Audit Shows CJUSD Lunch Program Misspent Or Overpaid $730,000

(April 10)  Irregularities in the administration and operation of and accounting  for the Colton Joint Unified School District’s student  lunch program involved the apparent distribution of kickbacks, non-competitive bidding for products and the diversion of program income to other district accounts, according to a filed complaint, many of the specifics of which were confirmed by an audit and report carried out by the California Department of Education.
A confidential complaint to the Department of Education was filed in October 2012, triggering a state examination and audit of the district.
That complaint alleged that district officials had been provided with gifts from food service vendors. The state audit confirmed that district employees had indeed come in for largesse put up by more than one of the companies providing supplies to the district’s cafeterias.
Moreover, the audit uncovered multiple instances of proceeds from the school lunch program being utilized to fund other elements of the district’s operations.
Six months after the complaint came in, the state’s investigation was in full swing. Auditors and investigators learned:
*    Partially because of a lack of competitive bidding and oversight, the district paid up to 43 percent more for produce than the previously agreed  upon  price from at least one vendor.
*    The district overpaid $117,000 on the purchase of produce in the 2009-10 school year alone.
*    Custodians, who performed maintenance, cleaning and upkeep of school cafeterias as only part of their daily assignments, were having a major portion of their salaries paid  by proceeds from the school lunch fund, entailing at least $535,202 in excessive payments from the cafeteria fund for that purpose in school years 2008-09 through 2011-12.
*     During the same 2008-09 through 2011-12 period, the district also overcharged the school lunch program at least $200,000 for utility service, including both water and electricity.
*    Despite the diversion of money to programs and services unrelated to the school nutrition program, the district had more money in that program account than is permitted under federal and state guidelines.
*    The excessive amount of money in the program accounts notwithstanding, the district did not reduce for students and their parents the price charged for meals, as protocol and  law dictates.
*     Employees were paid without their hours worked being  documented.
*    Food and supply vendor representatives  offered, and  district personnel accepted, “marketing rewards,” which were shared or distributed among food  service workers.
*    The marketing rewards were given to the district workers in lieu of  cash rebates or price discounts on goods or food, which could have assisted the district in reducing the cost of meals.
*    Nutrition Services Manager Diana Herington signed off on allowing the vendors to provide the marketing rewards in lieu of the rebates as part of an effort to boost employee morale.
*    Herrington made what Department of Education Southern Field Services Unit Manager Gail Andersen characterized as an  “unreasonable and unnecessary” purchase  of 627 embroidered men’s and women’s polo shirts at a cost of  $9,999 to give each of the district’s 151 contract nutrition division employees three shirts to be worn while working.
The report did not confirm reports of bid rigging or that Herrington had pressured at least one vendor to provide donations to a student scholarship program.
It was reported that the marketing incentives included but were not limited to Apple iPod Nanos, wristwatches, portable DVD players, gift cards from American Express and Target, Apple iPod Shuffles, and theater tickets.
The district quietly sought to come into compliance with a list of recommendations made by the Department of Education by the time the fall semester began.  At least one reprimand was given to a district employee, whose identity has not been disclosed.
The district at the same time instituted a prohibition on employees soliciting donations or gifts from district vendors or contractors.
Last fall, superintendent of business services Jaime Ayala pledged to the Department of Education that that the excess salary and benefits costs paid to custodians from the nutrition services department during the 2011-12  school year will be refunded to the lunch program beginning at the close of the current school year in June and that the district will make incremental refunds of the $200,000 in excessive utility payments made by the department.

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