By Thomas Ultican 10/10/2024
In California, we have the Fiscal Crisis and Management Assist Team (FCMAT – pronounced fick-mat) which is more often the bane of its clients than a help. It is a quasi-autonomous non-governmental organization signed into law in 1992 by Governor Pete Wilson. FCMAT was a response to the financial collapse of the Richmond school district. Unfortunately organizations with this structure become bureaucratic and overtly support the political agenda of whoever is in power. The unhelpful nature of FCMAT recently reared its ugly head in Stockton Unified Schools District (SUSD).
The story of Stockton is that of a small city less than 50 miles south of Sacramento whose school district has become the target of unrelenting attacks by billionaires. It is a minority majority city of about 321,000 people. The demographic makeup is 45.2% Hispanic, 20.9% Asian, 31.3% White and 11.6% Black. The city has a little more than a 15.6% poverty rate; however, SUSD reports that 77% of their students live in poverty.
California’s Data Quest enrollment data for the 2023-24 school year shows charter schools with 6,282 students, public schools with 32,448. That means charter school enrollment is 16% of the 38,730 total publicly supported students in Stockton.
The two biggest problems for the schools is massive spending by billionaires to privatize them and an unrelenting superintendent of schools turnover. Since 2005, there has been a revolving door for superintendents. The longest serving one in that period was John Deasy and he resigned June 15, 2020 serving just 2 weeks more than 2 years.
Deasy was succeeded by Brian Beiderman who already worked in the district and appeared to have been Deasy’s choice. Beiderman was interim superintendent for 8 months and then resigned. He was replaced by John Ramirez Jr., who resigned under a cloud just over one year from being appointed interim superintendent. Going into the 2022-23 school year, the SUSD board settled on Dr. Traci E. Miller as interim superintendent.
In December 2022, Superintendent Miller was informed that “we have decided to go in another direction” six months before her contract was allowed to expire. She says the call was from Don Shalvey, CEO of San Joaquin A+, and Fritz Grupe a real estate developer, who leases charter facilities. It is of note that neither of these gentlemen had any actual standing in SUSD.
June 30 2020, was the 75 year old Shalvey’s last day at the Gates’ Foundation. For the entire 11 years he worked for Bill Gates, Shalvey commuted from his ranch in Linwood, California where he lived with his wife Sue. Linwood is 10 miles outside of Stockton.
San Joaquin A+ was a small non-profit (TIN: 51-0536117) supporting education initiative with modest holdings of less than $40,000. Coincident with Shalvey’s availability, Helen Schwab, a San Francisco billionaire, donated $400,000 to A+ and Shalvey was named CEO. In the three years prior to his arrival, A+ had taken in $15,169. The haul in 2020 was $3,176,833 and in 2021, $3,942,790. Shalvey’s new part-time job was paying him a high six-figure salary and billionaire dollars were flooding Stockton.
FCMAT Arrived
FCMAT Main Web-Page
John Ramirez, who was interim superintendent in 2021, appeared concerned about the reliability of his district’s budget. He contacted FCMAT for help. In June 2022, an odd Stockton grand jury reported on the district. Local news group Stocktonia briefed:
“The biggest concern: SUSD is “headed toward at least a $30 million deficit by `the fiscal year 2024-2025.” And if the current management practices continue, that deficit will “likely escalate.”’
Despite Ramirez having called on FCMAT months before this grand jury report, the San Joaquin County office of Education stated:
“The SJCOE can confirm that it has contracted with the Fiscal Crisis Management Assistance Team (FCMAT) in order to conduct a comprehensive review of the school district. The San Joaquin County Superintendent of Schools initiated the AB139 Extraordinary Audit earlier this year.” (An AB139 audit gets its name from the assembly bill 139 that authorized these audits of school district budgets.)
In 2023, FCMAT issued two reports. February saw the release of their Extraordinary Audit which was a bureaucratic nightmare. On page 33, the report states, “Based on the findings in this report, there is sufficient evidence to demonstrate that fraud, misappropriation of funds and/or assets, or other illegal fiscal practices may have occurred in the specific areas reviewed.” The audit cost the district $50,000 and provided no insight into the looming $30 million dollar deficit or what evidence of fraud and illegal fiscal practices had been unearthed.
The same unfounded claims of criminality were lobbed by FCMAT CEO Michael Fine at Sweetwater Union High School District where I worked. No serious legal charges were ever made and the district finally got FCMAT off their back.
The final report, Fiscal Health Risk Analysis, was presented in August. FCMAT has developed a group of tables with a series of questions having three possible responses, yes, no or N/A. They then use some secret formula to turn these answers into numbers which guides the conclusion. They determined that SUSD’s solvency risk factor was high. The report is not that convincing.
These reports were responses that provided little to no help for SUSD, who originally asked for the audit. The Extraordinary audit seemed to be a regurgitation of the grand jury findings. FCMAT trashed the board and management of the school but offered few insights. During COVID, the school board received federal money to do things like improve ventilation in schools. The audit spent five of 45 pages on the air purifier purchase from IAQ that the board made. It seems some people wanted a different company to get the contract and felt the school board froze them out. However, this was a – spend the money or lose it – purchase, and did not affect the viability of the budget.
An interesting character in this episode is financial expert Susan Montoya. She was chief financial officer when John Ramirez was superintendent of the district. Supposedly she informed Ramirez that she would be away for a while, but would have the 2021-2022 budget ready. She did return with the budget in hand and then resigned. Later, Montoya was hired by San Joaquin County school superintendent, Troy Brown, to be the counties “Fiscal Expert.”
Before Montoya’s hiring, SUSD interim superintendent, Traci Miller, wrote Brown sternly warning against the hiring. Miller stated that Montoya was unprofessional and many of the district’s “current fiscal problems can be traced back to Montoya.” Miller feared she “will sabotage our progress and our implementation of new and improved processes.” Miller was ignored.
When FCMAT was conducting its audit, the county’s “Fiscal Expert,” Susan Montoya, was a primary source. The person Traci Miller blamed for the district’s fiscal problems was part of the team doing the audit. In effect, grading her own home work. In the extraordinary audit, FCMAT writes, “Limiting the possibility of any personal influence, either directly or indirectly, is about avoiding even the appearance of a conflict.” (Page 10) Their statement seems a little hypocritical.
To put a cherry on the top, SUSD has discovered that the $30 million budget deficit was rouge. Supposedly, Montoya had created phantom positions that were being funded and that was the source of the apparent deficit that never existed.
Public Schools are Resilient
After years of turbulence and leadership turnover, it could be that SUSD is on a better path. Traci Miller took over a mess and improved the district’s functioning. In 2003, the district hired Michelle Rodriguez to be superintendent. After one year on the job, her contract was extended from three to five years.
Rodriguez studied at Chico State University and upon graduation went to Spain for further study. She is fully bilingual. Rodriguez earned a PhD from University of Southern California, was a principal in San Diego, became chief academic officer in Santa Ana and was Superintendent of Pajaro Unified School District in Watsonville for 7 years prior to accepting the Stockton job. Michelle stated she expects to be in Stockton for 7 years declaring, “I plan to retire here. I plan to stay here and affect change.”
SUSD has been demeaned because it does not have good standardized test scores. In statistics, the r-value correlation has a value between o and 1 for determining the effects of different inputs on education testing results. An r = 0 means there in no relationship and an r = 1 means the input is 100% determinative. Inputs like teacher, curriculum design, class size, etc. can be evaluated. The only input ever found with more than 0.3 r-value is family wealth at a 0.9 r-value. Stockton parents are poor and many of the students are language learners; for them to perform as well on standardized tests as wealthy students would show statistical evaluations to be meaningless.
The California dashboard reveals that Stockton has no academic areas in crisis and meets all professional standards. It has a relatively low graduation rate of 82% but is improving the rates of chronic absenteeism. Public schools are very resilient. With the constant leadership turnover, high poverty rates, billionaire attacks and widespread belief the district is corrupt, schools are still functioning at a high level. With a little stability and professionalism at the top, the future looks bright.
On the other hand, FCMAT needs to be defunded. Programs aiding districts should be in the California Department of Education and not be in some semi-private organization in Bakersfield, California.
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