‘91 Schools Audit Cited Shoddy Bookkeeping : Finances: A report three years ago warned of possible abuse in the El Rancho Unified district, where funds are missing.

Three years before the Los Angeles district attorney’s office began investigating the disappearance of student activity funds at a Pico Rivera high school, auditors warned that student money was being managed poorly and conditions were ripe for abuse.

Auditors said they found chronic shortages of funds, shoddy bookkeeping practices and inadequate controls of student funds at El Rancho High School during the 1990-91 school year. Officials said the district apparently used general school funds to make up deficits of about $75,000 in the student activity account.

Auditors recommended the district transfer some bookkeeping duties to its central office, increase supervision over those handling student money and develop a plan to repay the student activity deficits.

But the problems apparently persisted. When auditors were called in to look at the account again late last year, they reported as much as $100,000 was missing and urged El Rancho Unified school officials to contact outside authorities.

Auditors cited new irregularities. They said employees were extremely lax about depositing cash, waiting months after money was collected before making a deposit. Some records also were missing, including books that showed how much cash had been collected from students, according to the auditors’ report.

The firm of Vicenti, Lloyd & Stutzman of La Verne performed both audits.

Two weeks ago, investigators searched the home of school board member Eleanor C. Cole, a former bookkeeper at the high school. Cole resigned from her job when she won a seat on the school board last fall.

Cole has refused to comment about the investigation, but her supporters showed up in force at a recent school board meeting. Several parents pointed out that student activity accounts had been in shambles years before Cole became the school’s bookkeeper in December, 1991.

Evelyn Moran, a parent and former instructional aide at the high school, said parents would raise money for events or scholarships, only to be told later by school officials that the funds were not available. When parents asked to examine financial records, high school officials often were unresponsive, she said.

Auditors gave the first official alert that something was amiss in 1991. Auditors found a number of problems at the school, including missing paperwork as well as lax bookkeeping practices and shoddy handling of student money.

Many of the student groups had no idea how much money they had in the bank because faculty advisers did not monitor budgets or exercise control over spending, auditors said.

For example, about 20 of the 60 student organizations spent more money during the 1990-91 year than they raised. The school’s yearbook operation lost $3,000 that year alone.

High school officials had also improperly spent at least $52,000 in student funds over several years to pay for bus transportation for band and drill-team members to athletic events and other performances, the auditors said.

Former Supt. Fernando R. Elizondo, who headed the district at the time, said he advised the school board simply to erase the shortages in the student activity accounts and start from scratch.

Elizondo hired Cole to supervise bookkeeping and assigned an outside accountant to meet with her and other school officials every week. He recommended that a committee of school officials, including Cole, monitor student spending.

Elizondo left the El Rancho district soon after that to head a school system near Fresno. He said he did not know whether the school board ever followed through on his recommendations. All of the school board members have refused to comment.

Elizondo’s successor, John T. Sherman, said he ordered last year’s audit of the student activity fund after he found discrepancies in the school’s records. It was at that time that auditors discovered that as much as $100,000 was missing.

Sherman, who was fired in February, said he arranged for the district’s central office to take over bookkeeping at the high school.