Almost No Paper Trail Exists for $250K County Schools Contract

Santa Clara County’s chief education official has a math problem, and he hasn’t been showing his work.

Last month, San Jose Inside learned that county superintendent of schools Jon Gundry was quietly trying to push through a $250,000 contract between the Santa Clara County Office of Education (SCCOE), which oversees 31 school districts, and School Business Service Consultants—a company that does not exist, according to the Internet.

Gundry’s request for money came after he’d already signed off on a near six-figure consulting contract, without requiring any proof of work completed.

Between November 2014 and May of this year, Gundry approved $92,925 in payments to the mystery company’s accounting consultant, Mark Skvarna, without requiring any documentation on results—no emails, no handwritten notes, nothing. The contract itself appears to have been designed so Skvarna, formerly a superintendent in Southern California, could avoid state rules on public employees remaining out of work for six months following retirement.

At a May 20 meeting, Gundry requested an additional $150,000 to continue the contract with School Business Service Consultants. Up to that point, the contract terms had been set at $99,999—a dollar short of public disclosure and beyond the reach of the Board of Education. Following the publication of San Jose Inside’s report, the Board pulled the contract extension off of the agenda for a longer discussion at its June 3 meeting, which takes place tonight. Gundry had placed the item on the May 20 consent calendar, which is often where matters are passed as a procedural matter, without scrutiny.

Since that meeting, Skvarna has decided to quit working with the county. Based on the fact that Gundry was requesting an extension of $150,000 to their prior agreements, it’s not a stretch to say he has left the county with yet another incomplete assignment.

Invoices obtained through a Public Records Act request list the hours Skvarna billed to the county, at a rate of $225 an hour, but no further documentation exists for work completed. When pressed for more information, the SCCOE told San Jose Inside that Gundry, Skvarna and School Business Service Consultants never once shared emails or any other written communication. This is practically unheard of when working on a quarter-million dollar project.

During the first six weeks of his contract with SCCOE, Skvarna reported 88 hours of travel time at a total cost of $19,800 to taxpayers. Considering he only reported 325 hours of actual work, time spent traveling accounted for 21 percent of Skvarna’s fees. These fees also jumped noticeably after the New Year, when Skvarna began billing the county three hours each way for travel, again at the rate of $225 an hour. For the first six weeks of work, his commute time was only two hours each way. There is also a question of why all of Skvarna’s billing was rounded off to the hour in every case.

Gundry, Skvarna and Frank Butler, the listed proprietor of School Business Service Consultants, did not return San Jose Inside’s requests for comment for this story.

Board of Education trustee Joseph Di Salvo, who pulled Gundry’s request for more money off of the May 20 agenda, told San Jose Inside he has serious concerns about how the contract was handled and intends to vet the situation at tonight’s meeting.

“Twenty-thousand dollars in travel in that short amount of time is excessive,” Di Salvo said, adding that he believed the contract was structured as “an attempt to sidestep CalPERS laws on retirees."

A spokesperson for CalPERS, the state’s public employee retirement system, told San Jose Inside that Skvarna receives $8,744.27 in gross retirement benefits per month. He officially retired from Baldwin Park Unified School District, located in Los Angeles County, on Oct. 18, 2014, according to CalPERS. That would mean his work with SCCOE began less than a month later—well ahead of the six-month grace period retirees must wait before starting new employment with a California public agency, unless they apply for a waiver. The SCCOE said it has no documentation for such a waiver.

CalPERS is now in the process of checking if Skvarna is a retired annuitant or truly an independent consultant—the latter classification might shield him from certain rules.

According to a memo Gundry wrote to the Board, he was aware of retirement restrictions on Skvarna working for the county as a full-time employee. Rather than offer him the position of interim deputy superintendent, which would have paid the consultant an hourly wage of $120, Gundry and Skvarna hashed out an agreement to pay him $225 an hour through an intermediary, School Business Service Consultants.

“If he had been hired directly by this office in the Deputy Superintendent position, he would have been subject to those (CalPERS) restrictions, but since he was working as an independent consultant, he was not,” Gundry wrote to the Board. “This is a very common practice.”

To justify the potential end-around of state employment law, Gundry notes that the SCCOE’s lobbyist firm, Capitol Advisors Group, had a glowing endorsement of Skvarna and two other retired superintendents on its website.

In a signoff to his memo to the Board, Gundry wrote that Skvarna has decided to take on other clients because of the “uncertainty of approving a contract extension.”

“I think not completing the job is wrong,” Di Salvo told San Jose Inside. “He’s wimping out on doing the work.”

The lone email discussing the SCCOE’s contract with Skvarna and School Business Service Consultants shows that Gundry and staff knew there was something unusual about the company. County general counsel Maribel Medina wrote an email to Gundry on Nov. 6, 2014, noting that Skvarna had suggested his contract be connected to an outside law firm to assist in auditing matters.

“Since I had not heard of School Business Consulting Services, I looked them up on the State Bar website but could not find the firm or principal, Frank S. Butler,” Medina wrote.

Gundry did not reply to that message, which appears to be a modus operandi for the superintendent, who joined SCCOE a little less than a year ago. Sources tell San Jose Inside that Gundry—who faced complaints of backdoor contracts in Pasadena—rarely uses email, which would be in line with the lack of paper trail for the current contract in question.

Josh Koehn is the managing editor for San Jose Inside and Metro Silicon Valley. Email tips to [email protected] or follow him on Twitter at @Josh_Koehn.

40 Comments

  1. Will be interesting to understand why Gundry’s actions don’t violate CA’s constitution and case law prohibiting gifts of public funds – see:

    a) Cal. Const. art. XVI, § 6 (“nor shall it [the Legislature] have power to make any gift or authorize the making of any gift, of any public money or thing of value to any individuals, municipal or other corporation whatever;…”)

    b) Albright v. City of South San Francisco, 44 Cal. App. 3d 866, 870, 118 Cal. Rptr. 901, 902 (1975) (making the connection between council member expenses and the prohibitions against a gift of public funds),

    c) City and County of San Francisco v. Patterson, 202 Cal. App. 3d 95, 103-04, 248 Cal. Rptr. 290, 295 (1988), and McQuillin, Municipal Corporations, § 39.25 (3d ed.) (all expenditures must be for a public purpose).

    Should be an entertaining meeting. I’m bringing popcorn.

  2. > “Twenty-thousand dollars in travel in that short amount of time is excessive,” Di Salvo said, adding that he believed the contract was structured as “an attempt to sidestep CalPERS laws on retirees.”

    Translation: Joe is “shocked”.

  3. SCCBOE seems to be among the worst run public agencies in our region, and ever since Colleen Wilcox left it has been steadily rolling downhill, with bad hires, bad policy decisions, and bad financial decisions.

    My vote is “0 confidence”.

  4. Item 10 (B) on tonight’s agenda http://www.sccoe.org/countyboard/Pages/Board-Meetings.aspx is to OK Gundry’s SOLE discretion of $5 million loans: “Request to Approve Updated Resolution to Provide Temporary Loans to School Districts (overview) This resolution,…will allow the County Superintendent to loan up to, but not exceed, a total of $5.0 million from the County School Service Fund…”

    Ummm…Unlike most, SCCBOE doesn’t require dual control over multi-million transactions. Seems like Grundy can unilaterally OK loan conditions (interest, term, payment schedule) and criteria. Can he forgive loans too?

    • Correction: read the fine print. Loan must be repaid by next fiscal year, interest set at SCC Treasury investment rate of return.

  5. Odd facebook photo choice. Is it a selfie taken while driving?

    • I just looked at the photo closely. The reflection is his sunglasses does show that he’s taking a two-handed selfie while driving a car? Seriously? And this clown is in charge of education in SCC???

  6. “If he had been hired directly by this office in the Deputy Superintendent position, he would have been subject to those (CalPERS) restrictions, but since he was working as an independent consultant, he was not,” Gundry wrote to the Board. “This is a very common practice.”… Yes, it is a common practice for the small group of CA superintendents to scratch each other’s back and enrich themselves. Too bad that they get away with it. Just because it is a common practice does not justify his actions when he is taking our tax dollars money from our kids education. I am sure he would not be so generous if the money came from his fat salary.

    • And people complain of mis-spent public funds by charter schools. Looks like the California traditional school system is pretty good at it also… Except for Rocketship, I think charter schools should return to their SCCBOE granters and learn how to really be corrupt.

  7. The invoices provided in the article link is showing this criminal (Mark Skvarna) is even charging the County Office for his commuting time on Sundays. Does Jon Gundry look at the invoices he signs? Maybe he’s helping his friend rip off the County Office because he could get away with it. That would make him an accomplice?

    • Great catch! Thanks Julie J.

      I managed to get a copy of Mr. Skvarna’s contract. Appendix A specifies deliverables: ” The consultant will provide research & analyze issues related to audits. [sic] including but not limited to payroll audit. ” – and nothing more.

      But this is inconsistent with Gunnery’s June 3 letter to Board delineating 4 deliverables:
      1. “…interpret the draft of the 2013 payroll audit reports
      2. “provide [payroll audit] management responses”
      3. advice “on how to improve internal controls”
      4. “monitor our payroll reporting”

      As a former consultant, I’m astounded that a Statement of Work wasn’t prepared to identify deliverables and their schedule. SOWs protect consultants and clients from misunderstandings and disputes. Equally astounding is that none of the 3 umbrella organizations that represented Mr. Skvarna demanded it for their protection too.

      Am surprised that the General Counsel that prepared the contract and Mr. Gundry failed to include tangible deliverables and schedule. Typically, payments are dispensed upon completion of deliverables v. ‘time and materials’ billing. After 6 months of work, there’s no evidence of activity or assignment completion: No reports or emails per the public records request.

      SCC’s chief auditor tells me they use Harvey Rose http://harveyrose.com for this type of service. And that’s what their website says they do. Why wasn’t Rose used?

      There’s also the problem of “employee v. independent contractor”. Gundry’s letter makes it clear that one option was to employ Mr. Skvarna as a Interim Deputy Superintendent. As Mr. Skvarna evidently operated with little to no direct supervision, this would seem to violate state labor law and render Mr. Skvarna an employee, not an independent contractor.

      As Mr. Di Salvo and others pointed out, Mr. Gundry’s behavior circumvents the intention of CalPERS requirements by using a shell. Ethically is it different from my hiring someone to steal v. my stealing? Most would agree there’s little practical difference. Mr. Gundry’s ethics are sketchy at best.

      What prevents a recurrence? How can $92,925 be clawed back since there’s no evidence that anything was done?

      SCC Whistleblower Hotline at http://www.sccgov.org/sites/wp/File%20A%20Complaint/Pages/File-a-Complaint.aspx

  8. Smoking Guns! Wow! Gundry is a piece of work. On Walden West, he and Mary Ann Dewan blamed Anita Parsons. Do the two have any brains?!?! It’s a kids’ camp for havens sake! On this bogus contract, Gundry tried to blame other staff and other colleges. Blame, Accuse, Blame, Accuse…. I bet he has a bunch of other bogus contracts. Who will Gundry blame for signing the ridiculous invoices for payment? His dog?!

  9. Great investigative reporting, Mr. Josh Koehn! You nailed it. Jon Gundry has only himself to blame for the quarter million bogus contract. Thanks to you, this possible criminal conduct is moving to the hands of those who will investigate. Nope, I’m not referring to the Santa Clara County Board of Education.

  10. Just posting some search info, but these are some pretty interesting links.

    MICHAEL S BUTLER is a Secretary of SUNRISE PETROLEUM RESOURCES INC. in NV
    Address: 23020 ATLANTIC CIRCLE 23020 ATLANTIC CIRCLE, MORENO VALLEY, CA 92553
    Inactive: T Terminated: F Resigned: F Corporation Type: Domestic Corporation Corporation Status: Revoked Corporation Number: E0561862006-0 Creation Date: 2006-07-31
    http://www.companies-nevada.com/sunrise-petroleum-resources-inc-fecx/

    http://www.sec.gov/litigation/admin/2006/34-54574.pdf
    https://www.sec.gov/litigation/admin/2006/34-54574-o.pdf
    http://www.sec.gov/litigation/admin/2006/34-54670.pdf
    https://www.sec.gov/litigation/admin/2006/34-54687.pdf

    • Jon Gundry appears to have been allowed by the SCCBOE to bring Mark Skvarna back! This is the same crook he hired through that make believe company! I hope the DA and AG are investigating this.

  11. Where is the deliverable for the work performed by Mark Skvarna, especially for $93,000 in billings? He was to interpret the 2013 payroll audit, which should have generate some tangible work product.

    For the amount of the billings, one would expect that the invoices would be a little more professional-looking, rather than scribbled travel expense summaries.

    And this is interesting as well, the address for Skvarna’s billings is for a business in Moreno Valley, rather than to Adkinson, Andelson law firm or the other two businesses of School Business Consulting Services or the other. That same Moreno Valley address, and Frank Butler also appear here in a pretty serious allegation: https://lasvegasconman.wordpress.com/2011/05/31/how-i-steal-money-from-people-and-the-people-that-are-involved/

    All of this is looking very shady.

  12. That picture is a selfie. The County Superintendent takes selfies while driving?! It sounds like Jon Gundry lives his life regularly committing illegal activities, and never being help accountable. White Privilege?

  13. How incredibility disgusting! Even after two investigative reports from San Jose Inside, the Santa Clara County Board of Education is not even going to investigate. In fact, board members Grace Mah, Anna Song and Darcie Green were defending Superintendent Gundry’s actions in the June 3rd board meeting when this item was being discussed. This lying cheating tyrant is going to get away again. How does the County Board of Education hire these people?

    • I listened the meeting online. You can view it here:
      http://www.sccoe.org/countyboard/Pages/Board-Meetings.aspx

      Then click on the June 3rd video under Archived Videos. Discussion of issue starts at 04:04:58.

      Here are a few gems.

      Trustee Mah went out of her way to defend the whole thing. She explained that the work being performed by Skvarna was “very sensitive in nature” and that’s why the work scope and deliverables did not have a high degree of specificity in the contract. She also expressed disappointment that Skvarna quit after public scrutiny, and that the 10% commission by Butler was “quite a deal.”:

      “Because it is very sensitive in nature, the services in the contract are adaquately expressed that as far as his final work completion, I think it’s most efficient if he decided to keep working with us. If he decided to not work with us for whatever reasons, then that’s a shame on the system for us, because as far as the 10% that goes to Mr. Butler, as I understand that’s actually quite a deal, compared to a lot of other consultants and consultant firms.”

      Vice President Song was even more lamenting that Skvarna quit, and also defended the secrecy of his mission. She is also not a fan of this website:

      “I have to say, even though I have no kept in close contact with Mr. Skvarna, I was aware that he was brought on for specific purposes and for reasons undisclosed, for very good reasons undisclosed…. Now there’s public scrutiny, for whatever the reasons, I don’t know what’s really motivating. I’m going to refuse to call it media, but it’s a public scrutiny. Yes, and we should be and always have been responsible. But I think it’s unfortunate that we didn’t get to finish the job that we started. And I think it’s unfortunate that he should have stuck around. Just because an item was pulled does not mean that it automatically was not going to be approved. So that part I just regret it. At the same time, as the Chair of the Policy Committee, I’m uncertain if I’m charged with this duty if I can come up with a solution that satisfies the public, because this is practice allowed. Nothing illegal was done. The public may not understand, because there are some things we do the public do not immediately understand, unless they really go through the system and gets the system. After 6 years I still don’t get some of the system. So, I just think it’s unfortunate all around, because I do believe the job was that was charged for Mr. Skvarna I think it was going somewhere. So, it’s our loss. In the end it’s out loss. So, it’s unfortunate. And I resent sensationalism.

      Jon Gundry actually clarified that Skvarna quit because his name was being “maligned” and blogs were “accusing him of illegal behavior”:

      “I don’t think he declined to work for us simply because the item was pulled. It’s because of the public scrutiny that was being brought to bear on this. And some of the things that were being said not only about my involvement in this, but also his. And he was in no position where he had to have his name maligned for doing what was legitimate work. And there have been some things written in blogs, you know, accusing him of illegal behavior, while here at the county office, and he just felt that it was not something that he was interested in being engaged in.”

      • The only reason that crook left was because he knew the investigative reporter was on to him. $20,000 in half year for his commute is highway robbery. The taxpayers need these money returned, so it could be used for kids.

  14. Question: How many local politicians, in their campaigns for public office, pledged to “make government accountable”?

    Time to round up those politicians and challenge them to “get to work”.

  15. Sounds like more public employees got both hands in the cookie jar.
    Keep digging, someone needs to go to jail!

  16. Gundry and Skavarna engaged in several unethical and illegal arrangements, as articulated by Josh. Here’s a recap:

    1. PERS requires 180 day wait period after one retires from PERS, before one can work, unless one gets a waiver. Gundry/Skavarna violated this requirement. Skavarna retired in October 2014 and started collecting checks from the SCCOE 2 months later. No waiver, no nothing.

    The irony? The County Office of Education is charged with approving those waivers for us at the district level.

    2. Gundry signed off on a contract with a company that doesn’t even exist!

    His General Counsel even warned him.

    3. Gundry signed off on invoices approving payment to a company that doesn’t exist, totaling over $90K in taxpayer dollars. A big chunk for travel.

    WHAT SERVICES DID SKAVARNA PROVIDE TO GUNDRY FOR $90 K?

    4. Gundry does not have anything to show for the $90K of taxpayer dollars he released –except for lip service, as he reported at the June 3rd board meeting.

    5. Gundry has been paying Frank Butler who has been part of scams and had his license revoked from the state.

    Is this how our County Superintendent manages our taxpayer dollars?
    When will the board take action to start restoring credibility? You 7 know what you need to do.

  17. So, I still haven’t seen any explanation of exactly why Gundry would do what he did, in violation of the law. What does Skavarna have on him? Nor have I seen any logical explanation, or even a lame excuse, for the Board’s failure to detect this until it was almost too late; or to stop the final payment once it was detected, pending a full investigation. So, are we to conclude that school board seats are training grounds for incompetent politicians in nonfeasance and on how to milk the system?

  18. You guys are a great Investigation team!
    I think your next project should be “Hillary and the 35000 missing E-mail gap”, or what happens at 3am when the phone rings?

  19. I’m sure there’s an innocent explanation.

    Well, pretty sure.

    Yeah, maybe, an unusual innocent explanation.

    But it’s not actually impossible that there’s an innocent explanation.

    I’m sure Bill Clinton could think of a really good explanation.

  20. In reference to the recent articles regarding Jon Gundry clandestine and unethical operations, it appears that he’s just continuing the practices of the Interim Superintendent Mary Ann Dewan.

    Exactly ONE YEAR AGO, PRIOR to Gundry’s time, San Jose Inside uncovered a similar situation of lies and corruption. However, this time the unethical activity was lead by Interim Superintendent Mary Ann Dewan.

    Check it out.

    http://www.sanjoseinside.com/2014/06/19/emails-show-office-of-education-committed-to-obfuscation/

    “Well, I think in response to requests and things of that nature and public records and/or media requests, we have been setting our processes here at the county office and looking to be compliant and efficient and take a global schematic approach across our department. Our efforts are more cohesive. We want to be responsive. That’s certainly our intention to be responsive. But we also want to make sure we’re compliant and efficient.”—Mary Ann Dewan.

    “Dewan’s robotic response says nearly as much about her “intention to be responsive” as the emails her office turned over—which included documents she and Blackstone withheld from previous requests for information.” — SJI

    “One email shows that Dewan, who got a $7,500 monthly raise on her $169,000 annual salary after receiving the interim superintendent tag, coached board member Beauchman for an interview with San Jose Inside while also providing invoices that were never turned over. In an April 11 phone call, Dewan told San Jose Inside that she would have cooperated more with the database story had she known we were requesting comment sooner. But emails show Blackstone—who refused to even meet with San Jose Inside before its story ran April 9—was blind carbon copying (Bcc-ing) her on emails as far back as late March.” — SJI

    My question to the Santa Clara County Board of Education, why do you allow this conduct? Why do you continue to put these types in leadership roles representing you? For goodness sake, clean it up.

    • Isn’t Mary Ann Dewan the person responsible for the Walden West Scandal? If she’s the same one, then duh! Dewan and Gundry and Blackstone and Skavarna. What’s the common denominator? You got it!

      • Gundry, Dewan, Whitestone, Skavarna, and the rest of those privileged administrators get away with their unethical conduct and obfuscation because they are the same color. Bucket. Let’s call it what it is.  The common denominator is white.  The former Hispanic Sup did nothing close to what these types are doing, and the entire board came after him. 

        SCCBOE, shame on you!

  21. > My question to the Santa Clara County Board of Education, why do you allow this conduct? Why do you continue to put these types in leadership roles representing you?

    Good questions.

    And, buy the way, has anyone seen or heard from Joe DiSalvo?

    I’m concerned about his health. Is he being held prisoner in the school supplies closet to keep him from talking?

    • SJ, I thanked him and he seemed to appreciate the input. My sense is that Gundry and the Board now have a bunker mentality. Somewhat understandable, since they’ve made a number of very bad personnel choices.

      You;d think they would have learned. Then along comes another one that makes the Board look even more negligent: Gundry’s similar sweetheart track record in Pasadena + his request (which they OKed) to increase his discretionary spending limit without Board oversight + failure to comply with OoE written policies (I’m not convinced the Board has even read them).

      So far, the Board has declined to act and evidently accepted Gundry’s narrative in the June 3 memo.

      If there are to be consequences, then others would need to take action (SCC DA Jeff Rosen, state agencies, and perhaps the US Dept of Education’s Inspector General).

      I initially thought the OoE was under the SCC’s Board of Supervisor and subsequently learned they aren’t. All the measures County Executive Jeff Smith put in place to avoid another Shirakawa-type incident don’t apply.

      The matter is still being pursued. Let’s hope more will be revealed if and when the public records requests will be satisfied.

      • Taxpayer, I agree that if there are to be consequences then others need to take action. The SCCBOE is condoning Gundr’s activity.

        Thanks for the sources. Send to all or just one?