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Audit: LA Community Colleges Misspent $140M In Bond Funds

LOS ANGELES (CBS) — A state audit has found that the Los Angeles Community College District mismanaged more than $140 million in bond funds.

State Controller John Chiang said on Wednesday that the district failed to maintain accurate records while spending on expenditures that went beyond voter-approved limits.

Chiang said by ignoring its own procurement rules, the LACCD showed "shoddy fiscal management and sub-par oversight."

"Local voters raised their property taxes for a major investment in workforce development and higher education," State Controller John Chiang said. "Shoddy fiscal management and sub-par oversight of a project of this magnitude will undermine the public's trust and threaten billion of public dollars."

"Taxpayers deserve more accountability and tighter fiscal oversight to maximize the return on their investment," he said.

A district spokesman could not be reached for immediate comment.

According to Chiang's audit, the district inappropriately spent $42.64 million in Measure J bond funds by using the money for things outside the measure's approved project list. In some cases, the funds were used to complete projects that were supposed to have been completed with funds from earlier bond
approvals, according to the audit.

The audit also found that the district failed to properly oversee the spending practices of its colleges, leading to $28.3 million being spent on projects that were canceled before they were completed. The district also could not readily provide a list of canceled projects, and instead developed such a
list while the audit was being conducted.

The audit also found that some costs were inappropriately charged to bond funds, including $2 million for copying and binding; $1.5 million for public relations, tours and special events; and $1.5 million for photography.

Auditors also faulted the district's resident oversight committees for being "passive, perfunctory and ineffective," noting that the head committee failed to issue any of its required annual reports for seven years.

They also accused the district of ignoring its own procurement rules in the hiring of an inspector general to oversee the bond funding by choosing a newly formed company led by a principal with no auditing or legal experience — even though nine of the 11 firms that applied for the position were rated higher.

The audit noted that the district has spent more than $2.75 billion to date in its bond construction program, but it has done so without a centralized facilities master plan with project cost estimates.

(©2011 CBS Local Media, a division of CBS Radio Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. Wire services contributed to this report.)

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