Proceedings Begun to Dismiss 2 Adult School Officials : Education: Investigators probing allegations of mismanagement, misuse of funds. Both employees deny any wrongdoing.

Officials have begun proceedings to dismiss the popular administrator of the Paramount adult school and the school’s vice principal amid investigations by the Los Angeles County Sheriff’s Department and private investigators.

The Paramount Unified school board voted 4 to 1 in closed session Tuesday to place adult school director Ed Quesada and Vice Principal Luther Martinez on unpaid leave while the district begins dismissal proceedings. Investigators are looking into allegations of mismanagement and misuse of funds.

On the advice of attorneys, Quesada and Martinez declined to discuss the specific allegations, but both denied any wrongdoing.

“We’re deeply hurt and saddened that they’re doing this,” Quesada said of district officials.

The decision came after a 90-minute closed session in which the board discussed allegations presented privately against the employees last week. Supt. Michele Lawrence called the matter a personnel issue and declined to release the charges or discuss them.

The employees had been under district scrutiny since last summer when the school system’s annual audit report concluded that the adult school had spent $564,515 from the district’s general fund without board authorization. The auditors also warned that the Paramount Adult Education Center was likely to exceed its budget this year unless adjustments were made. In addition, auditors expressed concern over the school’s attendance records and its cash receipts and accounting procedures.

Sources said the administrators must answer to more than 200 individual charges. Each is entitled to a district hearing before the dismissals become final.

Since 1984, Quesada has directed the adult school, which offers high school diploma programs and courses in English as a second language. It also offers classes for pregnant minors and job training for welfare recipients. Some of the training is done in area businesses and factories.

Although the specific allegations against Quesada and Martinez have not been made public, much of the investigation has concerned what happened with district funds and who is to blame. Attempts to answer that question have involved district auditors, the state controller’s office, private investigators hired by the district and the Sheriff’s Department.

The controller’s audit is not yet complete, and the district will not discuss the findings of its private investigators. The Sheriff’s Department just began its investigation last week. Only the regular audit report offers clues about district concerns.

That report, by the La Verne accounting firm of Vicenti, Lloyd and Stuzman, states that last year, without board approval, the adult school spent $458,322 from the district’s general fund on a program for pregnant minors and $106,193 for an independent study program.

“This type of encroachment appears excessive and if continued could adversely affect the solvency of the school district,” the audit report said.

“The internal controls over all of these procedures are extremely poor, and the risk of irregularities or errors occurring is extremely high,” the report said.

Quesada acknowledges the adult school’s financial problems but he blames them on the school district’s central administration. He said top administrators raided the adult school budget to solve the district’s own budget shortfall, shifting the red ink to his department.

Quesada lists more than $1 million in adult school money from various sources allegedly siphoned away by the district. Those funds would have been more than enough to cover the adult school’s general fund encroachment, he said.

Former Supt. Richard Caldwell, who left the district last summer, generally supports Quesada’s version of events. He characterized Quesada as a cautious risk taker who took defensible gambles with district funds to create or bring in valuable programs to the community.

In the past, Quesada has been hailed as the architect of some of the adult school’s more innovative programs. Adult school enrollment has more than tripled since the 49-year-old administrator took charge of the school in 1984.

Because the state limits how much funding it gives adult schools, Quesada has always scrambled to find money to pay for the programs he wanted to offer, Caldwell said. He did this by applying for grants and bringing in programs that had their own funding.

“He’d been with us about eight years,” Caldwell said. “Every year he’s improved the program and the money. I had the state and county do audits of the whole program, and they came out clean as a whistle.”

He said the adult school sometimes received advances from the general fund. Caldwell emphasized that these advances were always approved by the school board and that Quesada always repaid them.

District officials said they will have to review documents before commenting specifically on Quesada’s allegations that the district had raided adult school funding.

The district placed Quesada, Martinez and adult school secretary Sandy Cook on administrative leave with pay in November. Cook remains on leave with pay.

Marjorie Murphy, the district’s director of special projects, is running the school in Quesada’s absence.

To cut costs, Murphy and other officials have combined several classes at the adult school and trimmed the number of hours the staff will spend teaching classes at industry sites and factories next semester. The staff also has been trimmed to 47 from 51 as teachers left and were not replaced.

“Because we had some serious financial problems there, we had to make some modifications,” Supt. Lawrence said. “We hope the modifications won’t hamper the progress of the students.”

About 1,600 students are expected to return to classes for the spring semester beginning Feb. 8, compared to 1,900 last year.

The changes at the school have added an element of uncertainty to efforts by adult school employees, including Quesada, to make the school a charter school. Under a recently approved state law, individual schools may apply to their districts to become charter schools, which have a greater degree of financial and philosophical independence from the school districts.

District officials held a five-hour hearing on the charter school effort last week. Board members are scheduled to vote on the charter drive Feb. 23.