LOS ANGELES TIMES

Friday, June 12, 1998

State Trustees Uneasy About Spending OKd by Prop. 227

Education: Board members to consider keeping funds from adult programs that have drawn the attention of the FBI for alleged money irregularities.

By JANET WILSON, Times Staff Writer

SACRAMENTO--Members of the State Board of Education said they will discuss at a meeting today whether to block the allocation of Proposition 227 funds earmarked for adult education programs under investigation by the FBI.

Federal authorities are conducting an investigation of the state education department's allocation of millions of dollars in public funds to community organizations that provide adult education, and the possible misuse of funds by 10 of those groups.

"I am horrified to think about what might happen if you look at adding $50 million to already troubled waters and just seeing what happens without any proper management structure," said board member Janet Nicholas, who plans to take up the issue with her colleagues at a board meeting today.

Proposition 227, overwhelmingly approved by voters last week, virtually banned bilingual education from California public schools, but set aside $50 million a year in state funds for parents or others who pledge to tutor children in English. The proposition mandates that the adult education programs be offered by schools or community organizations.

State Supt. of Public Instruction Delaine Eastin, a Democrat who is often at odds with Nicholas and other members of the Republican-dominated board, agreed that it would be better for school districts with credentialed teachers to get the money and run the programs.

"I'm not crazy about community-based organizations getting these funds for just that reason," she said.

But Eastin said the move by board members planned for today was driven by politics as well as an attempt to keep her from deciding how to spend the funds. Eastin, who faces a runoff against Republican-backed Gloria Matta Tuchman of Santa Ana, a strong supporter of Proposition 227, said she will fight any attempts by the board to decide where the money should go.

"That was really political more than anything; they're trying to hurt me in the election and take away my power," said Eastin of Nicholas' remarks. "She has no say over management systems or the execution of programs."

The board sets education policy for California, but Eastin's staff is responsible for administering all public education programs, including those now under scrutiny.

Among the alleged financial irregularities under investigation, according to documents subpoenaed by authorities, is whether the community organizations received payment for classes that were never held or reimbursed for equipment that was never bought.

Federal officials also are investigating whether state education officials ignored or quashed complaints from their staff about the alleged misuses, according to the documents and sources familiar with the investigation.

Board president Yvonne Larsen said she was "extremely troubled" by reports of the investigation and by some of the subpoenaed documents she had reviewed.

After reading some of the documents, Larsen said she is convinced that she and other board members were not notified that for the past six years, funds may have been illegally set aside for community organizations that taught English as a second language and citizenship classes, because the state's adult education plan was never amended to include the funding.

"You have a report from your own internal auditor last October 1997 saying that we, the board, should be notified," Larsen told Deputy Supt. Henry Der. "It's June 11."

Der said the U.S. Department of Education, which provided the funds, had reviewed the allocation of money and signed off on the classes.

Eastin said the classes were funded before she was elected superintendent, noting, "There were obviously mistakes made . . . but we have new staff in charge of adult education who we believe are scrupulous, honest, professional, and will clean up this mess."

Eastin said she wanted to make sure that "not one cent more" went to any community organization that had not properly accounted for how it spent federal funding.

The largest organization under investigation, Hermandad Mexicana Nacional, received $3.8 million this year from Eastin's adult education staff even after Hermandad's executive director admitted he had broken the law by not paying payroll taxes, and the department was forced to pay for nearly $200,000 in back taxes for the organization.