offering deeper scrutiny and wider disclosure than City College officials were perhaps prepared to stomach.

"My overall feeling is that we appreciate their efforts, accept their findings, and will implement all of the recommendations," a conciliatory Vice Chancellor Peter Goldstein told the Guardian in response to the report.

While mostly mild in its language, the audit shows that the school may have violated state law by granting several small contracts to the same construction companies so City College could avoid the headache of competitive bidding.

The state's Public Contract Code requires that projects costing more than $15,000 go to the lowest responsible bidder through a competitive process, a provision designed to save money for taxpayers. But between 2005 and 2006, the community college entered into seven separate no-bid contracts with one construction firm totaling $83,545 for work at its Cloud Hall facility on Ocean Avenue.

"It's unfortunate that two of the project managers were not aware or did not appreciate the importance of that rule," Goldstein said. "They've been counseled and we don't expect to have any more occurrences of that type."

The auditors found "similar multiple contracts" — totaling less than $100,000, Goldstein said — where the work should have been combined into one larger contract and approved by the school's independently elected Board of Trustees.

The audit reserved special criticism for a bond oversight committee required by Prop. 39 to watchdog the school's capital spending. The Guardian reported last year that such committees in other districts, for example, West Contra Costa County routinely received full performance audits and met more often than City College's oversight committee (See "Who's following the money?", 07/10/07).

But the group of citizens here, which includes San Francisco Treasurer José Cisneros and former San Francisco Chronicle publisher Steve Falk, who's now head of the San Francisco Chamber of Commerce, has done far less than what the law asks it to do.

The report says that one oversight committee member, who goes unnamed, told the auditors that it wasn't the committee's responsibility to determine how City College actually spends the funds. The auditors also watched former Chancellor Day tell the committee at a January meeting that its reach was limited solely to ensuring that City College complied with certain provisions of the state's Constitution.

That turned out to be totally untrue.

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