California audit criticizes L.A. community college building program

A state audit of campus construction at the Los Angeles Community College District has found $140 million in questionable spending, including at least $28 million sunk into projects that were later abandoned because of poor planning.

In the audit released Wednesday, state Controller John Chiang challenged the district’s use of voter-approved construction money to pay for public relations, public art and other purposes he deemed inappropriate.

Document: Audit of L.A. community colleges

In addition, the college system’s elected trustees set up a “passive, perfunctory and ineffective” citizen oversight system for the $5.7-billion program to rebuild its nine campuses, the audit found.

“Shoddy fiscal management and sub-par oversight of a project of this magnitude will undermine the public’s trust and threaten billions of public dollars,” Chiang said of his review of spending under bond measures passed in 2001, 2003 and 2008.

Many of the findings mirrored those of a Los Angeles Times series published earlier this year.

District Chancellor Daniel LaVista disputed all of Chiang’s major criticisms, saying they were “based on flawed assumptions and interpretations.”

“While we disagree with many of the specifics … we will examine the audit and make whatever changes are necessary to further tighten and improve management,” he said in a statement.

Chiang’s office also cited “possible malfeasance” in the district’s selection of an inspector general last year to investigate allegations of waste and corruption in the construction program. The district hired Policy Masters Inc., a newly formed company headed by Christine E. Marez, former director of construction policies at the Los Angeles Unified School District.

As The Times reported in February, Marez had no experience as an independent auditor or investigator. From 1998 to 2003, she worked for a firm owned by Art Gastelum, a leading campaign donor and fundraiser for the community college district trustees and a major contractor on the construction program.

State auditors found that Marez’s firm finished second to last in a district committee’s scoring of proposals by 11 bidders for the inspector general’s contract. Yet she was one of the four chosen to be interviewed, according to the audit. Accounting giants Deloitte Services LP and Ernst & Young were among Marez’s unsuccessful rivals, the report said.

LaVista, who recommended Marez to the trustees, rejected Chiang’s call for an independent investigation of her hiring. But a newly elected trustee, Scott Svonkin, called the proposed inquiry “a good idea,” given Chiang’s allegation that the district violated its own bidding policies in selecting Marez.

“If we can identify who did this, they should be fired for breaking the rules,” Svonkin said.

Marez took issue with the controller’s accusation that she was unqualified. “I’m well aware of the qualifications that it takes to be an inspector general, and I think that our work is testimony to that,” she said.

The spending questioned by auditors included $30 million budgeted for public art, which was not authorized by the bond measures put before voters, and $28 million spent on projects that were later abandoned, including an admissions center at L.A. City College.

The Times series cited other examples of money squandered on canceled projects.

At West Los Angeles College, the district spent as much as $39 million on design and early construction of a gymnasium, theater and other projects that were scratched when officials realized they lacked the money to finish them, public records show.

Miguel Santiago, president of the district’s Board of Trustees, called a special meeting for next week to review the audit. “The board intends to take decisive action in the coming months to continue to reform the building program,” he said.

Document: Read the full audit

gale.holland@latimes.com

michael.finnegan@latimes.com