State says school district owed $95,580 to charter school.

Monterey Peninsula Unified School District (MPUSD) overcharged and withheld revenue owed to Cypress Grove Carter High School in the amount of $95,580, according to a state investigation.

The report, released June 26 by the state’s Fiscal Crisis and Management Assistance Team, is only seven pages long, but it goes a long way in getting to the bottom of a financial dispute between MPUSD and Cypress Grove.

The report is a partial vindication for the charter school, which in February had its charter renewal application denied by MPUSD based on assertions that the school chronically failed to meet its required financial targets.

“We always knew for sure that our deficit wasn’t the $192,000 that MPUSD was claiming.”

The state’s report focuses on the 2004-2005 school year and finds that MPUSD overcharged Cypress Grove for financial services and other items.

To Walt Ferguson, Cypress Grove’s executive director, this proves that the school was right not to trust the district’s financial numbers in the first place.

District officials have claimed since last fall that Cypress Grove was $192,000 in the red for the 2004-05 academic year. The district officials were wrong.

According to the state’s investigation, Cypress Grove didn’t balance its budget, but its money woes were only about half as bad as MPUSD officials previously stated. The report, which examined financial records relating to Cypress Grove, found the school operating with a deficit of about $97,000.

“If we had known in August of last year what our real deficit was, we could have taken measures to fix it,” says Ferguson, whose complaint to the state Board of Education triggered the investigation. “We always knew for sure that our deficit wasn’t the $192,000 that MPUSD was claiming, but we didn’t know until [last] Monday what the real number was.”

Ferguson has spent most of the last year disputing MPUSD’s numbers instead of attempting to balance the school’s checkbook. The quarrel with MPUSD has been so intense that the school has refused to sign off on its 2004-2005 budget, due months ago, because it wouldn’t accept MPUSD’s accounting figures. Because the school didn’t have a signed budget, the MPUSD Board of Trustees sided with district staff and turned down Cypress Grove’s charter application, leaving it on the brink of extinction.

The report also says that none of MPUSD’s three charter schools, including Cypress Grove, had direct or even remote access to the district’s financial system. Additionally, the district did not routinely provide Cypress Grove with quarterly financial reports.

“MPUSD was legally responsible for being our financial oversight agency,” Ferguson says. “So if Cypress Grove was in the red, then the district should have told us about it so we could have addressed the problem ahead of time.”

MPUSD staff are on vacation this week and weren’t available to comment on the state investigation. MPUSD trustees say they haven’t had an opportunity to read the report. Trustee Helen Rucker says the board followed staff’s recommendations to deny the charter application based on the data they were provided.

“We had no alternative but to protect the school district,” Rucker says.

Buoyed by the report, Ferguson is orchestrating one last attempt to keep Cypress Grove’s doors open. It’s a long shot. He is hoping to raise about $250,000—the amount auditors estimate the school needs to pay legal fees and accumulated debt—by July 12 when the state Board of Education will vote to approve or deny the school’s charter application.

An advisory commission has already recommended that the Board of Education deny Cypress Grove’s application. Ferguson knows it may be futile, but he says he wants to raise enough money to show the Board of Education that Cypress Grove can meet its financial responsibilities.