School districts take steps to prevent future financial misdeeds | October 31, 2012 | Almanac | Almanac Online |


Cover Story - October 31, 2012

School districts take steps to prevent future financial misdeeds

by Barbara Wood

While both the Woodside and Portola Valley school districts have put measures in place to try to make it more difficult for their funds to be misused in the future, officials emphasize that the crimes Mr. Hanretty has confessed to were sophisticated.

Mr. Hanretty "was able to snow two distinguished districts," said Scott Parker, head of the Portola Valley district's board. "These are really sophisticated boards full of people who have been serving for a number of years."

If the Woodside district had not discovered the loan improprieties, "I don't know whether (the Portola Valley embezzlement) would have been found. He was very, very good at hiding things," Mr. Parker said.

For example, the Portola Valley district already had in place a system of independent audits. Unfortunately, the audits were presented to the chief business officer, who was Mr. Hanretty, and not directly to the board.

"It's not a matter of not looking into the documents," Mr. Parker said. "We're reading every page and that's still not enough."

In hindsight, district officials say, it may not have been the best idea to combine the jobs of chief business officer and superintendent, or to share one person, as the districts did for many years. At the time, however, the decisions had widespread support and were seen as money-saving. "It was actually something that nobody opposed," Mr. Parker said.

"We thought we were being quite efficient," said Woodside board member Bettina Pike.

Both districts say they have completely revamped the way they keep track of money.

"We really have changed our entire accounting structure," Mr. Parker said. "What we've added is additional ways for the board to have clearer eyes on our actual financial picture, rather than an interpretation of it."

"I think we're just starting with a clean slate," said Ms. Pike, who is the board member who first asked the questions about the district's debt service that led to discovery of the unauthorized $2 million loan. Woodside plans, for example, to use an outside project manager for any future bond projects, she said.

Woodside district superintendent Beth Polito said the district is "making sure an independent financial audit is completed in a timely manner and that it is reported to the board in an open session every year."

In Portola Valley, Superintendent Carol Piraino said the district has formed an advisory committee made up of parents, representatives of the Portola Valley Schools Foundation and teachers; established an audit committee, which also has representatives of these groups; and begun using the San Mateo County financial systems for purchase orders, position control, and payroll to prevent the district from spending money it does not have.

In addition, Ms. Piraino said, all purchase orders over $15,000 must now be approved by the school board.

"All of these practices have put checks and balances in place to ensure that we, as a district, live within our means," she said.

Stephanie Ashworth, the former Woodside School Foundation board member who worked with Mr. Hanretty, said she has learned something from the experience that both districts might heed.

"I think for me the lesson learned (is) you never give one human being too much power in an organization when finances are involved," Ms. Ashworth says.