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Portola Valley schools: Possible misappropriation of funds uncovered

Original post made on May 3, 2012

The Portola Valley School District is seeking a loan from the county education office to cover a projected, unexpected deficit after auditors found evidence of the possible misappropriation of funds, according to a letter from the district's interim superintendent. The financial irregularities were uncovered after the abrupt resignation in January of former superintendent Tim Hanretty, who is facing three felony counts that include misappropriation of public funds -- allegations of misdeeds that stem from his earlier employment with the Woodside School District.

Read the full story here Web Link posted Thursday, May 3, 2012, 11:54 AM

Comments (13)

Posted by Janet, a resident of Menlo Park: Stanford Weekend Acres
on May 3, 2012 at 1:36 pm

So let it go into receivership. Why should the county, that is short of funds, bail out PV? PV citizenry has more funds than the county.


Posted by PV Parent, a resident of Portola Valley: Central Portola Valley
on May 3, 2012 at 2:56 pm

Janet, that's a really RUDE thing to say. Obviously, since you don't live in PV, it doesn't affect your child---or you. Since this appears to involve misappropriation of funds, it has nothing to do with being a "budget shortfall," and everything to do with theft.

Seeking a loan from the County is the next step, per the D.A's office, as I understand it. We'll all (in PV) be paying it back somehow (unless they can get it back from wherever it went.)

Please feel free to contribute your money, if you feel the need to contribute your commentary.


Posted by PV parent, a resident of Portola Valley: Woodside Highlands
on May 3, 2012 at 3:56 pm

Wait please. There is nothing in any communication about theft. Please do not start rumors. In fact in Woodside the Principal has specifically stated that all the money went to finish the renovation and indeed no theft had occurred. There may be lack of controls and lack of competence on many people's part and a major problem but theft is a very serious allegation which neither the board nor the administration has alleged. Come to meetings to stay informed.


Posted by Interested, a resident of another community
on May 3, 2012 at 4:30 pm

PV Parent. The story includes the statement "after auditors found evidence of the possible misappropriation of funds".....Where I live that means someone may well have stolen money from the district. Nothing in the story suggests any person has engaged in such activity. It does state that PVSD has somehow lost almost a million dollars. Janet is correct, why should the rest of us pay for it......

Does PVSD have insurance in place (financial bonding for key employees ) to protect against such larceny. If not, why not....


Posted by Reader, a resident of Woodside: Woodside Glens
on May 3, 2012 at 5:15 pm

@PV parent #2; it sounds like you don't know what "auditors found evidence of the possible misappropriation of funds" means. It means that there is evidence that a crime may have taken place, and considering what is happening in Woodside (where actions involving the misappropriation of funds have resulted in serious felony crime charges being filed), it is not out of line to discuss the potential here. No one is starting rumors.

From FreeDictionary.com:

"misappropriation n. the intentional, illegal use of the property or funds of another person for one's own use or other unauthorized purpose, particularly by a public official, a trustee of a trust, an executor or administrator of a dead person's estate, or by any person with a responsibility to care for and protect another's assets (a fiduciary duty). It is a felony (a crime punishable by a prison sentence)."


Posted by PV parent, a resident of Woodside: Family Farm/Hidden Valley
on May 3, 2012 at 8:41 pm

As a parent who attended the meeting on 5/2/2012, at this point the district is not talking about theft regarding the deficit, and a complete audit is not complete so any assumption of such is speculative. What is apparent is that the solar panel project over the past 2 years caused the district to take out a large loan--more than the bid--to cover any contingencies for cost overrides. The project was to receive a federal reimbursement for installing solar panels in the amount of $1.5 million. The cost of the actual solar panel installation came in under the loan amount. The excess amounts of the loan could be used for other capital improvements, but nothing else, i.e. classroom materials or teacher salaries. However, the funds were used to acquire more technology for students' use(i.e. I-pads,) for the district, which is not allowed under strict school district accounting procedures. That has put the whole $1.5 million reimbursement from the Federal government in jeopardy. Those funds for those illegal expenditures must be repaid to the account immediately--perhaps $3-500,000. In addition, the cost of teacher compensation benefits were grossly underestimated for the coming year. A complete forensic accounting is being done at this time...whether there was actual theft is not known at this time...but certainly strict accounting procedures and guidelines for necessary approval of spending procedures were not followed. I would suggest all who wish to know more attend the next School Board meeting.


Posted by woodside parent, a resident of Woodside: Kings Mountain/Skyline
on May 3, 2012 at 8:42 pm

Why in the heck are you defending this guy? [Portion removed; don't use this forum to convict people of crimes.]


Posted by Reader, a resident of Woodside: Woodside Glens
on May 3, 2012 at 9:31 pm

PV parent wrote, "...at this point the district is not talking about theft regarding the deficit, and a complete audit is not complete so any assumption of such is speculative." At this point, any assumption that no crime has occurred is also speculative-- particularly since "a letter from the district's interim superintendent" is being reported as saying that "auditors found evidence of the possible misappropriation of funds." So what is wrong with talking about it? The district's interim superintendent is. You sound protective of Tim Hanretty. Do you know him, or are you related to him?


Posted by David B, a resident of Portola Valley: Central Portola Valley
on May 3, 2012 at 9:55 pm

There is nothing in the record in either Woodside or PV (that I've seen) to say that Tim H has "taken money" for himself.

"Misappropriation of Funds" is a broad term that can mean many things other than stealing money for your own benefit:

Charging an invoice to the wrong general ledger account by accident

Approving an invoice or contract over legal or policy limits without formal Board approval

Being aggressive with how you read the definition of acceptable use of certain funding sources

All could be called a breach of fiduciary duty, and may be criminal. But are not necessarily "stealing".

I'm not trying to defend Tim; the truth will come out. But let's just stick to the known facts at this time.

The comments by "PV parent, a resident of the Woodside: Family Farm/Hidden Valley neighborhood" above are fair and accurate from what I heard at the meetings.


Posted by Ben Dover, a resident of Woodside: Kings Mountain/Skyline
on May 4, 2012 at 9:38 am

Innocent until proven guilty...that said, the facts are damning. [Portion removed; see terms of use.]


Posted by Mr Mehoffer, a resident of another community
on May 4, 2012 at 10:05 am

"Innocent until proven guilty..."

Yeah, that's where you should have left it until the issue is settled by court, but you continued in a most un-Christian manner.

Jack


Posted by Reader, a resident of Woodside: Woodside Glens
on May 4, 2012 at 12:09 pm

The comments reflecting belief that a crime has taken place are not being based on the discussion from a "meeting." They are a response to the statement written by the interim superintendent, that is being reported in the above article-- and I don't doubt that the interim superintendent knows the meaning of the legal term misappropriation of funds (given what is going on in Woodside).

It doesn't matter if charges have been filed; it doesn't matter if the "evidence" alluded to isn't described in detail; and it doesn't matter how any possible misappropriated funds were used-- we are still talking about the possibility of a felony crime. Telling people to stick to the "known facts" sounds like just another way to tell folks to keep their opinions and reactions to themselves. All we know from this article is that auditors have found evidence of possible misappropriation of funds (a legal term for a crime). It is appropriate and understandable for people to react to this reported information, whether it sits well with Mr. Hanretty's supporters, or not.


Posted by Interested onlooker, a resident of Portola Valley: Central Portola Valley
on May 4, 2012 at 1:44 pm

Reader,

you seem to be missing the distinction between "no evidence has been found of theft" and "we're assuming no theft has taken place". The auditing that has been reported on thus far is that they have not found evidence of theft. It seems pretty clear that they are not assuming that no theft has taken place — they may be hoping that no theft has taken place — but mostly they are trying to identify and understand what has taken place. Talk of theft without evidence just makes it harder for those trying to understand the implications for the community, students, staff.

I'm no defender of Tim Hanretty, and am unhappy about the apparent lax financial controls in the district, given the sizable contributions I've been making through my property taxes! Even if all the money has been spent on things the schools need, not diverted to someone's secret bank account in the Cayman Islands, what has been uncovered so far does not lead to confidence that the money has been spent effectively.

Janet,

while the quote in the article above does not include it, the communication from Ms. Piraino stated:

"These remedies may include making a request to borrow funds from the San Mateo County Office of Education in accordance with Education Code sections 42621 and 42622."

and

"Yesterday, in addition to approving a negative certification of the District's second interim budget, the Board directed me to begin the process to make a request to borrow funds from the San Mateo County Board of Education, in accordance with Education Code sections 42621 and 42622, for the purpose of ending the fiscal year with a positive cash flow. I am also in conversations with the Portola Valley School Foundation to see how the Foundation may be able to help the District."

So, yes, citizens of PV (and the parts of Woodside served by the PVSD) are likely to be involved financially (through donations past, present and future to the PV Schools Foundation, which currently provides approximately 10% of the district's budget!), and no one is asking the county to simply give the PVSD enough money to wipe out the shortfall. A loan from the San Mateo County Office of Education to the Portola Valley School District is unlikely to be interest-free, I think. And as for whether it is appropriate, here are two paragraphs from the San Mateo County Office of Education's website:

"The San Mateo County Office of Education provides leadership and support to public schools through its three Divisions: Instructional Services, Fiscal and Operational Services, and Student Services."

"Fiscal services help districts manage over $500 million annually and maintain compliance. Accounting, budgeting, and payroll functions maximize revenues. Other services include processing warrants and preparing W-2 forms and PERS, STRS and Social Security reports."

Sounds rather appropriate for them to take a role in keeping the PVSD out of receivership!


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