Grand Jury Finds That School District Misused Funds : Campaign: Report concludes that officials planned 'to push the law to the limit' in support of a 1989 tax measure, but no charges will be filed.

TIMES STAFF WRITER

The Capistrano Unified School District improperly used public funds and failed to report expenditures in an effort to drum up support for a 1989 property-tax measure, but no criminal charges are warranted, the Orange County Grand Jury concluded in a report released Thursday.

The grand jury found that school district officials launched "a carefully planned and often secretive effort to push the law to the limit" during the May, 1989, campaign for Measure A, which would have raised property taxes in the district for new school construction. In a close contest, the measure failed to get the two-thirds vote required to pass.

District Supt. Jerome R. Thornsley, accused by prosecutors of setting up the support campaign and then asking participants to remain silent about it, on Thursday repeated his previous assertion that the district did no wrong.

"Our district attempted to follow the law to the best of our ability according to the legal advice we had," Thornsley said.

The grand jury report charged that the district awarded confidential "bonus incentives" to principals who could produce the necessary two-thirds vote in their areas and improperly used public money to hire political consultants and set up phone banks. The report also said the district improperly conducted closed school board meetings and matched pupil records with voter registration files.

Although the grand jury concluded that the district acted improperly in several areas that were investigated, no criminal charges will be filed in the case. The jury, however, recommended that the district attorney's office ask the state attorney general to clarify laws on how public funds can be used in school-related elections.

Dist. Atty. Michael R. Capizzi said charges will not be filed against the school district because of insufficient evidence and because the statute of limitations has run out on all the alleged violations.

"It is obvious that we were concerned about this case and that the grand jury was also concerned," Capizzi said. "The grand jury has seen fit to detail and express the conclusion that there were improper activities going on."

Capizzi said his office will pursue the grand jury's recommendation to ask the attorney general for clarification of the law. Capizzi said his office also will send copies of the grand jury report to the county's 28 school districts so that officials can draw up election guidelines.

A press release issued Thursday by the Capistrano Unified School District said officials started the campaign drive because of a "legal and moral obligation to inform the voters" regarding the election.

But the grand jury found that the district followed borderline tactics. Among the conclusions in its report:

* The district's Board of Trustees erred in unanimously approving "incentive pay" for school principals who persuaded residents to vote for the measure. "Moreover, it is clear that this 'incentive pay' was meant to remain confidential. The principals were admonished not to make the concept a matter of public record," the report said.

* The district's allocation of $23,000 to establish phone banks at its schools was, according to the report, "unequivocally used to advocate the passage of Measure A and (was) improper."

* The district allocated $29,935 in public money to hire Russo, Watts & Rollins, a political consulting firm, to help locate "yes" voters.

Thornsley strongly criticized the grand jury for suggesting that the district conducted the campaign improperly.

"We're no dummies," Thornsley said. "It's one thing if somebody suggested that I profited from this or if anybody else did. But we did not. If there were any mistakes made, they were honest ones."

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