State grills Perris school officials

Members of the panel that parcels out state funds for school construction grilled top officials of a Perris school district Wednesday about its mounting debt and questionable spending decisions, but delayed for a month a decision that could deliver a major financial blow to the district.

The State Allocation Board is considering withholding $89 million in construction funding because the Val Verde Unified School District borrowed that amount by issuing special, non-voter-approved debt to supplement what it was getting from the state. State officials say that borrowed money should have been used on past and future projects instead of state money.

The district, which has received $350 million from the state for building projects since 1999, argued that the funds in question were needed to cover “cost overruns” on new schools because state funding grants are “absolutely, positively inadequate,” Supt. C. Fred Workman told the board Wednesday.

Officials at the state’s Office of Public School Construction say the cost overruns largely stem from the district’s decisions to spend state bond money on luxury items such as elaborate football stadiums, stainless steel locker room whirlpools and 5,000-square-foot weight rooms.

Val Verde has to operate under special rules because it has been classified since 1999 as a “hardship” school district by the state, meaning that it has declared it does not have the revenue or debt capacity to pay its 50% share of new school planning and construction costs, as other districts must.

As a hardship district, it gets from the state up to 100% of the costs for building schools, but the state restricts how the money can be used. The state also may scale back its funding if a district raises money by issuing new debt or bonds not approved by voters, as Val Verde has done.

“We are totally now at the mercy of the state, God forbid,” Workman told the board, after explaining that as a result of the controversy, the district was going to return $50 million of outside funds it borrowed to cover overruns on the district’s next high school, middle school and elementary school. “All we will have left is what we can bleed from the state of California.”

State board member Kathleen Moore was sympathetic to the district’s struggles and said she was troubled when she recently had to approve the plans of another hardship school district that had enough state funds under the guidelines to build only a school with classrooms alone.

“I think it is representative of a trend that is going on in hardship [districts],” said Moore, who is also director of the state’s schools facilities planning division. “I really think that we as a board need to review the issue.”

Board member Kevin de Leon, also a Democratic state assemblyman from Los Angeles, told Val Verde school officials he understood their desire to provide fully outfitted schools for disadvantaged children but said he was concerned that the “poor kids” across the state might end up “subsidizing the construction of your schools.”

“It’s a dangerous thing,” De Leon said of the district’s decision to borrow funds without voter approval, “because someone’s left holding the bag and it may end up being the state of California.”

Board member and state Sen. Bob Margett (R-Arcadia) balked at the suggestion that the state should be responsible for overruns created by the district’s decisions.

“The district took the money and spent the money of your own volition,” he told school officials.

“It’s the state of California that purchased that property and built those schools -- and you threw them into hock.”

In the report that was the basis for discussion at the meeting in Sacramento, officials with the Office of Public School Construction were harshly critical of the district’s spending, stating that Val Verde officials had made decisions “to build the schools they wanted with little regard” for the limitations of the state funding program.

After reviewing all of the data provided by the district, OPSC officials concluded that the district’s “cost overruns” stemmed from decisions to build state-of-the-art stadiums and amphitheaters, the report said.

State officials noted that often the plans for elaborate accouterments were added with last-minute change orders after the state approved the plans for new schools. The officials cited examples such as an $11,000 change to add school logo lettering to a gym building, and a $40,000 change for four stainless steel whirlpools and to use stainless steel wall paneling in locker rooms, team meeting rooms and sports training rooms. The addition of one stand-alone weight room and locker room added $700,000, the report said.

Workman said aspects of the state officials’ report were inaccurate, but he could not immediately detail all of the inaccuracies.

In routine financial reports to certify its financial hardship status, the district also did not inform state officials that it was issuing millions of dollars in the special bonds for the cost overruns.

“The district has not been overly forthright,” the OPSC report stated. “The lack of disclosure of [the special bonds issued] by the district may be cause for later consideration by the [State Allocation Board] to determine if a material inaccuracy occurred.”

maeve.reston@latimes.com