ENCINITAS — For the first time, the San Dieguito Union High School District is creating a comprehensive memorandum of understanding with the district’s four high school foundations to set clear and consistent expectations regarding financial reporting and use of district facilities.
On Nov. 20, the SDUHSD board of trustees reviewed a first draft of a proposed MOU that would govern the district’s operational relationship with the foundations at Canyon Crest Academy, San Dieguito Academy, Torrey Pines High School and La Costa Canyon High School.
The draft MOU comes forward just over a year after two CCA students released an investigative report highlighting major concerns related to their school foundation’s financial practices. This report spurred the district to order an audit of all four high school foundations.
In its August audit report, the firm CWDL gave several recommendations to improve transparency, communication, and financial practices for the foundations. One of the recommendations was for an MOU.
“We do believe that this MOU process you are undertaking will result in increased collaboration and communication, and certainly increased transparency, for all involved,” said Superintendent Anne Staffieri.
The draft memorandum sets consistent fees to be charged by all foundations. Currently, donors to each of the four foundations see different fees applied to their donations.
CCAF, for example, has much higher fees than other foundations. At CCAF, 25% of donations made to a specific club have historically been allocated to a general fund for athletics, arts, or STEM.
CCAF also charges each club an end-of-year fee, which varies based on total revenue raised, to cover executive management and salaries.
Under the draft MOU, each foundation would be permitted to charge an administrative fee of up to 10%. Foundations would also still be able to allocate a portion of each donation to a larger unrestricted fund, but donors must be able to opt out if they choose.
“For example, if someone wanted to donate $100 specifically for a team, they could say ‘I want to opt out of any other side allocation,’” said Associate Superintendent of Business Services Stephen Dickinson.
For years, foundations have used district facilities and collected event fees to generate revenue. The draft MOU changes this longstanding practice, making it clear that the district, not the foundations, is responsible for the facility-use process and fee collection.
Foundations will need to start paying a nonprofit fee to use district facilities when the activity charges participants.
District staff said they received initial feedback from school foundations with concerns that this change could be catastrophic to their operations. One foundation estimated it would cost them $600,000 in annual lost revenue.
“Our primary feedback that we’ve received is that this would be a large financial impact on the foundation and the teams and clubs that are supported, and that it may be a disproportionate impact on athletics versus other types of activities,” Dickinson said.
Some foundations requested that the district charge only 50% of the facility fee.
At the same meeting, the board also reviewed a proposed facility fee schedule for different types of facilities, including classrooms, fields, theaters, concession stands, parking lots, and more. These fees are set to increase gradually over the coming years.
The board will approve a final facility fee schedule in December.
Trustees said they want to ensure student organizations aren’t forced to pay a fee to use facilities on their own campuses, and that during fundraisers, as much of the money as possible goes back to students.
“I think the bottom line is to make sure that if students, teams, and clubs are doing fundraisers, that they actually get the maximum amount of the funds for the students,” said Trustee Jane Lea Smith.
In setting facility use fees, the board could choose to charge no fee for school-affiliated camps, clinics, and fundraisers. Trustee Michael Allman said he would be interested in charging zero percent for these activities.
Other requirements outlined in the draft MOU include:
- Creation of quarterly and annual financial reports as well as an operating manual,
- Pre-approval process for verification of documentation before distributing funds.
- Retention of receipts, invoices, approval emails, and other supporting materials.
- Filing of Form 990 with the IRS, documentation and approval of all credit card transactions, and monthly reconciliation of cash and investments.
- Maintenance of proper director and liability insurance policies.
The district will gather additional feedback about the draft MOU from the school foundations and bring back another draft to the board for another review in December. It would then likely go into effect in July 2026.
“Whenever we do get to the point of having a final [MOU] and getting signatures, our plan has always been to have some reasonable transition time for implementation. So, right now, our guess is that this would be effective July 1,” Dickinson said.
Several community members supported the terms in the proposed MOU and said these changes are long overdue.
“I want to say how genuinely shocking it is that the district has operated for years without an MOU in place with its foundations, and that it took an independent auditor to point this out,” said resident Janice Holowka.
Other community members commended the two CCA students, Litong Tian and Kevin Wang, for releasing the initial report that drew attention to foundation issues. Tian and Wang have both since graduated, but received strong pushback from the foundation and school leaders last fall.
“Their courage was remarkable, especially when their concerns were initially met with pressure and the criticism rather than support,” said Dr. Mingzhu Zhang. “They choose to make a difference rather than just keep silent.”
The CWDL audit ultimately supported many of the students’ concerns regarding the CCA Foundation, including a lack of salary disclosures to the IRS by former foundation management and employees.
The audit also found that CCA Foundation failed to report or track in-kind (non-cash) donations, and as a result, they could not confirm that the foundation conformed with generally accepted accounting principles.
CWDL observed other issues that were consistent across all four foundations, such as the practice of paying for some expenditures before or without ever obtaining approval.
The report also said none of the four foundations has reported their investments, leading to a material understatement of revenue that could potentially misrepresent the financial positions of the organizations.
CWDL also noted a failure to track net assets at the TPHS and LCC foundations, a lack of credit card payment controls including documentation and authorization (CCA, TPHS and LCC foundations), a lack of regular cash reconciliation (CCA, SDA and LCC foundations), failure to track net assets (LCC and TPHS foundations), incorrect classification of funds in the trial balance (TPHS and CCA foundations) and failure to track in-kind donations of capital equipment (SDAF).
Some of the foundations have already implemented changes to comply with the audit recommendations.
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In light of everything that has unfolded, it’s clear that students who raised concerns in good faith deserve a sincere apology from Principal Brett Killeen. After the students published their investigative report, Principal Killeen sent out a school-wide email to families calling their work “grossly erroneous and misleading,” and criticizing their methods. Other parents and community members who verbally attacked or undermined those students also owe them an apology as their words and actions contributed to creating an environment hostile to accountability and discouraged honest dialogue (see 9/20/24 comments on Coast News article -Students allege major financial issues at Canyon Crest Foundation). A public acknowledgement would go a long way toward rebuilding trust and demonstrating that student voices matter. An apology now isn’t just about the past; it’s about showing that CCA truly values its students and is committed to fairness and integrity going forward.