State Audit Blasts Oakland School District : Education: Report cites widespread fraud and incompetence. Study details ‘the most pervasive set of problems we’ve ever found.’

In an extraordinarily blunt report, the state auditor general charged Wednesday that the troubled Oakland Unified School District knowingly hired a convicted drug user, paid administrators for days they did not work or degrees they had not earned and granted an inflated contract to an underqualified consultant.

The two-volume audit also found that California’s sixth-largest school district borders on financial collapse, even though administrators failed to apply for millions in grants that would have helped them rebuild schools, remove asbestos and improve student reading skills.

“They have got to change the status quo,” Acting Auditor General Kurt R. Sjoberg said as he released the report. He added that in Oakland, auditors discovered “the most pervasive set of problems we’ve ever found” in any of the state’s school districts.

Oakland School Superintendent Richard P. Mesa, who took over on Jan. 1 with a mandate to clean up the district, vowed in written responses to the audit to comply with the recommendations.

Dan Siegel, general counsel to the school district and part of the new administration, said the audit “helps us because it gives us the moral support to make the needed changes.” Assemblyman Elihu M. Harris, the Oakland Democrat who commissioned the audit, held out hope that the lesson for the district’s 53,000 students is that “we are vigilant. We may be a little bit slow, but our major priority is their education.”

Harris, who is running for mayor of Oakland, said the audit showed that within the district, “People started taking. There was no check and balance. Everybody felt it was whatever you could get away with. That was the rule.”

Prompted by Harris, the Legislature took the unprecedented step last year of passing legislation seizing control of the district from the school board. A state-appointed trustee is trying to pull the district out of its financial straits.

In the face of the district’s problems, three of seven school board members have said they will step down this year. Elections for the open seats are set for June.

The audit mentions no names, but portrays a school system run on the basis of political patronage. Amounts of money involved in questionable expenditures were small, but many district employees took their cuts, according to the audit.

The auditors found one administrator was paid $5,400 for 16 days that he did not work. Other administrators received bonuses of up to $2,575 a year by claiming they had obtained doctoral degrees they had not earned.

One English teacher received $10,919 in extra pay over a period of years, partly because he obtained credit from the district toward a post-graduate degree simply for reading books and maps before embarking on a trip to London, Paris, Barcelona and elsewhere, according to the audit. The teacher promised to bring back pictures and brochures.

School officials paid nearly $250,000 to consultants without knowing whether the services were ever received, the audit found. The district hired a firm at $652,000 to study asbestos removal, even though the company was the “least qualified, most costly contractor,” the audit said.

The audit found the district paid $1,000 last year in sick leave to an elementary school custodian who, in fact, missed work because he was in jail--on drug possession charges. According to the audit, the district hired the janitor despite knowing he had been convicted previously on drug charges, as well as on forgery and burglary charges. State education law prohibits people with drug convictions from being hired.

Citing such personnel practices, the audit said the district “may have allowed its students to be exposed to drugs, has allowed itself to be vulnerable to theft and has overpaid $124,000 to six administrators unnecessarily.”

The report, noting that the district must reduce spending, said it would have had a deficit of $1.8 million in the 1988-89 year but for an unexpected windfall in state lottery money and other revenue. The audit also said the district could have received $120 million in state aid simply by applying for a variety of grants in recent years.

In a continuing investigation unrelated to the audit, 13 district officials and employees have been arrested. Three of the 13 have pleaded guilty to receiving stolen property or grand theft