L.A. Unified Sets $15 Million Aside to Audit Construction

After weeks of internal squabbling over funds to audit school construction projects, a Los Angeles Unified School District official said Wednesday that $15 million will be set aside to settle the dispute.

Sam Yoshida, chief of procurement for the district’s facilities division, said the decision was made Wednesday to fully fund an authorization that was approved by the Board of Education in March.

District Inspector General Don Mullinax, who is responsible for the audits, had complained last month that the facilities division was balking at his request for $3.5 million to audit 105 projects in the first year of the three-year program.

After receiving inquiries from The Times, facilities chief Jim McConnell said earlier in the week that $1 million would be set aside. Yoshida said late Wednesday that the entire $15 million would be allocated.

“We do have $15 million set aside now,” Yoshida said.

“That’s news to me,” Mullinax said late Wednesday. “If it’s true, it’s great. That was the board’s intent three months ago.”

Mullinax said he had retained seven outside accounting firms to start on a backlog of audits but that officials in the facilities division cut his plans back drastically because of the cost.

Facilities officials had bristled at the assertion that they were stonewalling on the tougher auditing the district had promised during the campaign for November’s $3.3-billion bond authorization, Measure K.

Yoshida said the list Mullinax had submitted included many long-completed projects and others that were not likely to turn up any recoverable overcharges. He said he had negotiated an agreement with the inspector general’s office to proceed on a small fraction of the audits from the list, as well as to review 40 upcoming contracts. The total cost for the plan would have been $661,000, Yoshida said.

Mullinax first complained of resistance last month when he told a board committee that he had completed only three audits of the giant school building program and found significant evidence of overcharges in all of them.

In one case, Mullinax said, the district’s contractor was making a profit of more than 100%.

In an interview, he said the district is negotiating with the contractor for a refund.

“We would have kept paying that much if we hadn’t looked at it,” Mullinax said.

In another case, a company official has his wife on the payroll in an unnecessary position, he said.

Mullinax proposed the contract audit program last summer as the district was gearing up its campaign for Measure K.

He recommended reviews before, during and after construction and modernization projects to assure voters that past problems with waste in school construction would not recur.

District officials acknowledged in the fall of 2001 that they faced a shortfall of $600 million in projects funded by a 1997 bond measure, Proposition BB.