Looking out for themselves first

August 25, 2009

Steven Damewood looks at a scandal over financial mismanagement in the Peralta Community College District.

CALIFORNIA'S EDUCATION system is currently experiencing the most severe budget cuts in its history, including the slashing of $936 million from the community college system--a 20 percent reduction in state funds.

The Peralta Community College District, with four campuses in and around Oakland, is no exception. Teachers, staff and students are bracing for furloughs, increased class sizes, retroactive tuition hikes and cuts to services and programs this fall.

However, while students and teachers were made to sacrifice, the Peralta district chancellor and top college administrators were steering tax-funded contracts to business partners, raising salaries for high-ranking administrators, and using college funds for expensive clothing and stays in luxury hotels.

On July 11, writers from the Bay Area News Group reported that Peralta Community College Chancellor Elihu Harris helped his former business partner secure a no-bid contract with the district at a cost of just under $1 million. Harris and Mark A. Lindquist were partners in a Fresno radio station and a real estate company when Harris recommended Lindquist's company, 1701 Associates Inc., for the Peralta contract.

Peralta Community College Chancellor Elihu Harris
Peralta Community College Chancellor Elihu Harris

According to reports in the Oakland Tribune, the price tag for the tax-funded project to oversee renovations on the Laney campus in Oakland was increased three times, including once by Harris himself. The project was originally estimated to cost $309,000 but had ballooned to $943,000 by April 2007 by the time Harris' former business partner secured the deal for 1701 Associates Inc.

Trustees claim they weren't aware of the relationship between Harris and Lindquist or any possible conflicts of interest. This is somewhat believable, given that the person responsible for notifying the board of potential legal or ethical conflicts, General Counsel Thuy Thi Nguyen, is herself caught up in the scandal.

Nguyen is one of 57 top district officials who received pay raises from Harris of up to 16 percent. Along with Harris' special assistant, Alton Jelks, Nguyen actually had two raises in the space of six months--from an annual salary of $148,000 last year to $165,000 at the beginning of this year.

While the Peralta board of trustees have tried to distance themselves from the chancellor's unethical dealings and unilateral pay increases, both the chancellor and the trustees have used district credit cards in violation of the board's own policies. Despite requirements that district officials choose the least-expensive hotel option when traveling on business, the Bay Area News Group investigation uncovered misuse of funds on business trips by Harris and several of the trustees.

To make matters worse, even though Harris used Peralta credit cards for airfare and other travel expenses, he receives a stipend of $1,000 for travel each month--whether he uses it or not.

After forcing Peralta to release credit card statements, the Bay Area News Group found that Trustee Marcie Hodge used her Peralta credit card for thousands of dollars worth of personal purchases over the last year, including hundreds of dollars for expensive clothing while on a single trip to Las Vegas. As the Contra Costa Times noted:

"If you came to Las Vegas and forgot your flashy, sequined dress, don't be alarmed," states the Web site of the Marshall Rousso dress shop, where Hodge spent $355. She also spent $278 at another Venetian clothing store called "Privilege."

SUCH BLATANT cronyism at the top of the Peralta Community College District is disgusting, particularly in the context of the economic crisis and the draconian budget cuts being imposed on students and teachers across the state. So far, however, little has been done to hold Peralta leaders accountable.

When the Bay Area News Group published its articles, trustees told reporters that they were shocked to learn of the unilateral pay raises that Harris gave to administration management. Trustee Cy Gulassa announced to the media that the trustees were "not going to let things slide."

However, as the Oakland Tribune noted, "Trustees decided this year--without telling the public, as the state open-meeting law requires--to keep the manager raises in place and not to admonish Harris publicly."

Opinion pieces in the Oakland Tribune and other local papers have ridiculed the individual administrators caught-up in the scandal and called for a "clean up" of the district. In response, the trustees have hired a state investigator--a retired community college chancellor from southern California--to look into the possible ethics conflicts.

As if to underscore the futility of a "clean house" approach to corruption like this, one of the trustees under scrutiny for using district money for personal purchases has spent the last few years trying to build a political career based on "cutting waste" in the Peralta Colleges.

In 2006, Trustee Marcie Hodge, who had charged over $4,000 for personal expenditures to her Peralta credit card in a year and a half, ran for Oakland City Council. Ironically, she attempted to build her campaign's profile through denouncing "wasteful spending" in the Peralta College District.

Aside from possibly clearing some closet space for a new tax-funded shopping-spree, "cleaning house" does little to get to the root of why this scandal occurred, and nothing to prevent corruption in the future. For more than a decade, public education in California has faced cuts to funding which lead to a situation where public higher education institutions are constantly searching for new sources of funding rather than focusing on the needs of students and teachers.

THE REASONS the trustees gave for appointing Harris as chancellor of the district provide insight into why a culture of corruption and suspicious business deals exists at the top of the Peralta district. The Contra Costa Times stated that board of trustees President Bill Withrow "said he [Elihu Harris] was hired for his management expertise and political connections," despite a complete lack of experience in education or familiarity with issues faced by community colleges.

While Harris misused funds in order to take two separate trips to Washington, D.C., in January to attend both President Obama's inauguration and Rep. Barbara Lee's swearing in, Withrow defended the trips. Withrow was quoted in the Contra Costa Times explaining that Harris is "an asset to us back there. We get in excess of $20 million per year in grants. You have to work the process to do that."

When "working the process" takes precedent over educating students, both students and teachers suffer. If officials see their main task as securing funds and lobbying, then they will need to attract the managers with business and political connections.

Harris defends the pay increases for top administrators by saying he was trying to be fair because administrators at other community colleges in California make more money. Yet how is it fair to give raises while teachers and staff are facing layoffs and furloughs? For each $20,000 a year pay increase awarded by Harris to people like his general council, 40 students could be given full scholarships.

The Peralta Community College District is not alone in rewarding management while students and teachers suffer cutbacks. Only a month after the Peralta management's pay raises came to light, the San Francisco Chronicle observed:

On the same July day that the [University of California (UC)] Board of Regents cut $813 million from UC budgets--setting in motion pay cuts, layoffs and campus cutbacks--the board quietly approved pay raises, stipends and other benefits for more than two dozen executives.

The real scandal is that there has been an attack on the entire concept of affordable public higher education for the past generation in California. Before 1984, community colleges in California were free. Since that time, tuition has increased dramatically in the state college system as well as in the UC system. The Community College League of California estimates that 250,000 fewer students will be able to attend Community Colleges in California this year due to the budget cuts.

In order to reverse this trend, students and teachers need to build movements that can challenge the existing priorities of both their college districts and the state government. In April, thousands of students from all three levels of California's higher education system converged at the state Capital to protest fee increases and many campuses have also seen protests. The fall promises more protests as students return and will be forced to deal with the effects of the budget cuts.

These protests offer a chance for students, teachers, and campus workers to join together to expose the hypocrisy of making students and workers pay for the budget crisis through cuts to education and furloughs.

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