The claws are coming out.
This week, Kern County Superintendent of Schools Mary Barlow and Kern Community College District Chancellor Tom Burke widely distributed a "Dear community partner" letter and fact sheet that seemed to push all blame for the loss of $19 million in taxpayer funds on the Kern County Treasurer and Kern County Auditor-Controller’s offices.
Superintendent of Schools spokesman Rob Meszaros and KCCD spokesman Joe Grubbs said the letter was just an attempt to answer questions the community is asking.
But that’s not how Treasurer-Tax Collector Jordan Kaufman took it.
He said the school districts were attempting to shift their responsibility for the situation onto the county.
While the letter, he said, “has many inaccurate statements, my office continues to work with both districts and the bank to recover as much money as possible from the perpetrators of this crime.”
Kaufman announced in early February that his office had been alerted that fraudulent payments had been made from “clearing accounts” in the county treasury that were used to pay vendors and employees of the KCSOS and KCCD.
The losses — eventually discovered to total $19 million — had happened over two to three years with most of the thievery taking place in the past three to five months, according to Kaufman.
An investigation by The Californian documented that thieves were able to continue stealing from the accounts — which are separate from the districts’ main “cash-in-county” accounts — because no one from the Auditor-Controller’s office or the school districts were reconciling the activity in those clearing accounts.
Nobody was checking those funds regularly to make sure all the transactions were valid.
The letter from Burke and Barlow largely ignores the issue of account reconciliation.
Instead it focuses on the general structure of the relationship between the districts and the county.
School money is required, by law, to be kept in the country treasury.
The letter blamed Kaufman for releasing documents and making statements to the media that “led to confusion and misinformation to the general public.”
The bottom line, the letter states, is that the money was in the county treasury and so it is the responsibility of the Treasurer-Tax Collector and the Auditor-Controller to keep the funds secure and only make payments authorized by the school districts.
The fact sheet finishes with a firm statement that the school districts don’t expect any financial liability from the situation.
“We also expect that no losses will be absorbed by the education agencies because the Treasurer-Tax Collector, the Auditor-Controller and Wells Fargo did not disburse our funds strictly in accordance with our (pay) instructions and the Treasurer’s trusteeship responsibilities,” it read.
Kaufman took that as a direct shot at the county and his office.
The responsibility for catching the fraud, he said, was squarely that of the districts.
Letters from the Kern County Auditor-Controller’s office provided by Kaufman, written in 2005, clearly explain that the two school districts would be responsible going forward for reconciliation of the impacted clearing accounts.
School district staff have claimed they did not have access to bank statements in those accounts.
But Kaufman has provided information that shows — at least in the past — that financial staff in both districts did have access to two of the three affected accounts.
“The joint letter appears to be an attempt by the two districts to redirect attention from that responsibility,” Kaufman said. “While the county has provided documentation to back up any claim that it has made the districts have not provided any documentation to date. Therefore, at this point, I do not feel it necessary to respond to any baseless claims made in the letter.”
Meszaros and Grubbs both said the letter wasn't an attack on the county.
“That was absolutely not the intent of the letter,” Meszaros said. “The letter was to answer the questions we’ve been asked over and over again.”
Barlow, he said, has been getting bombarded by questions about what is going on and the letter was an attempt to inform the district’s friends, partners and the public.
Grubbs said the only goal of the letter was to inform district “stakeholders” about what was going on.
Did the letter get ahead of an investigation being conducted on behalf of both districts by an independent forensic auditor? Won’t that investigation determine who is responsible?
Meszaros said the letter was simply relating the best information the districts have at the moment.
“That’s the information we have right now,” he said. “If something comes out of the forensic audit, we’ll release that. But that’s the information and the perspective we have right now.”
Kern County Counsel Mark Nations said the county is remaining focused on the most important part of this situation.
“Our number one priority right now is to recover as much of the money as we can. I’m not really interested in pointing fingers right now,” he said. “It doesn’t serve any purpose other than to sway public opinion.”