SUSANVILLE, California (SmallTownPapers) -- Lassen County District Attorney Robert Burns has referred the investigation into alleged conflicts of interest at the Westwood Charter School and the Westwood Unified School District to the California Attorney General's Office.

According to an Extraordinary Audit report regarding the WUSD and the WCS prepared last month by Fiscal Crisis and Management Assistance Team, "violations of California Government Code Sections 1090, 87300, 1126 and 1127 have occurred."

Burns informed Lassen County Superintendent of Schools Jud Jensen he'd referred the matter to the attorney general in a Tuesday, July 28 letter. Burns said the attorney general would independently review the matter.

On Thursday, July 16, Jensen notified Burns, the state controller and the state superintendent of public schools of the alleged violations as required by the California Education Code.

The alleged violations occurred when Henry Bietz served as the principal/superintendent of the' WUSD and served as superintendent for the WCS at the same time. As superintendent of the WUSD, Bietz had oversight responsibilities over the charter school.

Bietz also is listed as the chief executive officer and a director of Westwood Charter School Services, Inc., a corporation that provides financial services to WCS. The charter school is the sole shareholder of the corporation, according to the FCMAT report.

The newspaper was unable to reach Bietz for comment on this story. He is currently on a one-year leave of absence from his duties as superintendent at WUSD.

But in a story published in the Tuesday, July 28 issue of the newspaper, Bietz said, "I did not think there was a conflict. Basically I was helping run the charter for the benefit of the district." FCMAT is an independent state agency created in 1992 to assist local educational agencies in complying with fiscal accountability standards.

The WUSD granted a charter to WCS in Oct. 2001. According to the FCMAT report, WCS currently serves, "approximately 417 students enrolled in a non-classroom-based independent study program in five contiguous counties."

Copies of the FCMAT report were hand delivered to the WUSD trustees on at a board meeting on Wednesday, July 15, the day the audit report was completed.

In March 2008, the Association of California School Administrators honored Bietz as Superintendent/Principal of the Year.

FCMAT report

. Debi Deal, a FCMAT fiscal intervention specialist who helped prepare the audit report, presented the document to the Lassen County Board of Education at its regularly scheduled meeting on Wednesday, Aug. 12.

"A conflict of interest occurs when there's some financial interest in which either the school board or the superintendent or a designated employee has a special financial interest in the decisions that person makes," Deal said.

She characterized the findings in the report as a very serious matter.

"This is a specialty kind of report," Deal said. "This is not something we normally do in the course of the FCMAT work. This is rare."

Deal said last year her agency was asked to provide technical assistance to the WUSD in closings its books for the 2007-2008 school year. She said the district couldn't build a budget for 2008-2009 until that work was completed.

"In the process of doing that, we discovered the West-wood Unified School District has sponsored a charter school," Deal said. "In looking at the official audit reports done annually for the school district, we discovered notations in the audit report that the superintendent of the school district was also superintendent of the charter school."

Deal said the problem is the school district has oversight over the charter school.

"We have a conflict of interest here," Deal said. "You can't sponsor a charter school and have oversight over it when you're the superintendent of both entities. Part of your role in the oversight responsibility of a school district is to make sure the charter schools are performing their duties appropriately within the Education Code or you revoke them. You can't revoke yourself, so herein lies the problem."

Deal said since 1992

FCMAT has completed only nine extraordinary audits such as the one for the schools in Westwood.

"You can see this is not something that happens all the time," Deal said. "This is a rare event. When the county superintendent calls for an extraordinary audit under AB 139, that's a very serious matter."

Deal said the FCMAT report is primarily based on "third-party evidence" including federal documents such as W-2s and 1099s and bank records.

"The basis of the review," Deal said, "is to determine if there is significant documentation that exists to further investigate the findings, or if the findings are of a criminal nature, they should be reported to the local district attorney."

Deal said this extraordinary audit found a "material weakness," the worst of three classifications included in such reports.

"A material weakness is a serious deficiency in the internal control system, one that employees in the normal course of their duties would not detect," Deal said.

Deal said Bietz, as the WUSD superintendent, claimed he had no financial interests to report on a 700 Form, Statement of Economic Interests, a filing with the county clerk required of all public officials.

But according to the FCMAT report, the WCS approved a $2,000 per month administrative stipend for Bietz in April 2004. That amount was increased to $4,000 per month on June 15, 2005 and to $4,181.20 on Aug. 10, 2007. Bietz also was paid consulting fees in addition to the stipends.

On the 1099s, WCS reported payments to Bietz of $28,000 in 2004, $32,000 in 2005, $48,000 in 2006, $70,607.20 in 2007 and $88,424.40 in 2008 for a total of $267,031.60.

According to the FCMAT report, investigators "found no evidence or notation in the official minutes of the board that these stipends were approved at a public meeting of the board of directors."

As the superintendent of the WUSD, Bietz is paid $134,391 annually beginning July 1, 2008 plus a $2,400 automobile allowance. According to Bietz's contract with the WUSD, he "shall render a full 12 months of service to the district and will be entitled to 25 days of annual paid vacation.

The FCMAT report noted Bietz reported 65 consulting days on weekdays from Jan. 8 2007 through Jan. 22, 2009.

"Forty-nine of theses days are in one year, indicating that several of these consulting days may have occurred during contracted work days paid by the WUSD," FCMAT reported ? an alleged violation of employment practices.

Bietz "was paid a full salary from Westwood Unified School District, a monthly administrative stipend and additional consulting fees from Westwood Charter School and is a corporate officer of West-wood Charter School Services, Inc.," the report noted.

According to tax records, FCMAT reported Bietz received $847,388.37 in combined total reportable earnings from WUHSD and WCS between 2004 and 2008. His wife is a full-time WCSS, Inc. employee and received a total of $149,154.64 in compensation between 2006 and 2008.

An attorney for WCSS, Inc. told the FCMAT investigators it has never employed Bietz or made any payments to him, even though Bietz reported to the state of California he is the chief executive officer of the corporation.

According to the FCMAT report, "unaudited actuals reports for Westwood Charter School obtained from the Lassen County Office of Education for the 2003-04 through 2007-08 fiscal years show the total spent for professional services was $4,682,525. The majority of these expenditures were paid to WCSS, Inc. for bookkeeping services for Westwood Charter School operations."

According to the story in the July 28 issue of the newspaper, because WCSS, Inc. writes the checks issued by the charter school, money is transferred from one account to the other in order to pay all contractual obligations, such as rent for facilities.

Bietz told the newspaper the state money for the charter school goes to its account and then must be transferred to the WCSS, Inc. account so staff in that office can write the checks. WCSS, Inc. is a for-profit business owned by the charter school, therefore all its profits belong to the charter.

WCS purchased the human resources and business service company when the charter school was first established in order to cut costs.

"It was a financial move that was approved by the state, and it not only provided human resources services for Westwood Charter but also for other charter schools," Bietz said.

A copy of the FCMAT report is available online at fcmat.org/stories/storyRead-er$5877.



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