Higher Ed | Daily Report

The Los Angeles Community College District has hired an outside firm to set up an Office of Inspector General and a whistle-blower program to review "financial integrity and legal compliance" of the district's $6 billion construction program and to receive any information about "potentially illegal activity, fraud, waste or corruption,” district officials announced this week.

The district hired Altadena-based Policy Masters Inc., and CEO Christine E. Marez will oversee the efforts.

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"By employing an inspector general who reports directly to us, the board will be improving our oversight of the district’s bond program and hopefully will be increasing efficiencies over the remaining years of the construction projects," said Georgia L. Mercer, president of the board of trustees, in a prepared statement.

The nine-college district – the largest in the state – passed a series of bond measures in 2001, 2003 and 2008 totaling $5.7 billion to refurbish and replace aging buildings with more energy-efficient structures. As of August, the district had completed 358 projects and spent $2.8 billion, according to the latest project report. 

In the last several years, however, the district's management of the bond program has come into question. A consultant told district officials in 2005 that excessive reviews of design plans had led to delays and millions of wasted taxpayer dollars, according to a report in the Los Angeles Daily News. 

Last November, the district hired an outside firm, Capstone Advisory Group LLC, to conduct an organizational review of the building program. Capstone’s work is what led to the creation of an Office of Inspector General and the whistle-blower program. Their March 2010 memo to trustees [PDF] urged the district to implement several layers of external oversight and internal controls.

The Capstone memo strongly recommended that the district look at expenses going back to at least 2007 to figure out the "total amount of any and all expenses incurred that are disallowed under Prop. 39 and other bond and tax rules." Proposition 39 requires that the proceeds from the sale of school facilities bonds are used for specified school facilities projects only, and not for teacher and administrator salaries and other school operating expenses. 

For example, Capstone's memo said, the inspector general could test the performance of the finance department to make sure that only "appropriately qualified individuals are hired and that unnecessary or unallowable positions are not being created."

Also, Capstone noted, "there is no full and independent disclosure of the cost, legality or relevancy" of the multitude of bond program-related proposals that come before the board of trustees for approval. 

The group recommended that all staff and contractors sign conflict-of-interest statements and that all suppliers sign codes of conduct that state a zero-tolerance policy on any gifts or hospitality to or from district personnel –  including transportation, vacation and recreational trips, speaking engagements, free goods or services and invitations to sporting or cultural events.

In August, California Watch reported that the Los Angeles Community College District had awarded a series of multimillion-dollar contracts to a Tarzana-based firm that district officials said needed to be baby-sat to meet construction standards and was doing an “absolutely awful job.”

This week, the district announced it had approved a five-year contract with Policy Masters, which will be paid $701,680 per year. The Office of Inspector General will have the authority to recommend changes in contracting and other business practices of the building program. 

Marez has 25 years of public-sector construction experience, including seven years as director of policies for Los Angeles Unified School District. That position involved developing internal audits and acting as a liaison to the Office of Inspector General. She also served as a senior project manager working on the Los Angeles Unified School District's $2.4 billion Proposition BB bond measure, according to a bio [PDF].