$49-Million Shortfall May Stall Anaheim School Construction

Some Anaheim school construction and modernization projects promised to voters when they approved a $132million bond measure in 2002 may not be completed in light of a $49-million shortfall, according to an audit released Tuesday.

The audit, requested by the Anaheim Union School District’s Board of Trustees, also found a lack of oversight of projects and a failure by the district to secure tens of millions of dollars in state matching funds.

“The management of the ... bond program and its financial matters has been inadequate,” according to the audit by Construction Controls Group, which will be presented to the school board Thursday. “In fact, many of the key operational areas that were reviewed have significant weaknesses.”

The 37,000-student district serves seventh- through 12th-graders in Anaheim, Buena Park, Cypress, La Palma and Stanton. In 2002, the district embarked on a $330-million construction and modernization plan.

Starting last fall, however, the board became increasingly concerned about the number of project cost increases and, in the spring, called for an outside audit of the bond measure and construction program.

“The reason we did an audit was for accountability,” Trustee Denise Mansfield-Reinking said.

“The public and the taxpayers have a right to accountability.”

The gravest finding is that overspending has led to a budget shortfall of $49 million, making it possible that projects at Magnolia, Savanna and Western high schools -- as well as five junior high schools -- may not happen.

“The big issue is how much of the construction program can be completed, and [several] projects may not be able to be completed without additional funding,” said Tim Holcomb, who became the district’s deputy superintendent and chief facilities officer in July. “It depends on what we find we have available in matching [funds].”

However, matching funds have also been a problem. The audit found that applications that could provide nearly $40 million in state funding have been awaiting a district signature since the former facilities manager left in February. The district also failed to retrieve more than $21 million in approved state funding, the audit said, and can potentially apply for $84 million more.

Supt. Joseph M. Farley, who also took his post in July, said he was confident that the district would be able to fix the program and implement the audit’s recommendations, which include hiring a finance director and several managers to oversee the construction program.

“This report is unfortunate,” Farley said. “It speaks to some unfortunate decision-making and some problems that occurred in the construction and modernization project, but I’m glad that it’s done.

“It clearly outlines a course of action we need to take, and I have every confidence with my new staff ... that we will be able to address all those issues.”