BL SPECIAL REPORT

Two years after more than a million dollars was discovered missing from local school district accounts, internal and external audits have resulted in 10 county schools receiving funds amounting to $2.7 million.

The long road to reconciliation of cash accounts involving every school district in San Benito County has resulted in what Hollister School District Trustee Rob Bernosky describes as a “windfall,” while others consider it long overdue monies that the schools should have had all along.

BenitoLink first broke the story in November 2017 about a budget shortfall of more than $1 million that crippled decision making in San Benito County’s three largest school districts, stymied teacher raises, and angered educators and elected officials who said the problem might be worse than anyone knew.

When the final reconciliations were completed in August this year, the shortfall was more than $1 million—the 10 school districts netted gains of $2.7 million. That money always existed, but never found its way to the schools.

Bernosky, elected in 2016 with a background in corporate financing, said he determined early on that the Hollister School District’s bookkeeping was “bizarre,” and brought his concerns to the attention of HSD Assistant Superintendent of Business Affairs Gabriel Moulaison. Moulaison immediately began looking into the problem as he conducted his own reconciliation, eventually going back to records from 2011.

“Gabe dedicated a huge amount of time to reconciling accounts and working with the County Office of Education and county auditor [Joe Paul Gonzalez] to get the necessary information and for those entities to do what they had to do,” Bernosky told BenitoLink. “At the end of the day, several school districts received cash that was always theirs, but never given to them. In my opinion, the Hollister School District seemingly took the lead on the situation and many other school districts benefited. My understanding is that the County Office of Education and the county auditor were cooperative.”

Moulaison said that the problem began when the county auditor did not move cash appropriately from a holding account for all the schools.

“Say the County Office of Education gets in some special education money or federal grant revenue,” Moulaison said as an example, “that it then has to disburse to individual districts. [The office of education] would do the entries on all the districts’ books. Then they’d tell the county auditor to move it to the schools’ individual accounts. [The office of education] was sending stuff over, but the auditor wasn’t moving anything. So, it just sat in that account.”

Moulaison said Gonzalez never explained why the monies were not disbursed. Gonzalez told county supervisors in August 2016 that a clerk in his office had not posted two large transactions, and that the errors went undiscovered for several years, but he did not explain what happened over the eight-year period that Moulaison investigated in his effort to reconcile HSD’s accounts. 

BenitoLink asked Gonzalez on Oct. 2 to explain why monies were not transferred to school districts. He said that while his office records journal entry transfers, those entries are prepared by the office of education, which is also responsible for reconciling them.

“The county auditor’s office does not perform a reconciliation on behalf of the office of education, nor the districts,” Gonzalez told BenitoLink, adding that the auditor’s office and the office of education work together to minimize the human error that may occur in any manual processes. He didn’t elaborate on how his office is doing this if it does not conduct reconciliations.

While Moulaison reconciled HSD’s accounts, the office of education did the same for all the county’s school districts to see if they came up with the same figures, which they did. Moulaison said HSD received approximately $325,000 during last year’s reconciliation, adding that it wasn’t all that much when overall district budget is more than $60 million. He said most of the $325,000 went into HSD’s general fund. 

In total, HSD received $1,244,000 after the latest reconciliation; that includes $919,000 from a 2015 reconciliation, which was around $325,000 short of what it should have received.

“The San Benito County Office of Education recently completed cash reconciliation for years comprising June 1, 2011 through June 30, 2018,” said Shannon Hansen, assistant superintendent of business services with the office of education. The office of education “worked with the County of San Benito Auditor’s Office as we reconciled cash against the general ledger activity for the above referenced time period.”

Hansen said that in 2015, the office of education utilized Christy White Associates to complete a cash reconciliation for fiscal years 2012-13 and 2013-14. CWA was hired to complete the cash reconciliation by March 31, 2015, as required by the state.

According to the office of education, between the two audits of 2015 and 2019 the 10 school districts received:

• Bitterwater Tully: $22,225 
• Cienega: $16,661
• Hollister School District: $1,244,282
• Jefferson: $4,187
• North County: $125,379
• Panoche: $11,772
• San Benito High School District: $1,227,475
• Southside: $41,159
• Tres Pinos: $12,964
• Willow Grove: $12,409

Hansen had no comment about the source of the mistakes, “other than they generally appear to have been due to inadvertent human keying errors at that time.” She added that the office of education now reconciles cash on a monthly basis (for the previous month’s activity) between the districts’ financials and the auditor’s general ledger. The office of education also hired a coordinator of accounting services in 2018 tasked with completing cash reconciliation for all county school accounts.

Moulaison confirmed that going forward, reconciliations will be carried out monthly.

“That way, it’s caught very quickly,” he said. “and there’s much less room for errors.”

Other related BenitoLink articles:

BL Special Report: The errors of their ways

County and Hollister School District agree to confidential settlement, details still sketchy

Schools in the dark about budget shortfall