Category: Oakland Promise

City Auditor Says Mayor Schaaf Misused City Money and Resources to Fund Oakland Promise

Investigation reveals nonprofit received free office space and over $700,000 in city funds to pay staffer’s salary

Oakland Mayor Libby Schaaf

By Ken Epstein

Mayor Libby Schaaf directed the city administration to make “inappropriate contributions” to her favored nonprofit organization, The Oakland Promise, bypassing the Oakland Municipal code and paying the director of Oakland Promise over $700,000 without authorization, according to the findings  of an investigation released this week by the Oakland Office of the City Auditor.

The office of the City Auditor Courtney Ruby conducted the investigation in response to multiple “whistleblower allegations” and questions raised by the City Council in June 2019.

The Oakland Promise, a nonprofit “multi-agency partnership” that includes the Mayor’s Office, the Oakland Unified School District, the East Bay College Fund and the Oakland Public Education Fund, raises money to provide scholarships and other educational opportunities for Oakland youth. The organization began in 2014, and in 2015, the Mayor’s Office joined the partnership “and assumed a leadership role in collaborating with these organizations,” according to the auditor’s report on the investigation.

In June 2019, the East Bay College Fund changed its name to Oakland Promise, which became a registered nonprofit organization.

The auditor’s investigation concluded:

  • “The Mayor’s Office directed the City Administration to provide workspace to Oakland Promise without following Municipal code requirements.” Without proper authorization, starting in 2016, the city provided three workstations, phones, computers and internet for up to five Oakland Promise employees for two years on the 11th floor of City Hall. “This arrangement … contrasts with other third-party organizations that have used city-owned real property,” the report said. “Other third-party entities using city-owned real property have formal agreements and were charged rents (and) have provided verification of insurance coverage.)”
  • “For 16 months (from July 2015 – Nov. 2016),  the Mayor’s office allowed an Oakland Education Fund employee to lead Oakland Promise as the “Mayor’s Director of Education” without executing an agreement to ensure the City’s interests were promoted and protected.”
  • Since fiscal year 2017-2018, the city has funded the Mayor’s Director of Education, who continued to work for Oakland Promise, “without authorization from the City Council as an in-kind contribution to Oakland Promise, at a cost to the city exceeding $700,000.”

The Mayor’s Director of Education, David Silver, was not mentioned by name in the auditor’s report.  “City financial records show that (David Silver) has accounted for $704,374 in direct personnel-related costs from the city’s General Purpose fund between July 1, 2017 and Nov. 7, 2019.

In August 2015, Mayor Schaaf submitted a Memorandum of Understanding (MOU) to the City Council to implement Oakland Promise, approving it herself while the council was on summer recess. A memo from the mayor stated that the “MOU has no cost implications to the City of Oakland.”

According to the auditor’s findings,“It wasn’t until June 2019 that a republic report summarized the city’s financial and in-kind contribution to Oakland Promise.”

In total, the city has contributed $4,372,428 to Oakland Promise, including authorized and unauthorized expenditures and excluding the cost of in-kind donation of office space and equipment, which is unknown.

Among its recommendations, the City Auditor suggested that the city administration “should comply with the Municipal Code in providing space to other others” and suggested that the City Council request a yearly report on leases and other arrangements with organizations that use city facilities. The auditor also suggested that the City Council develop a policy that requires in-kind contributions to be “formally authorized in advance.”

The Mayor’s Office agrees with all of the recommendations, said Justin Berton, the mayor’s director of communications.

“The Office of the Mayor is grateful for the City Auditor’s detailed report that concludes every contribution to the Oakland Promise is being used to send more kids to, and through college,” he said. “We regret, however, that in the eagerness to launch a generation-changing education initiative, we unintentionally failed to properly document the legal use of City Hall office space and a grant to support an employee’s salary. We wholeheartedly support all of the City Auditor’s recommendations that will bring clarity to this process in the future.”

Published November 22, 2019, courtesy of the Oakland Post

 

Mayor Created Oakland Promise by Approving Resolution While City Council Was on Summer Break

City Attorney memorandum says city rules “prohibit the mayor from approving ordinances during council’s annual recess”

Oakland Mayor Libby Schaaf

By Ken Epstein

Local residents who follow city government might well wonder why Oakland City Council members allowed Mayor Libby Schaaf to set up her signature multi-million dollar college scholarship program, Oakland Promise, placing complete control of the program in the hands of the mayor with a minimum of oversight or transparency.

The short answer: they didn’t.

Oakland Promise was created and approved by Mayor Schaaf on the Mayor’s Summer Recess Agenda on Aug. 25, 2015. In other words, while the council was on its annual summer recess, the Mayor’s Office single handedly approved a Memorandum of Understanding (MOU) with the East Bay College Fund (EBCF), which went into effect in September 2015, bypassing public input and council approval.

In a legal opinion requested by Council President Rebecca Kaplan, City Attorney Barbara Parker wrote a memorandum last week, saying that the City Council Rules of Procedure 21 “prohibits the mayor from approving ordinances during the council’s annual recess.”

In response to Parker’s opinion, City Council President Kaplan wrote in an email, “There was no funding or urgent need to bring (the MOU) as a recess action. So, it was hidden from the public without a valid reason for doing so. The 2015 recess action clearly contains legislative action, which is prohibited.”

The 2015 MOU authorizes the Mayor’s Office to appoint one voting member of the EBCF Board of Directors and members of the Oakland Promise Advisory Committee. In addition, “The Mayor’s office will provide communication support, marketing collateral, engagement opportunities and support for promotion and collaborate on annual fundraising events for Oakland Promise,” according to the MOU.

The City of Oakland from 2016-2018 gave $1.15 million to Oakland Promise’s Kindergarten to College Program. In addition, Oakland Promise received 11th floor City Hall office space, as well as “desktop computers, phone and internet service for approximately five Oakland Promise staff,” according to an administrative report to the city/school district Education Partnership Committee.

Until recently David Silver, Special Assistant to the Mayor III, served as the head of Oakland Promise. While receiving no salary from Oakland Promise, Silver’s city salary in 2018 was $261,961.45, salary plus benefits.

In her cover memo to the August 2015 M.O.U., Mayor Schaaf wrote that the MOU “has no cost implications to the City of Oakland,” though that does not appear to be the case.

Council President Kaplan, following up on the issue after it was raised by community activist Gene Hazzard, requested an opinion from City Attorney Parker about the legality of the mayor’s decision to approve the MOU without going to the City Council.

The City Attorney on Sept. 11 wrote that Rule 21 of the Council’s Rules of Procedure that the mayor may make decisions “during the annual recess except for those matters specifically set forth herein.”

Restrictions on the mayor’s authority to bypass the City Council:

  • “Rule 21 prohibits the mayor from approving ordinances during the council’s annual recess.”
  • The mayor must “set for reasons in the agenda reports and resolutions why approval cannot be deferred for council approval after the recess.”
  • The Mayor cannot “appropriate funds without prior council authorization and approval.”
  • The Council “is required to approve by ordinance any lease with rent at below fair market value. “

“The (City Attorney’s) legal memo says that anything that requires legislative action —  like renting space in city hall for free or changing how board members get appointed by moving the power out of the hands of the council and into the hands of the mayor — cannot be done by recess action,” Kaplan wrote in an email on Wednesday.

In July, the Oakland Promise appears to have merged with the EBCF. The governing board of the EBCF voted to convert their nonprofit to Oakland Promise, filing with the Secretary of State,  according to newly hired  Oakland Promise CEO Mialisa Bonta, president of the Alameda Unified School Board and wife of Assemblyman Rob Bonta.

“Functionally, that means that Oakland Promise has the EIN (nonprofit tax IRS tax identification number) of the East Bay College Fund,” she said.

Oakland Post Questions to Mayor Schaaf’s office were unanswered by press time.

In reply to an Oakland Post email, the City Attorney’s office said that Parker’s legal memo was written about the rules governing mayoral recess decisions in the current year, not about what Mayor Schaaf did in 2015.

“The City Attorney’s memo was written in response to a Councilmember’s request to explain the current rules of procedure regarding the mayor’s recess authority. It does not address or make a determination regarding whether any particular action was, or was not, in compliance with the rules. We will review the 2015 action and the rules that were in place at the time,” said Alex Katz,  Barbra Parker’s representative.

For Gene Hazzard’s website, including his blog, go to www.cleanoakland.com

Published September 21, 2019, courtesy of the Oakland Post

 

Questions about Oakland Promise: If it wasn’t a nonprofit, what was it? What happened to the money for scholarships for kids?

Photo by Godfrey Lee

By Ken Epstein

Questions continue to surface about the organization and accountability of “The Oakland Promise,” Mayor Libby Schaaf’s signature initiative that has raised millions of dollars since 2015 to help low-income families “to triple the number of high school graduates who …complete college by the year 2024.”

Though the Promise’s s lofty goal is widely popular among Oakland residents, that support has not silenced demands for full transparency about the legal status is of this organization, which has operated out of the Mayor’s Office,  and how it is spending public money and  resources.

Most significantly, Oakland Promise is wide perceived as a nonprofit organization. But that has not been the case, at least until recently.

The organization was not listed as one by Guidestar, a website designed to provide ”the  highest-quality, most complete nonprofit information available.” Nor was Promise registered as a nonprofit with the State Attorney General.

According to an email to the Oakland Post on Aug. 29, 2018, Oakland Promise was described by its backers as a “public-private effort” backed by four organizations: the City of Oakland the Oakland Unified School District, the East Bay College Fund and the Oakland Public Education Fund.

Since July, however, Oakland Promise has become a nonprofit, merging with the East Bay College Fund and taking over its nonprofit status, according to the East Bay Times.  Mialisa Bonta, president of the Alameda Unified School Board and wife of Assemblyman Rob Bonta, has become organization’s CEO, taking over the leadership from David Silver, who is a city staffer in the Mayor’s Office.

Another question is what has happened to the money that the city gave Oakland Promise to start set up college saving accounts for children. A copy of a Public Records Act request forwarded to the Post  asked for information about the total of $1,150,000 that the city budgeted for Oakland Promise for these savings accounts. But according to the city’s Finance Department on Aug. 16, “The city has not yet made payments on behalf of Oakland Promise from funds earmarked for this program in the adopted budgets for 2016-17, 2017-18 (and) 2018-19. The requested documents (canceled checks) do not exist.”

Council President Rebecca Kaplan in an email explained why she has asked City Auditor Courtney Ruby to audit Oakland Promise.

“Many people have been asking the questions I sent to the auditor – and many members of the public, And even the League of Women Voters, have expressed concern about the Oakland Promise funds. It is perfectly reasonable for anyone to want to know where the money is. This is large amounts of tax-payer funds that were promised to be used to set up college savings accounts for each Oakland kid, as they enter kindergarten.”

“We want to know where the money is – and where the college savings accounts are – that were supposed to be set up each year, starting in 2015,” Kaplan said.  “By now they should have grown a lot  if they had been set up as promised and as funded in the city of Oakland budget, for the Kindergarten to College Program.”

Asked about Council President Rebecca Kaplan request for the City Auditor to conduct an audit of Oakland Promise, the Mayor’s  Office replied, ““Kaplan wants Oakland taxpayers to fund her petty political vendetta masquerading as an audit. And tragically she’s targeting the Oakland Promise – a program started by the City of Oakland to send low-income kids to college with scholarships and mentors. She needs to immediately withdraw this taxpayer funded political score settling – because it hurts taxpayers and kids.”

 

Responding, Kaplan said, “The Mayor’s Office says I’m asking for tax payer money, but that is flatly false. I am not requesting any money.  I have asked our independently elected City Auditor for help getting information about where the college savings accounts they promised for Oakland youth are. The auditor is paid a regular salary.”

The Alameda County League of women Voters(LWVO)  expressed concerns about Oakland Promise when Mayor Schaaf and the Promise organization backed Measure AA last November, which would have created a $198 parcel tax to provide funding for Oakland Promise for 30 years. In its voters’ guide, the League took a neutral position, saying, “We found it unclear how moneys in the Oakland Promise Fund would be spent .”

Measure AA won more than 50 percent of the vote but failed to pass because it needed a two-thirds majority.  That ruling is now being challenged in court, and  according to observers, the case may take three years and end up at the state Supreme Court.

According to its website (Oaklandpromise.org), the organization consists of four programs:

  • Brilliant Babies – “Through participating early childhood programs and pediatric clinics, parents  are offered the opportunity to open a Brilliant Baby college savings account seeded with $500 as an early investment and source of inspiration for their baby’s bright future,” according to Oakland Promise;
  • Kindergarten to College – “Open(s) an early college scholarship seeded with $100 for all Oakland public school kindergarten students;”
  • Future Centers – creates college and career advising center on middle school and high school campuses, replacing services lost by the public schools as a result of cutbacks;
  • College Scholarships and Completion – $1,000 annual scholarships to students going to community colleges and up to $4,000 a year for students attending four-year colleges.

Questions that remain to be answered are how many $500 accounts have been set up through Brilliant Babies; how many $100 scholarships have been established through Kindergarten to College;  how many Future Centers have been set up and how many hours of support they have provided to students; and how many community college and four-year college scholarships have been awarded.

During the years that Oakland Promise was not a nonprofit, the Oakland Public Education Fund served as the organization’s fiscal sponsor and can share budgetary information, including IRS Form 990; audited financial statements; Form 1023 and all correspondence in relation to the production and completion of this document; and a IRS Determination Letter,” according to Maggie Croushore, director, development, of Oakland Promise.

By deadline, the Post had not received  that data nor an answer questions about the cost that Public Education Fund charges to serve as Oakland Promise’s fiscal sponsor and numbers of students and families served by the programs.

Croushore told the Post that during the three years, 2015-16 to 2017-18, the Oakland Promise spent a total of $19.9 million or 94.7 percent of its budget on program costs ($11.3 million) and scholarships and saving accounts ($8.6 million). During that time, the initiative spent $1.1 million or 5.29 percent on administrative expenses. Total revenue during the three years was $33.5 million. However, now that the Oakland Promise has become a nonprofit, costs of administrative overhead could potentially increase if most the organization’s 47 employees  are paid out of the budget instead of being provided  without cost by the City, OUSD and other agencies.

In an email to the Post, Schaaf spokesperson Justin Berton said, “The nature of the Oakland Promise has always been a collaboration with OUSD and community partners to send underrepresented kids from Oakland to college with scholarships, mentors, and the life-skills to end patterns of generational poverty and institutionalized racism. Every Oaklander should be proud their City has come together to send more than 1,400 Oakland kids to college (and counting), seeded more than 500 ‘Brilliant Baby’ scholarships, and worked tirelessly to support Oakland families and their children from cradle-to-career.”

Published September 12, 2019, courtesy of the Oakland Post

 

Community Raises Questions Over City Funds, Staff Given to Mayor Schaaf’s Favored Education Nonprofit

Assata Olugbala

By Ken Epstein
Questions are being raised by members of the community whether city staff, funds and resources have been improperly utilized to support Oakland Promise, an education nonprofit that has been widely touted by Libby Schaaf as her greatest accomplishment while mayor of Oakland.

A number of these issues have been have raised at public meetings by community activists Gene Hazzard, Assata Olugbala and others.  Based on these concerns and information, City Council President Rebecca Kaplan requested on Aug. 26 that City Auditor Courtney Ruby audit the Mayor Office’s support for Oakland Promise.

David Silver

“Since it’s the auditor who has the legal authority to investigate those issues, I’ve forwarded the information to her, so we and the public can learn what happened to the public funds,” Kaplan told the Oakland Post.

One question has to do with do with role of Mayor Schaaf’s education czar, David Silver, whose official title is Special Assistant to the Mayor III.  In this capacity, according to the website Transparent California, his city salary for 2018 was $173,627.18 plus $88,334.27 in benefits for a total of $261,961.45.

Gene Hazzard

Yet in addition to working for the Mayor’s Office, Silver has served as staff of Oakland Promise. In an email response to a request for information from the Oakland Post, Oakland Promise reported on Aug. 29, 2018 that Silver was a member of the nonprofit’s staff.

In the 2018 Oakland Promise Annual Report, he was listed a member of Oakland Promise’s “Operations Team.”

In response to questions this week from the Post, Oakland Promise told the Post in an email that Silver received no salary, payment or other benefits for his work at the nonprofit, beyond the salary he earned working for the city.

“Prior to July 1, 2019, while Oakland Promise was a city-driven initiative and a project of the Oakland Public Education Fund, David Silver, in his role as Director of Education for Oakland Mayor Libby Schaaf, worked with City staff, OUSD, the East Bay College Fund, and the Ed Fund to help coordinate the activities of the Oakland Promise to ensure that they served the City’s goals,” according to Maggie Croushore, a member of the Oakland Promise Operations Team and also “Communications & Partnerships, Education, Office of Mayor Libby Schaaf.”

“As of July 1, 2019, as an independent 501c3, Oakland Promise has hired a CEO, Mia Bonta, to set the strategic direction and lead Oakland Promise, reporting to a governing board of the nonprofit organization,” wrote Croushore in an email to the Post on Wednesday.

Asked about Silver’s work schedule, how his work time was separated between his city-paid duties and Oakland Promise responsibilities, Croushore replied:

“This question regarding Mr. Silver’s schedule is best directed to the Mayor’s office or to David Silver directly, as he does not have scheduled hours at Oakland Promise. David Silver serves as a non-voting member of the governing board.”

Silver did not respond to the Oakland Post’s emailed questions.

However, a recent report from the administration on Oakland Promise, presented to the Education Partnership Committee, referred to David Silver’s responsibilities for the nonprofit.

“The Mayor’s Director of Education funded by the city for 2017-2018 and 2018-2019” had decision-making authority on the Oakland Promise, until the hiring of CEO Mia Bonta in July.

Justin Berton, a spokesperson for the mayor, did not respond the Post’s questions but instead praised the work of the nonprofit.

“The Oakland Promise was created by the City of Oakland in partnership with Oakland Unified School District and community partners to dramatically increase the number of Oakland public school students who go to college or trade programs with scholarships, mentors, and the life-skills to end the pattern of generational poverty and institutionalized racism,” he said.

In her letter to the City Auditor, Kaplan said that from 2016-2018, she heard allegations that Mayor Schaaf had ordered that city hall facilities “be given, free of charge, to the Oakland Promise without going through (the) legally-mandated process for use of public facilities.”

Kaplan said she had requested a list of organizations that had been given space in City Hall, but that list did not include Oakland Promise.

Kaplan also pointed out that the administration’s report to the Education Partnership Committee said the City of Oakland from 2016-2018 gave $1.15 million to Oakland Promise’s Kindergarten to College Program and 11th floor City Hall office space, as well as “desktop computers, phone and internet service for approximately five Oakland Promise staff.”

While many people are enthusiastic about the nonprofit if it lives up to its promises for students, several people are  requesting a public  accounting of how Oakland Promise has spent the public money it has collected and to make sure the money it actually being spent the way it claims.

At press time, the City Auditor’s Office had not replied  to the Oakland Post’s questions.

For Gene Hazzard’s website, including his blog, go to www.cleanoakland.com

Published September 6, 2019, courtesy of the Oakland Post