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By Alex Groves

The Capistrano Unified School District Board of Trustees on Wednesday, Oct. 10, adopted a resolution effectively distancing the district from an organization that raises funds for it.

The Board Voted 5-0, with trustees Patricia Holloway and Amy Hanacek absent, to adopt the resolution.

It was brought for the board’s consideration after concerns were raised about how the Capistrano Unified School District Foundation for Education was managing funds it raised for the district.

The resolution resolves that the district will direct the CUSD Foundation to “cease and desist from raising funds as the CUSD or Capistrano Unified School District Foundation, or in any way that suggests to unwitting donors that the CUSD Foundation is endorsed by, or any form associated with, the Capistrano Unified School District.”

It also says there will be a continued effort to educate community stakeholders such as PTAs, booster clubs and school-connected organizations about alternatives to the foundation.

According to a board report, the CUSD Foundation issued a statement on April 12 saying its Board of Directors became aware of “serious financial irregularities” believed to involve a former executive director who resigned in December 2017.

The report notes that on April 27 the district, concerned with the possible mismanagement of funds, requested that the foundation turn over all funds in its possession that were raised for the benefit of district schools; turn over all financial accounting; and present all pending and future donation requests to the district’s deputy superintendent.

On May 2, the foundation denied those requests, stating that it would be illegal to transfer or turn over funds or approval authority to a public school district.

The report says the district officials researched that claim and found that the law did not preclude the foundation from doing those things.

Despite emails and face-to-face meetings, the foundation had not met the district’s demands as of early October, the report says.

Trustee Martha McNicholas responded to two public speakers who asked the district not to sever ties with the foundation.

McNicholas said the foundation had been having “problems” for at least a couple years. That, paired with the recent evidence of financial mismanagement and limited cooperation left the district with no choice but to pursue the resolution, she said.

“We’re concerned that the foundation is using CUSD’s name to raise money and then we don’t know where it goes,” she said. “And we’ve really tried, like I say, over the last year and a half to try to figure this out and it’s just come to the point where we just really have to distance ourselves from this issue.”

The resolution notes that the superintendent or her designee “shall take any and all lawful action” to implement the resolution, including financial audits, efforts to enforce transparency and legal action.

The Board’s action follows a lawsuit filed on Sept. 10 by the CUSD Foundation against Michelle Hart, the former executive director for the foundation, alleging Hart had misused funds.

The lawsuit alleges that in or around December of 2017, Hart admitted to members of the foundation that she had misappropriated funds in excess of $50,000 over her three-year tenure as director and that she immediately resigned.

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