San Diego State University foundation deal ripped by audit
University research foundation reaped millions in improper administrative fees from state taxpayers, audit finds
A deal between the San Diego University Research Foundation and two California agencies improperly used money that was supposed to be spent on prevention of childhood injury and abuse to fund a portion of the non-profit's massive overhead, according to a state audit released today.
The state Public Health and Health Services department "paid the research foundation to administer the program from the funds that the Legislature had intended it to use directly for childhood injury prevention programs," according the document's cover letter by state auditor State Auditor Elaine Howle.
The letter goes on to say that "[Public Health] spent roughly 40 percent of their total appropriations received between fiscal years 2006–07 and 2009–10, or nearly $2.1 million, on the research foundation’s administrative costs for the Kids’ Plates Program."
The improper spending had been going on for years before being discovered, according to the report.
"From 1998 until 2010, the Department of Public Health (Public Health) and its predecessor agency, the Department of Health Services (Health Services), contracted with the San Diego State University Research Foundation (research foundation) to administer the Kids’ Plates Program," the audit says.
"When they contracted with the research foundation, Public Health and Health Services violated state law’s prohibition against state agencies contracting with private entities to perform certain types of work that state employees could perform.
“After years of approving the contracts, the Department of General Services finally identified this violation when Public Health attempted to enter into a new contract with the research foundation in 2010.
"Ultimately, Public Health determined that it could not justify continuing to contract with the research foundation.
“While it was attempting to resolve this issue, however, Public Health further violated state law by allowing the research foundation to perform services for 10 months without a contract.
"Public Health could not reimburse the research foundation for its efforts; therefore, the research foundation filed a claim against the State, which awarded it more than $300,000.
“Because the research foundation could not award grants without a contract, the State did not receive any benefits from the 10 months of work the research foundation performed and for which the State ultimately paid."
"In total, these departments inappropriately paid the research foundation nearly $2.1 million in local assistance funds to administer the Kids’ Plates Program between fiscal years 2006–07 and 2009–10.
“This amount represents 40 percent of Public Health’s and Health Services’ total Kids’ Plates Program appropriations of $5.2 million."
Agency officials responded that they were changing their practices and policies to strengthen their oversight of outsourcing.
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