State Taking Over School District of Ex-Compton Chief

In an extremely rare move, state education officials say they will soon take control of a tiny, financially troubled East Bay school district as a criminal investigation continues into the spending practices of its former superintendent.

State Sen. Don Perata (D-Alameda) says he will ask the Legislature next month to provide $3 million for an emergency financial bailout of the bankrupt Emery Unified School District, which is more than $1.4 million in debt and unable to pay its bills.

As part of the move, state Supt. of Public Instruction Delaine Eastin will also appoint a state administrator who will assume total control over school operations for at least two years, officials say.

This is the second time that state officials have taken the reins of a school district under the direction of J.L. Handy, who abruptly resigned in October after seven years as superintendent of the 900-student district in Emeryville.

The 60-year-old Handy was fired as superintendent of the Compton schools in 1992 amid allegations of financial mismanagement just before an unprecedented state takeover that was finally lifted this year.

At the time, Compton was the first school district in California to be taken over for both academic and financial bankruptcy, putting it in the forefront of a nationwide debate over state oversight and school reform. Since then, the state has intervened only in a Coachella Valley district.

Emery will be only the third district to fall under mandatory state control by way of a 1990 law that paved the way for the bailout of troubled schools.

Saying there are patterns of improprieties in Handy’s dealings at both Emery and Compton, one state official described the current investigation as “the equivalent of Compton by the bay.”

“What we found in Compton were numerous examples of cronyism and putting people on the public payroll who really had no true responsibilities--a situation that turned into a nightmare,” said Doug Stone, a spokesman for the state Department of Education.

“And from what we’ve observed so far at Emery, the superintendent who helped drive Compton into the grave has apparently done it again here. The children in this district and the community at large have been poorly served under Dr. Handy’s stewardship.”

A veteran administrator whom critics describe as aloof and dictatorial, Handy has also been called a hard-working, thoughtful educator who at worst made some errors in judgment. He could not be reached.

Since the summer, state auditors have examined Emery’s financial records, focusing on Handy’s expense reimbursements, credit card bills and cellular telephone bills.

School officials say Handy apparently used a district credit card for his own car repairs and for personal items, such as leather goods and luggage during vacation trips.

There were also numerous unexplained trips to Southern California, stays at hotels in the East Bay area and charges for a summer workshop at Harvard University that Handy never attended.

The Alameda County district attorney’s office is also investigating Handy’s management of funds, including whether millions in bond money for school construction was used inappropriately.

Alameda County School Supt. Sheila Jordan said the Emery district will ask state officials for $3 million in aid--double its $1.4-million debt--”because we don’t know what other losses the investigation is going to turn up.”

“I think it’s very sad for the children of Emery that we need to resort to a state bailout,” she said. “But as the audit goes on, we may uncover more and deeper mismanagement. So, at the end of the day, we don’t feel that $3 million is an unreasonable amount to ask for.”

The district, which has only three schools, is between Oakland and Berkeley.

But Perata called it “shameful” that the district could require a bailout for an amount that is nearly half of its annual $8-million budget.

“To me, what has happened at Emery is just plain outrageous,” he said. “It’s the result of incompetent and sloppy management and paying way over scale for contracts.

“The people who ran that district lost sight of why they were there; rather than take care of the kids, their priorities were to take care of their adult friends.”

Meanwhile, Emery has tried to resume the business of teaching as criminal investigators and auditors from the state’s Fiscal Crisis Management Assistance Team regularly visit the beleaguered district headquarters--which one parent described as “Fort Apache.”

Interim Supt. Laura Alvarenga said students are unaffected so far by the financial cloud. “The schools are operating the way they normally would do,” she said.

Angry parents have focused their wrath, not only on the former superintendent, but also on the entire five-member school board--and some have passed a petition calling for the board’s resignation.

“We’re not going to accept the excuse that the entire school board innocently had its head in the sand, that its members had absolutely no idea this was going on,” said Kim Shipp, who removed her 10th-grade son from school in Emeryville.

Handy’s whereabouts are a mystery.

“No one knows where he is, but we assume he’s back in Santa Ana because there were a lot of credit card charges for trips there,” Jordan said.