School district illicitly garnered $13 million in FEMA funds?

March 27, 2012


The Paso Robles School District is getting a double wave of bad financial news ― not only is the district already facing a $1.59 million budget shortfall, but the federal government may be seeking the return of more than $13 million in disaster relief money the district is accused of collecting illicitly.

Nearly eight years after the San Simeon Earthquake damaged the Flamson Middle School building, the Office of the Inspector General (OIG) is recommending that the Federal Emergency Management Agency (FEMA) ask the district to return $13 million in relief funds.

Paso Robles School Superintendent Kathy McNamara said the district “is working with” the OIG and has responded to all of the issues raised in an audit.

“We believe we have done things properly,” she said Tuesday. Patrick Sayne headed the district at the time of the earthquake and for four years thereafter.

Teachers’ union president Jim Lynette said “any outcome that is detrimental to the district will further erode the ability of teachers to teach. This is ugly.”

Lynett said the audit findings reflect “just another major problem for the district which is the result of mismanagement.” District officials “have rejected several plans” proposed by teachers to help address the budget deficit.

“We have always had great support from the community,” said Lynett, “but with this kind of mismanagement, we might not get that level of support. And I’m not sure how we can avoid a takeover by the state if this goes against the district.”

The OIG recently completed the audit of seven large projects and 14 small district projects resulting from the earthquake, totaling $19.1 million. Federal inspectors concluded that the district “erroneously funded the replacement of the Flamson Middle School building, did not get competitive bids, and as a result possibly overpaid three local contractors for construction, design and engineering work.”

FEMA considers a facility repairable when the “disaster damages do not exceed 50 percent of the cost of replacing the facility to its pre-disaster condition.”

However, in this case, because the district provided inaccurate square footage numbers, the determination was inaccurately made to replace rather than to repair the building. The OIG is asking FEMA to request the difference in repair and replacement costs to be returned to the FEMA and the OIG.

“Our analysis support that the fundamental bases for which this project was approved for replacement were incorrect, thus rendering the entire project ineligible and the improved project aspect moot,” the OIG report says.

In addition, district officials are accused of failing to get competitive bids, preparing a cost analysis or maintaining sufficient procurement records.

“District officials improperly procured three contracts worth $2.7 million  for architectural and engineering services, construction testing services, and construction inspections for Project 245,” according to the report.

The district did not use full and open competition, thus FEMA has no assurance that the district paid reasonable prices,” the OIG report says.

The OIG report says that district officials agreed that they did not compete the contracts associated with this project but noted that the three contractors had done work in the past for the district.

“Although the A&E contractor was “pre-qualified” by the district―five years prior to the disaster―to perform work for the district, this does not, and cannot, excuse the district from the  requirement to comply with federal procurement rules and regulations applicable to federally awarded FEMA funds,” the OIG reports says.

Superintendent McNamara said she does not believe that competitive bidding was necessary because of work done by the contractors previously for the district.

FEMA has until May 9 to provide a written response to the OIG’s audit. If FEMA agrees with the OIG that $13 million in relief funds should be returned, the district will then be provided a chance to respond.


I am moving to Templeton.

Hiram Schlicklgruber

Our sidewalks will be safer.


How interesting…

Quoting the linked article:


The city received 14 bids, ranging from about $827,000 to $1.4 million for the parking lot work.

The least expensive was chosen, which was submitted by MGE Underground Inc., a general engineering contractor based in Paso Robles. FEMA authorized a nearly $1.3 million reimbursement for the city, but officials can’t use the nearly half million dollars in savings between the bid and FEMA allotment for another project, Public Works Director Doug Monn said, because FEMA will only reimburse for the actual costs of the work.

Also, FEMA will only pay to restore the property back to its prequake status. That means Paso Robles couldn’t entertain alternative ideas to use the sulfur water for other uses, such as tourism, officials have said.…..

….Other fixes from the quake include the $2.5 million restoration and retrofit of the Carnegie Library in Downtown City Park and the $15.2 million rebuilding of Flamson Middle School’s main building, which is slated to open this school year.


1. The city received 14 bids for the parking lot work. Why did they bother if superintendent McNamara really didn’t think she had to get competitive bids?

2. Why would anyone expect FEMA (Federal EMERGENCY Management Agency) to do anything else but provide funds to deal with the EMERGENCY. I don’t know–that paragraph just sounds kind of pissy, like a pouting teenage girl whose car was damaged when a tree branch fell on it, her parents paid to have the car fixed, and the girl is pouting because she thought she’d get a new car out of the deal.

3. The article plainly shows that the city was planning to go ahead with projects that FEMA had not included for the funding–“rebuilding” Flamson School, and the work on the library.

Either McNamara or her superior should be fired for corruption. They had ultimate responsibility for ensuring the project did not do anything unethical or corrupt with the FEMA funds.

Hey, I just had an idea…You know, that 63%-of-project-for-engineering figure….

How did it get so exorbitantly high, in relation to the other percentages of the project costs?

I wonder who was actually administering that project.

The Wallace Group does that kind of contracting for projects all the time.

When work is contracted out, well—let’s just say that your own agency staff needs to stay on top of contract performance because it can be an issue. So it is Paso’s responsibility to monitor performance issues. Some contractors, especially if they’ve been around for awhile, and have taken the administrators out to dinner, etc., have this attitude of entitlement to do whatever they want, going outside of what was contracted for, and then just slipping in an invoice, or a couple of lines of charges in a routine invoice, for the services. This can be more of a problem if a not-to-bright agency administrator, or a corrupt agency administrator, is buddies with the contractor.

Even if Nunley was the lead engineering firm, he could have subcontracted the administration to another company.

It sure would be interesting to find out who exactly was really doing the project administration. That 63% figure is a red flag, IMO.

Hiram Schlicklgruber

I am sooooo confused. Why would Mcnamara have anything to do with the library?



The Doctor is involved because the District comingled money to get Flamson built by FEMA. The city money and school money seemed to be comingled as stated from the quote above. This is not new news. The District has so many shady deals it is appalling. They were fined before by FEMA because they invoiced work too far in advanced and collected interest on FEMA money( ILLEGAL). The district was fined a million dollars. They also paid District Personnel at the High School through School Bond money. (ILLEGAL). They are pleading their case as “Blame it on Bush”. WRONG The director of constuction and director of operations still are in their postions and have been there for ALL the mismanagement of money. Now your students are paying for it by receiving less school days. Bring the pitch forks people!!!!!!


You saved me…not a lot…but some writing, esp on the aspect of “rebuilding.” Thanks.


LOVE this part:

Superintendent McNamara said she does not believe that competitive bidding was necessary because of work done by the contractors previously for the district.

Where does the County get its superintendents? Cambria, Paso….are the rest of the County’s school superintendents as stupid?

There are two big problems with these superintendents: the first is that the superintendents are too incompetent to realize their limits, and the second is they must have zero supervision, even for something as big as submitting documentation for federal grants.

Or they are just corrupt liars, like the bunch at city hall, and have been able to scam the feds long enough that they think the feds won’t ever crack down on them.

Maybe they’re right. But if there is a fine, or if money has to be returned, you know where it is going to come from (hint: it won’t come from the superintendent who didn’t think to read the instructions before filled out and signed the grant documents).

Hiram Schlicklgruber

I believe it was Lancaster or Palmdale or something


Wow, most commentators seem shocked at THIS. This is barely the tip of the iceberg. An investigation into credit card misuse by state employees would stagger your mind. It’s a bureaucrat crime wave that would make Bernie Madoff blush.


O.k. time to grab the pitch forks. I’ve HAD IT!! Everything going on and now this??!!!!!! Also didn’t FEMA look into how Paso report on the hole in the library parking lot and or the old library? Anyone else WAAAAAAY past fed up?!!

I urge ALL local Paso people like myself to not vote for ANY incumbent this coming election. Lets send a message to all the assholes at city hall (App and the council) that we are DONE with their bullshit!!!!!

Mr. Holly

This is a school issue which is separate from city functions. The bottom line is that there are now 2 culprits in town now-city government and now the school district.


Yea but as I mentioned wasn’t there the same problem with the city library, either the old (building) or new one (hole)?


I bet the “pre-qualified” contractors were friends of an official at the city. There is more to this than we know. I don’t always think there is a conspiracy but having worked for city government it just seems like there are to many coincidences.


Interesting that all of this is coming out at the same time.

That’s what the D.C. politicians do….they do “Friday dumps,” where the release all of the bad news they don’t want people to think too much about on a Friday. Residents are busy on the weekend, don’t want to think about politics, for heaven’s sake. By the time Monday rolls around, a new shiny attention object has magically appeared on TV, and the Friday dump bad news barely gets covered.

The politicians and government officials overwhelm the people they are supposed to be serving with multiple scandals or bad-news issues at once, knowing that the people will become overwhelmed, go grab a beer, turn on March Madness (or Project Runway), and tune out.


Yep, and come the fall, all this will have been forgotten and “old” news, political ploy. The CC really believe this will all past by November and the idiots will be reelected. It’s worked in the past.


We know that the “pre-qualified” engineers included Nunley, The Wallace Group and Fugro, because they were all involved in the engineering, with Nunley being the lead engineering firm.

There are some contractors who we learn over time to associate with a red flag for project financial issues. That’s all I’ll say on that for now.


The “good old boy” network is alive & well! Nothing has changed in SLO County, it’s still the MOST corrupt county in California!


Is the public entitled to know the names of the contractors? Why were they allowed preferential treatment over other local contractors?

Were there pay offs? … or did they contractors know the right people of make the right political campaign contributions?

The hard working teachers in Paso Robles have got to be dissapointed in how the leaders are steering the bus.


“I would guess that they are the same contractors used on other FEMA-funded post-earthquake projects:

AH-ha! Here it is:



The OIG recently completed an audit of four large projects and two small projects resulting from the earthquake, totaling $5.8 million. Federal inspectors concluded that the city did not get competitive bids, and as a result overpaid a local engineering firm for design and engineering work.

“City officials awarded these contracts non-competitively to the same contractor they employed before the disaster,”
the OIG says in their Sept. 13 audit report. “Full and open competition increases the opportunity for obtaining reasonable pricing from the most qualified contractors and allows the opportunity for minority firms, women’s business enterprises, and labor surplus area firms to participate in federally funded work.

“In addition, full and open competition helps discourage and prevent favoritism, collusion, fraud, waste, and abuse.”

City officials signed a contract with Michael Nunley of Boyle Engineering to provide design and engineering services through Boyle Engineering, Wallace Engineering and Furgo West. City officials claim they selected Boyle Engineering in full compliance with federal and state laws….

…FEMA requires that contracts must be of “reasonable cost and must comply with federal, state, and local procurement standards.” FEMA rules say engineering and design services should run no more than 12.4 percent of construction costs.

City officials shelled out as much as 63 percent of construction costs for engineering and design.

In addition to questioning approximately $1 million for non-bid engineering work, the OIG wants $100,000 back for ineligible work and unsupported costs.

The OIG is recommending FEMA ask for $43,125 in construction management costs for library improvements to be returned because it was not part of “the approved scope of work.” City officials disagreed with the OIG investigators finding, but said they understood its position, the report says.

However, city officials agreed with the auditor that $51,882 in unsupported costs the OIG says occurred because of accounting errors and additional funds paid to an engineering firm without any details of the charges relating to disaster work should be returned, the report says….”




I have been hearing from local business owners for years of app sending business out of the area rarther than use local city business.

I isn’t hard to imagine there would be some graft involved (I know, where is the proof)

They (public servants) decieve, “YOU” comply.


Mr. Holly

Looks like Paso Robles is on a roll.

First we have the Solomon gift of $250,000 plus whatever benefits that she is likely to get from all of a sudden becoming “disabled.? The price tag on that is yet unknown.

And then what kind of payoff is the city going to offer to the officers that have been sexually assaulted by their chief. Certainly nobody is going to want us to know the details on that one. And now we have our educators misrepresenting what appear to be true facts which may cost the troubled school district $13 million dollars.

What’s in the water up there? It looks like the entire city and school district are completely inept at running there operations. Once again the tax payer will pay not only for these errors, crimes or whatever but it also appears that these people will still be paid their excessive salaries and benefits.

The citizens of Paso Robles should be in an uproar and demand change.

danika is all about Change Paso Robles Now!


The email address is

They reply very quickly, too. Very responsive and very friendly. Just one return email, and I already have a crush on Jim =)

I’m tempted to wait until midnight and send them an email to see how long it takes to get a reply =)


LMAO! I have met Jim in person.

neener, neener, neener, MM! ; )



Oh My God – I actually communicated with the lady of my dreams and I didn’t know it.

I am crushed


Get a room! lolz.

Hiram Schlicklgruber

mmmmmmmmmm waterrrrr