State audit reveals ‘blatant lack of management’ of spending at Toppenish School District

The Washington State Auditor found the school district gave the superintendent combined raises of more than $27,000 in 2021 and 2022 — despite him not having a contract.

TOPPENISH, Wash. – The Office of the Washington State Auditor released an audit of the Toppenish School District detailing a list of serious concerns about the superintendent’s spending, the school district’s failure to hold him accountable and at least one finding that says their financial practices broke state law.

“This audit really revealed that there was a lot of mismanagement and a lack of — I would say almost a blatant lack of management of some of the expenditures that are listed in this audit,” Washington State Auditor Pat McCarthy said.

The report indicated specific concerns around the school district’s superintendent and wrestling activities.

The Toppenish School District serves nearly 4,500 students in grades K-12 and has a school board that consists of five members who are elected. The board is responsible for hiring a superintendent that oversees the daily operations and employees of the district.

John M. Cerna has been working in the Toppenish School District for nearly 40 years. In 2020, Cerna was given a salary of $279,162 and in 2021, his salary was $309,736. There are several concerns found in the audit that discuss Cerna being given raises without oversight.

“We also found that the school board did not pay the superintendent according to the written contract because he hadn’t had a contract since 2013,” McCarthy said. “He was overpaid for items including a car allowance, a phone and internet stipend and vacation leave balance, cash-outs.”

Additionally, the audit found Cerna paid the former vice principal — who is also Cerna’s son — for wrestling coach duties he didn’t perform because the former vice principal was on administrative leave as part of an investigation into allegations of misconduct.

“There was an issue of the superintendent paying the former vice principal for wrestling coach duties that that he did not perform because he was on administrative leave,” McCarthy said. “The issue of them conducting business with a nonprofit organization, which may have resulted in unconstitutional lending of credit and a possible conflict of interest.”

According to the report released Monday, the audit listed the following findings:

  1. The District lacked adequate oversight to ensure its disbursements and credit card payments were adequately supported and approved
  2. The District lacked oversight to ensure the Superintendent’s pay and benefits were in accordance with an approved written contract
  3. The District paid the former Vice Principal without a valid contract for wrestling coach duties that he did not perform
  4. The District conducted business with a nonprofit organization that district administrators held governing roles with, and did not establish terms and conditions of the relationship in a written agreement

The report listed its findings for each one of the major concerns and then its recommendations. The school district also responded, indicating whether they agree with the findings and what they plan to do moving forward.

“We have not found fraud in these two audits, so let’s make that clear,” McCarthy said. “But we did find significant accounting error decisions made by leadership — whether it be the school board or the superintendent or the leadership of the administration — that were not working in the interests of transparency and accountability for the funds that the citizens of Toppenish provide to them.”

How the audit was done

The Office of the Washington State Auditor is required to examine the financial affairs of all local governments. It gathered evidence about the district’s use of public resources, compliance with state laws and regulations and the district’s own policies and procedures.

“We do what we call accountability audits,” McCarthy said. “That’s where we look at minutes of meetings, we look at the policies, the procedures, state law, did they follow all the rules that really guide oversight of a school district and  we do it for all of our governments.”

The state auditor did the assessment for the years ended August 31, 2021 and 2022. They examined the use of restricted funds, compliance with supplemental contracts for enrichment activities, student enrollment reporting, payroll direct deposits, payroll, self-insurance for unemployment, procurement – architect and engineer, accounts payable, open public meetings and financial condition.

Finding 1:  The District lacked adequate oversight to ensure its disbursements and credit card payments were adequately supported and approved

The audit found the district didn’t have the proper oversight when it came to funding for enrichment activities. According to the report, the school district paid for five out-of-state wrestling trips that cost it $41,620. The school district also paid for six in-state wrestling trips that cost it $17,212. This came out to total amounts of $7,991 in 2020 and $50,840 in 2021. At the time of the report, the district didn’t have a policy that established per diem rates for students traveling for school-related activities. Because of this, the auditor said it could not be determined if the students were provided the correct amount for meals when traveling.

The audit also found the district paid for flights for two out-of-state trips that came to a total of $9,360. This was done on behalf of a nonprofit organization of which Superintendent Cerna is listed as a governor. The first payments were made using a school district credit card, but the district later received reimbursement. The auditor said this could be considered a lending of credit to the nonprofit, which is against state law.

The audit found there were three trips for lodging and dinners that totaled $3,024 and did not have an attendee list. The audit said an attendee list was later provided for at least two of the trips , however, the total number of attendees on one of those that were submitted did not agree to the number of people staying in the hotel. One of the trips was also missing an itemized receipt for $183. It also found Cerna used the school district’s credit card to pay for coach and student athlete dinners after two state tournaments in 2019 and 2022. In 2019, the cost was $737 and in 2022, the cost was $1,051. However, the district did not have sign-in sheets showing who received the meals. The audit then found the students and coaches also received per diem meals for the same dinners, which came to a total of $1,185. This indicated the students and coaches received more than the amount they were allowed under normal district procedures.

Superintendent Cerna’s use of the school district’s credit card

According to the report, the district paid for nine out-of-state trips and three in-state trips for Cerna and other district employees  between the fiscal years of 2020 and 2022. The total of the trips for out of state was $42,234 and the total for in-state trips was $1,496. The audit found two of trips were later canceled and refunded through the district’s credit card, which came to a total of $3,330. Also in the report, it found Cerna approved his own food and beverage expense forms for 11 out of the 24 months for both travel and in-town meal purchases.

The report also stated eight trips Cerna took did not have an agenda or a business purpose that was given. Those trips totaled $24, 305. During the audit, the school district was able to to provide agendas and label them business trips, however, it was unable to provide itemized receipts. Out of these trips, four credit card transactions didn’t have itemized receipts that came to a total of $6,753. There were also other credit card charges and reimbursements that did not have itemized receipts or show support for the business that totaled $1,343, according to the report.

The audit said the district didn’t establish a checks and balances policy properly and that’s why the auditor can’t determine that all of its payments during the audit period were legal. While Cerna is the one who approves administrative staff travel, there is no one who reviews and approves his travel and credit card transactions. According to the report, the school district is reviewing its current policies in regards to travel and credit cards and is developing an updated version of them.

Finding 2: The District lacked oversight to ensure the Superintendent’s pay and benefits were in accordance with an approved written contract

According to the report, state law requires the school board to approve a written contract for the superintendent with a term not to exceed three years. If a pay increase is authorized during the term of the contract, then a written contract amendment must be done. The audit found the board did not give proper oversight of the terms of Cerna’s written contract and it is unclear of all payments to him were within state law. The audit found that Cerna’s last established written contract was from July 1, 2010 to June 30, 2013. Since 2013, the board approved the extension of Cerna’s contract each year without evaluating and formally approving the terms through a written amendment.

Cerna received two salary increases for fiscal years 2020 and 2021. These raises came with the approved extension of Cerna’s contract. The superintendent also received a second raise in July of 2020 when the board approved increases for specific types of employees. These employees were graduation specialist, principals and certified directors, classified supervisors and administrative central officer personnel. In July of 2021, the board approved raises for a director, GEAR UP staff, central office staff and graduation specialist. In 2020, Cerna received a raise of $7,530 and in 2021, he received a raise of $8,929.

These raises were in addition to the raises he was given in 2020 and 2021 when his contract was extended. In total, Cerna received a pay raise of $11,600 in 2020 and nearly $15,500 in 2021. According to the audit, it is unclear if the school board knew Cerna had received the July pay raises in addition to his contract “extended” pay raises. Ultimately, since the board never issued a written amendment to Cerna’s 2013 contract, the pay raises he received in 2020 and 2021 are not allowed.

Superintendent Cerna’s other benefits

According to Cerna’s 2013 contract, the district allowed him $7,200. However, according to the audit, it found the district paid Cerna an annual vehicle allowance of $9,017 in years 2020 and in 2021. The district overpaid Cerna a total of $3,634. The contract stated the vehicle stipend is to cover all related costs including any travel outside of the school district, however, the district also reimbursed Cerna for travel.

The district also paid Cerna a cell phone stipend of $160 in 2021 and a monthly reimbursement of personal internet charges of $540 each year. Neither one of these were included in Cerna’s 2013 contract. According to the report, they also found Cerna charged $115 and $119 on his district credit card for his cell phone in July and August of 2021. The board essentially paid Cerna twice for the same expense and these payments were not approved by the board through his contract. The payments in total were $934, which the audit said never should have been allowed.

“When you’re entrusted with a credit card of the school district, it’s incumbent upon you to be fastidious in how you utilize that credit card and I think in this particular case, it appeared to me to be more of a blatant disregard of what you should be doing to be fiscally responsible for the resources and the benefits that you have in that in that position,” McCarthy said. “It’s up to the citizens of Toppenish to be able to know and have confidence in their elected leadership and  in the superintendent who’s running the school district, that those kids deserve it.”

There is also concern over Superintendent Cerna’s vacation time. According to his 2013 contract, he was allowed to accumulate a total of 240 hours of vacation leave each year, which comes out to about 30 days. His contract allowed him to cash out up to 15 days each fiscal year. However, the audit report found Cerna was allowed up to 774 hours in 2020, which comes out to nearly 100 days. This is 534 hours over the allowed limit, according to his last contract. In 2021, Cerna was allowed 854 hours, which is more than 100 days. This is 614 days over the allowed limit, according to his last contract.

Despite only being allowed to cash out 15 vacation days, Cerna cashed out 20 vacation days in both 2020 and 2021 and received nearly $10,000 in overpayment.

“A total review of the school district’s policies as it relates to the use of credit cards or reimbursement or salary or, you know, relationships with nonprofits — they need to lock all that down because that’s what’s going to provide trust of the public that they’re serving,” McCarthy said.

According to district officials, they said it was their understanding that when they extended Cerna’s contract, any changes could be written on the annual evaluation form instead of a written amendment. However, this showed school leadership didn’t follow through and go by the terms of Cerna’s last written contract. According to the auditor, the district did not comply with state law for contract requirements and received $7,260 in retroactive compensation, a violation of the state constitution and approximately $9,343 for stipends and cashouts that were not allowed.

The Toppenish School District responded to Finding 2, saying they have already implemented changes to the superintendent’s contract process. The district said it is going to make sure the process is compliant with all state laws and regulations.

Finding 3: The District paid the former vice principal without a valid contract for wrestling coach duties that he did not perform

The audit found the former vice principal was paid for wrestling coach duties he did not do and without a valid contract. According to Washington law, school districts are required to have a written contract for additional duties related to coaching student sports. The school district is responsible for making sure employees perform the assigned duties before the individual is paid, as well as a current contract is in place.

Former Vice Principal John “Johnny” L. Cerna was paid $7,108 to coach the high school wrestling team. He did not have a contract with the Toppenish School District and did not perform any coaching duties. It should be noted that Cerna is the son of Superintendent John M. Cerna, who has been noted several times in this report. The younger Cerna was placed on administrative leave on May 23, 2021 and he was not allowed to have interactions with students and staff. This is due to an investigation of the younger Cerna and his wife, a teacher at the school, for inappropriate behavior with a high school student. In August of 2022, Cerna’s wife, Bertha, was arrested in California after a warrant was issued for her arrest. Click here to read more.

While the younger Cerna was on administrative leave, the school district approved high school coaching assignments for the 2021-2022 school year and placed him on the list as the intended wrestling coach. The wrestling season started in November 2021 while the vice principal was still on leave. According to the audit, the district said it issued a Personnel Notice of Employment to contract Cerna for coaching in January 2022, which was two months after the season started. However, Cerna never signed the contract, according to the auditor, and was fired from the Toppenish School District. He never coached for the season or signed the coaching contract, but was paid anyway. Furthermore, the audit showed it is possible the board did not know about the contract or the payment to the younger Cerna.

Timeline of events as stated in the audit:

  • May 23, 2021: Vice Principal Cerna placed on administrative leave
  • July 27, 2021: District approves coaching assignments and lists Vice Principal Cerna as the intended wrestling coach
  • November 2021: Wrestling season begins
  • January 6, 2022: District initiates Personnel Notice of Employment
  • January 20, 2022: District terminates Vice Principal Cerna’s employment
  • January 31 & February 28, 2022: District pays Vice Principal Cerna the full amount of his unsigned contract, totaling $7,108

While it is true the younger Cerna was the long-standing wrestling coach for the district, according to the audit, he still did not have an approved contract and did not perform any duties as wrestling coach. According to a response by the Toppenish School District, they do not agree with the audit’s findings.

According to the school district, it believes there was a valid written contract. According to the school board, it offered Vice Principal Cerna the wrestling coach position and approved his contract in writing. However, the board said the contract was sent to the high school for Cerna’s signature, but because he was on leave, he did not sign it. The school board says it felt while Cerna never performed the duties, since he was on paid administrative leave, they felt obligated to him the value of his contract.

Additionally, the school district said:

Moreover, in determining to pay the vice principal the value of his coaching contract, the District weighed the financial risks associated with him filing a wage withholding lawsuit against the value of his coaching contract. There’s considerable financial risk associated with a wage withholding lawsuit. For starters, regardless if the suit has merit, the District must bear the cost of defending itself against the suit—a cost that would easily exceed the value of the coaching contract. Then if the vice principal prevailed, he would be entitled to double damages and attorney’s fees. (RCW 49.52.070) Weighing those costs against the value of the coaching contract, the District believed it was financially responsible to pay the value of the contract—avoiding greater financial risk.

Finding 4: The District conducted business with a nonprofit organization that district administrators held governing roles with, and did not establish terms and conditions of the relationship in a written agreement

The Toppenish School District works with a nonprofit organization to help encourage youth in the community to make right choices and try to stop young people from becoming involved in gangs. This nonprofit helps the school district pay for out-of-state tournaments for the high school wrestling team, as well as other events. These activities are paid for by the district, but later reimbursed by the nonprofit organization, according to the audit report. The audit found there was $9,909 in spending that the nonprofit reimbursed the district during the audit period. According to the report, the initial payments of this amount were made on a district credit card, which could be a lending of credit to the nonprofit, which is a violation of state law.

Superintendent Cerna is listed as one of the organization’s governors and has been acting in that role since the Articles of Incorporation were made in 2010. The district’s business manager is Mark Kresge, who is also on the nonprofit’s board. It was the audit’s finding that the school district did not establish an agreement with the nonprofit organization to determine terms and procedures when conducting business. The audit found with Cerna being on the board of the nonprofit, there could be a conflict of interest in his role as superintendent, according to state law.

According to the report, the nonprofit organization holds meetings at the district’s office and during school hours. The auditor said this could give the appearance that the meetings are district activities. Furthermore, several district employees, including Cerna, attend the meetings during work hours without taking leave. The audit said employees can attend the meetings on personal time, but not on paid district time. According to the audit, the district said it did not know an agreement needed to be in place or that the nonprofit had to have meetings outside of normal business hours. The district also said it did not know the credit transactions on the district’s card could be seen as a lending of credit.

The audit stated the district is not in compliance with state law. The audit also stated because Cerna and Kresge serve on the nonprofit board and are members of the school district, this could cause a conflict of interest when it comes to decision making or voting. However, the district disagrees with the audit’s findings. They said because the charge and reimbursement were made in the same reporting period, they should have “canceled each other out.” The district also believed that there is not a chance for a conflict of interest and says the state law has a narrow definition on what constitutes as a “conflict of interest.” Because neither Cerna nor Kresge is getting a personal financial benefit, the district said it is not a conflict of interest.

The auditor, however, said the report showed district resources were used to pay for non-district transactions at least four times, which is considered a lending of public credit.

The school district will have its next regular financial and federal fund audit in the late winter or early spring of 2023. The next regular accountability audit is tentatively planned to begin in the spring of 2024.

McCarthy said she thinks the district has all the tools in their toolbox to be able to make improvements to their processes.

“There needs to be oversight of the superintendent. I served 12 years on the Tacoma School Board many years ago. One of the most important jobs that you do is you hold your superintendent accountable. That’s the job of the school board: it’s a community, an elected body of folks who are well-intentioned, of course, but they have that responsibility of oversight, and they need to follow their policies. They need to clean up their policies. This has nothing to do with the kids. It has all to do with the leadership of the school district,” McCarthy said.

The next Toppenish School Board meeting will take place on December 15.