San Diego Christian College still has not provided inewsource with documents accounting for $20 million in expenses, which were brought to light in our investigation published Oct. 30. We have asked repeatedly for this information.
Rather than sharing documentation of the expenses, however, Robert Jensen, the vice president for advancement and administration for the college, circulated to parents, students and alumni a list of alleged inaccuracies in our story. The college has not shared that list with inewsource, despite its attorney, Tracy Warren, demanding that we retract our stories because of errors.
We have asked Warren to supply us with details to justify her demands but as of close of business Monday, she has not responded.
We stand by the accuracy of our work, and we are transparent about our reporting process. We linked every fact in the initial story to documents verifying the reporting.
A parent shared with inewsource 48 allegations Jensen sent out. Our line-by-line response is below.
Section 1
inewsource: San Diego Christian College, a nearly 50-year-old nonprofit school in Santee, can’t account for more than $20 million in expenses that are supposed to be detailed on its public tax returns.
San Diego Christian College: SDC has accounted for all expenses. The college has a yearly independent financial audit. The college has always received an unmodified opinion (formerly known as an unqualified opinion, which is positive) by the auditors. The auditing term “unmodified/unqualified opinion” is a positive term, and it means that the auditors find that finances are in accordance with applicable financial reporting framework. For further information, you may refer to the full financial audits.
inewsource fact-check: San Diego Christian College’s public tax documents for fiscal years 2012, 2013 and 2014, do not include the legally required schedules explaining “other” expenses which amounted to $20,755,400. Steve Chaney, the college’s chief financial officer, told inewsource on Sept. 26, 2017 that he would provide this documentation but has not done so, despite repeated requests. The college did receive unmodified opinions in each of those years from its auditor.
Sections 2, 3
inewsource: In the meantime, current and former students complain of inadequate facilities, former staff felt they were underpaid and a vendor claimed the school often fell behind on payments. Students who attend this religious-based college full time pay $30,000 a year in tuition.
The school’s chief financial officer, Steve Chaney, told inewsource in an interview he could not say what the $20 million – spent from fiscal 2012 to 2014 – paid for. He said records would be made available, but weeks later the school’s attorney said in an email that San Diego Christian College would not provide any documents.
San Diego Christian: Mr. Chaney was asked by Megan Wood in a recorded interview on September 26, 2017, what made up the “other expenses” from the functional expense section on row 24 of the 2011, 2012 and 2013 federal 990. Mr. Chaney reported he could not remember every line item. She then asked if Mr. Chaney had the information and he reported that all figures reconcile to the annual audit report. Upon the advice of general counsel, it was decided not to respond to Megan’s request for the detail.
It is important to note that all expenses reported on page 1 of the Federal Form 990 for 2011, 2012 and 2013 reconcile to the statement of activities reported on each respective independent audit. The "Other Expenses" cited in the article are included as part of the allocation of the functional expenses in the fiscal year audits.
inewsource fact-check: The story is accurate. What’s more, our recorded interview proves Mr. Chaney never “reported that all figures reconcile to the annual audit report.” Regardless of audit, schedules required by the IRS, detailing expenses, have not been made publicly available.
Section 4
inewsource: “It’s a symptom of a problem. Nobody’s paying attention,” Marcus Owens, a former top administrator with the Internal Revenue Service said after examining the school’s financial records at inewsource’s request.
San Diego Christian: Mr. Owens does not have any connection with San Diego Christian College. He has never asked SDC any questions, nor has SDC ever sent him any documents to review.
inewsource fact-check: Mr. Owens is an expert on nonprofit finances, tax filings and requirements because he once headed the division of the Internal Revenue Service called the Exempt Organizations Division. San Diego Christian College is considered an exempt organization because it is registered as a 501(c)(3) and is exempt from certain federal income taxes. inewsource sent Mr. Owens SDC tax returns to review. Owens has been quoted extensively on IRS regulations regarding nonprofits.
Sections 5, 6
inewsource: The college president and the board of trustees, which is ultimately responsible for the school’s finances, either did not respond to requests for interviews or referred inewsource to the school’s attorney, Tracy Warren. She wrote in emails that officials had no comment and that inewsource should “cease and desist” efforts to reach the board.
Money problems at the school have mounted over the past few years. The U.S. Department of Education issued San Diego Christian College a failing financial score for fiscal 2014 based on findings from an outside audit.
San Diego Christian: It is true that in 2014, SDC received a .1 financial score, it is also true that the College raised the score in all subsequent years. The Department of Education awarded San Diego Christian full advanced funding in 2015, 2016. SDC fully expects their fiscal health to continue.
During the fiscal year ended June 30, 2014, the college experienced a financial loss. This was the result of over extending institutional aid (scholarships) and additional expenses associated with operating two campus during the campus relocation in 2014. Due to these factors, the college was assigned a CFI score that required additional accounting measures to ensure fiscal responsibility. The college addressed the required financial matters and raised the CFI score for Fiscal year 2014- 2015 to 1.1 and then in fiscal year 2015-2016 to 1.6 as confirmed by the Department of Education. This progress removed SDC from the Department of Education’s heighten cash management status.
inewsource fact-check: The story is accurate. The most recent financial responsibility scores published by the U.S. Department of Education are for 2014-15. The 2015-16 scores are not yet publicly available.
Section 7
inewsource: In a 2016 report, a regional accrediting agency also highlighted irregularities found in the school’s financial record keeping and earlier raised concerns about its “very sketchy multi-year budget.”
San Diego Christian: The term “very sketchy multi-year budget” was not used in any WSCUC report. In fact, the 2016 WSCUC report stated the opposite on page 12, “Positive annual financial results are now the “norm” rather than the exception with “clean” annual financial audits, and a realistic and data- informed multi-year budgeting process integrated with the strategic plan for allocation of resources.” WSCUC Site Visit Report 2016 (pp. 11-12)
inewsource fact-check: “Very sketchy multi-year budget” was written in a 2012 WASC Senior College and University Commission (WSUSC) report about San Diego Christian College. You can see the document here.
The 2016 WSUSC report did say “Positive annual financial results are now the ‘norm’ rather than the exception with ‘clean’ annual financial audits, and a realistic and data- informed multi-year budgeting process integrated with the strategic plan for allocation of resources.” But, it also mentioned the school’s financial record-keeping. The WSUSC report cited the audit as saying, “In prior years, deferred revenue was not recorded properly in accordance with GAAP (generally accepted accounting principles).” The WSUSC team said, “The difficulties for 2013/14 were compounded by the finding of nine significant deficiencies that were disclosed related to the audit of the major federal award programs for SDC.” It also said, “While SDC noted a ‘secured… sense of sustainability in the growth of assets as well as a smart financial model,’ the Team is concerned about the financial sustainability of the Institution ...”
Section 8
inewsource: Mr. Chaney attributed the failing financial score to money lost while moving the school to a new campus and dismissed concerns from the accrediting agency.
San Diego Christian: Mr. Chaney, did not dismiss any concerns during the recorded interview. He shared the process of the accreditation review and that it is intended to assist and help organization to improve. He also shared that SDC received an 8-year renewal on their accreditation status.
The reporter is incorrect about the financial score, and she is incorrect about Mr. Chaney’s statement.
inewsource fact-check: The financial score was reported correctly and Mr. Chaney is quoted accurately. Here is a transcribed portion of Megan Wood and Mr. Chaney’s conversation discussing concerns from the WASC Senior College and University Commission.
Megan Wood: So what about this comment from the WASC report?
Steve Chaney: About them being concerned?
MW: Yeah.
SC: WASC is concerned with everything. OK. That's what they're supposed to do is a peer review. They're supposed to come in and be concerned about everything.
Sections 9, 10, 11
inewsource: “They’re supposed to come in and be concerned about everything,” he said, insisting students shouldn’t be worried. “This institution is on solid footings.”
Yet there are doubts about the school’s finances.
“It concerns me,” said David Oliveira, a senior and student athlete. “I’m about to graduate and I’m worried about my degree.” Since he enrolled in 2014, Oliveira said he has seen his scholarship drop from covering 90 percent of his tuition to 80 percent. Another problem is increasingly “overloaded professors,” Oliveira said.
San Diego Christian: SDC awards institutional scholarships to support student retention. These merit-based scholarships are tracked and monitored for all programs at SDC, and there are several reasons why a student may have their scholarship increased or decreased. Athletic scholarships are a part of the merit- based calculations; therefore, depending on benchmarks and team composition, athletic scholarships are determined. SDC participates in NAIA athletics and in the GSAC Conference where full-athletic scholarships are uncommon. There can be many reasons why Oliveira’s scholarship was reduced; because, since he is a current student, SDC is unable to disclose those specific reasons. The average athletic scholarship at SDC is roughly 40%, therefore the student, by his own words, is receiving double the average athletic scholarship.
inewsource fact-check: The story is accurate.
Section 12
inewsource: The college’s graduation rate is also low — 30 percent in 2015, making the school ineligible to access state-funded Cal Grants.
San Diego Christian: San Diego Christian College is eligible for its students to receive CalGrant. There are two pieces of information below: (1) Email from California Student Aid Commission and (2) screenshot from CSAC website showing eligibility of San Diego Christian College.
inewsource fact-check: The story reflected information publicly available on the California Student Aid Commission website at time of publication. The website has since been updated at the request of the college. Our story has also been updated with the new information.
Section 13
inewsource: San Diego Christian College calls itself “one of the top” Christian colleges in Southern California.
San Diego Christian: SDC does not call itself “one of the top” Christian colleges; rather U.S. News & World Report does.
inewsource fact-check: San Diego Christian College’s mission statement — published on its website — states: “As one of the top Southern California Christian Colleges, San Diego Christian College (SDC) exists to educate and inspire students through the truth of scripture and the development of competencies that prepare graduates whose purpose is to impact the world.”
Sections 14, 15
inewsource: The school was founded by three people — a creationist, a pastor and the author of the best-selling Left Behind series. San Diego Christian existed on church-owned land in El Cajon until 2014, when it moved to “establish its identity as an independent, faith-based liberal arts college.”
Documents from the school’s accrediting agency show the college lost $2.4 million in net assets that year because of unexpected relocation costs and poor record keeping. San Diego Christian College said in a 2015 report that those were “extraordinary issues” in an “isolated year.”
San Diego Christian: The document cited by Megan Wood in no way states the $2.4M change in net assets was due to “poor record keeping”. Megan shares at the first part of the article that Mr Chaney shared the loss is due to moving a campus. Mr. Chaney shared with her the moving of a campus and over awarding. She fails to mention that the over awarding caused over $1.5M of the loss in FY 13.14. Furthermore, although the fiscal year 13-14 resulted in a lowered composite score, the fiscal year 14-15 proved that the leadership of SDC addressed the issues to result in no findings in the final audit report. WSCUC Site Visit 2016 Report (p. 33)
inewsource fact-check: The 2016 WSUSC report states: “Through the work of the audit, it was noted that 'In prior years, deferred revenue was not recorded properly in accordance with GAAP (generally accepted accounting principles). As a result of this restatement [of net assets for the prior year], previously reported unrestricted and total net assets decreased by $269,317 (Note 13).' The accreditation team learned from the Institutional Report provided by the college that 'The affected net change reduced income by $750K.' The total change in net assets per the annual audited financial statements was ($2,413,824), reducing the total net assets at end of year to $5,995,847."
inewsource also wrote “The college’s financial aid department — managed by the vice president for student affairs — over-awarded student scholarships by $1.4 million in fiscal 2014, according to its latest reaccreditation report.”
Section 16
inewsource: The new campus is five office buildings tucked behind a shopping center in Santee. Inside are classrooms, a library, a cafeteria, and a chapel where most full-time students are required to attend services every Monday and Wednesday morning or potentially pay a fine.
San Diego Christian: SDC’s campus also includes the a Science Lab, Hawks Annex, Murf & Breezeway, residence halls, and an Aviation hangar and offices at the airport, all with intentional design.
inewsource fact-check: The story is accurate.
Section 17
inewsource: Despite more than doubling the number of student-athletes at the college over six years, the school has no sports facilities of its own. Students use a nearby park, the Boys and Girls Club, and facilities at neighboring community colleges.
San Diego Christian: San Diego Christian College competes in NAIA Division 1 athletics. This is very different than NCAA Division 1 athletics. SDC’s focus is first on being students, then athletes. SDC’s athletes compete in rigorous competitions through the GSAC Conference. SDC’s Men’s & Women’s Tennis teams both won conference titles, and competed at the national tournament in the past few years. SDC’s baseball team went to the College World Series three years ago. SDC has many other successes to celebrate, but the motivating factor for the college is that SDC is students first and athletes second. This past year, SDC’s athletic department was awarded the Champions of Character from the NAIA national organization.
SDC’s athletic department developed healthy and strategic relationships with neighboring institutions to utilize their tremendous facilities. SDC is in good standing in conference and community through the platform of athletics.
inewsource fact-check: The story is accurate.
Sections 18, 19, 20
inewsource: Last year, more than 700 students attended the college.
Kaitlin Brooks, a former assistant professor of communication at San Diego Christian, said academic rigor was “put on the backburner” at the college in favor of the religious experience — one of the reasons she said she left in 2016.
Brooks, a San Diego Christian graduate, recalled being told by a superior that her job was to “protect students from the outside world, which to me does not resonate with how I see my job as a college professor.” More pressing, she said, was the low pay that pushed her and other professors away. There are no tenured professors at San Diego Christian – all are on one-year contracts, according to the U.S. Department of Education. Brooks said she knows of more than a dozen other professors who left the school within the past year. “It seemed unusually high,” she said.
San Diego Christian: According to Benchmarking, SDC’s faculty salaries align with its size. Also, SDC has Merit- based, three-year contracts for faculty who qualify. The following table is a national benchmarking exercise carried out by the Council for Christian Colleges & Universities (CCCU), which is a national association with represents the majority of Christian higher educational institutions.
The number cited is inaccurate. The professors who left at the end of last year never cited pay for their reason for leaving.
inewsource fact-check: According to the Integrated Postsecondary Education Data System of the U.S. Department of Education, all 19 full-time professors in Fall 2015 were on annual contracts. None were on multi-year contracts. This is the most recently released data.
Kaitlin Brooks, a former part-time professor, was accurately quoted.
Section 21
inewsource: Depending on their positions, professors made about $40,000 to $67,000 in the 2015-16 school year.
San Diego Christian: The same chart is used to show how SDC’s faculty salaries are aligned with national averages.
inewsource fact-check: During the 2015-16 school year, full-time professors at San Diego Christian College made on average $40,437 to $67,104, according to the U.S. Department of Education. Average pay for part-time professors is not published by the Department of Education. According to its most recent data in Fall 2015, 81 percent of instructional staff at San Diego Christian College were part-time.
Section 22
inewsource: Students said they’ve recently noticed professors taking on multiple subjects. “I have a professor, she teaches me social media marketing and she teaches me entrepreneurship. And she teaches him another class,” said Oliveira, pointing to his teammate. He said it seemed like too much for one professor to teach three or more subjects a day.
San Diego Christian: SDC has professors with advanced degrees in a variety of areas. Teaching across disciplines is intentional. The professor mentioned serves as the Acting Chair and prefers to teach most of the courses in her program. It is a part of the intimate experience that a college like SDC provides. WSCUC also reviews SDC’s course offerings and faculty load and have reported no concern.
inewsource fact-check: The story is accurate.
Section 23
inewsource: “It makes it awkward for them and hard for them, and for us as well,” Oliveira said. “When you ask something it’s, ‘Oh, which class are you talking about?’”
San Diego Christian: When asked a question by a student who is in more than one of a professor’s classes, it is typical to ask which class the student is referring to. What matters most, is that the students receive an answer to their question. Further to this, the important note here is that the faculty member is not asking who the student is, because they have already invested quality time and have come to know each of their students.
inewsource fact-check: The story is accurate.
Section 24
inewsource: Chaney, the CFO, said hiring more professors is not the school’s priority. Instead, the college is using software to expand, he said. The school has an online program that now offers bachelor’s degrees in six subjects and master’s degrees in two subjects. Eleven degrees are offered to traditional on-campus students.
San Diego Christian: This is a complete fabrication. Mr. Chaney remembers discussing how the college has invested hundreds of thousands of dollars in software to better enable abilities to serve students. The growth of the online program was discussed but never the hiring of professors, in the context presented.
Mr. Chaney also recalls Megan asking why when a professor wanted to be made full-time did the leadership not allow it (implying a lack of funds from the college). Mr. Chaney’s response was to state that there are a lot of requests and the leadership weighs each decision with the goal of serving the students. Furthermore, showing the fiscal responsibility of a mature institution, leadership has clearly created benchmarks to highlight where additional hires need to come from. At the point of departure of the former part-time faculty member, the number of students in the Communication department did not justify unnecessarily increasing costs by making the part-time faculty member into a full-time position. In the exit interview with the former part-time faculty member she told Human Resources that the reason she is leaving is because she did not agree with the direction the new Chair of Communication was heading. This was also evidenced in her audio interview in the article where she praised the former Chair. The aspect of her deciding to leave was more based on the departmental direction vs. any financial matter.
SDC has professors with advanced degrees in a variety of areas. Teaching across disciplines is intentional. The professor mentioned serves as the Acting Chair and prefers to teach most of the courses in her program. It is a part of the intimate experience that a college like SDC provides. WSCUC also reviews SDC’s course offerings and faculty load and have reported no concern.
When asked a question by a student who is in more than one of a professor’s classes, it is typical to ask which class the student is referring to. What matters most, is that the students receive an answer to their question. Further to this, the important note here is that the faculty member is not asking who the student is, because they have already invested quality time and have come to know each of their students.
The reporter is providing information not provided to her by Mr. Chaney. She wrongly and incorrectly attributes comments to Mr. Chaney which he never stated.
inewsource fact-check: inewsource did not ask “why when a professor wanted to be made full-time did the leadership not allow it.” inewsource stands by information attributed to Mr. Chaney.
Here is the transcribed portion of the interview about priorities:
Steve Chaney: When you lose $2-plus million in a year and you're pulling out of accounts payable, you start to pick what is priority. Sometimes you don't do everybody's hire that they want. Or they want to spend all this? No, we’re not gonna do that. This is what we’re gonna do …
Here is the transcribed portion of the interview about hiring of teachers, based on concerns from students:
Megan Wood: What would you say to students who might be concerned how their tuition is being spent?
SC: In what way?
MW: For example, money being spent on catching up with finances versus hiring new staff?
SC: What we're trying to do is expand our abilities, right, with software, with building out our campus, things of this sort. And being able to lower the cost, keep the economies of scale, like when you say well Steve how can you and your staff do all of this work?
Well because we've been cloud based in the accounting here since I started in 2010 and we converted in 2011. Because the economies of scale are so much cheaper where you leverage knowledge and systems and processes. Now we can serve almost 2,000 students with the current staff we have ... Where before, the old model that we’re trying to get rid of was 'oh you want to add more students? we've gotta add more FT, full time equivalent, more employees, more employees, more employees.’ Less goes to the classroom. So again we're coming from a paradigm of a 40-year old institution, right, at the church. Coming over here we're trying to build out a campus.
Section 25
inewsource: “We can serve almost 2,000 students with the current staff we have,” Chaney said.
San Diego Christian: This was said in context of software related to Enrollment Services. This comment had nothing to do with Instructional Services. Again, benchmarking allows us to deliver industry standards for institutions of similar size.
inewsource fact-check: Mr. Chaney told inewsource, “Now we can serve almost 2,000 students with the current staff we have ... Where before, the old model that we’re trying to get rid of was 'oh you want to add more students? we've gotta add more FT, full time equivalent, more employees, more employees, more employees.’ Less goes to the classroom. So again we're coming from a paradigm of a 40-year old institution, right, at the church. Coming over here we're trying to build out a campus.”
Section 26
inewsource: This year, San Diego Christian College became one of two private colleges in California ineligible to receive Cal Grants because of its low graduation rate in 2015 and 15.7 percent default rate (the percentage of students who don’t repay their federal loans) in 2013. Cal Grants are financial aid that qualified students do not have to repay.
San Diego Christian: San Diego Christian College is eligible to receive Cal Grants. SDC students have full rights to receive the Cal Grant. All SDC students, who are eligible to receive CalGrant, are fully capable to receive their aid from the State of California. Through the investigation of employees at San Diego Christian College, SDC found that information on the CSAC website was inaccurate and SDC reached out to the commission to change the information. The email below shows how a proper investigative process delivered factual information. Furthermore, the second screenshot proves that SDC is eligible for CalGrant.
inewsource fact-check: The story reflected information publicly available on the California Student Aid Commission website at time of publication. The website has since been updated at the request of the college. Our story has also been updated with the new information.
Section 27, 28
inewsource: Last year, at least 114 San Diego Christian College students received this state grant, and 90 percent of the school’s students had some type of financial aid.
Chaney, whose accounting company is based in Roseville, works as a full-time officer of the college for no pay, according to the school’s tax returns. The college pays his company, Chaney and Associates, an undisclosed amount to handle its accounts payable, payroll, tax preparation and more. According to tax documents, only five of the school’s contractors are paid more than $100,000. Chaney and Associates is not one of them.
San Diego Christian: The Federal Form 990 requires an organization to report the top five vendors paid more than $100,000 in the tax year. Chaney & Associates did not qualify to be amongst the top five paid vendors.
inewsource fact-check: The Federal Form 990 requires organizations to disclose the following: 1) Five highest independent contractors that received more than $100,000 of compensation and 2) The “total number of independent contractors who received more than $100,000 of total compensation from the organization.”
In 2016, Mr. Chaney listed the five highest paid organizations and reported that only five organizations received more than $100,000. Chaney and Associates was not among them.
Section 29
inewsource: Chaney’s relationship as a school officer and the owner of a company that does business with the college is not disclosed in the school’s yearly IRS returns, although that is required.
San Diego Christian: The 990 clearly showed Steve Chaney as CFO, and he was listed as an Officer of the organization.
inewsource fact-check: In the College’s yearly IRS returns, the CFO is listed as Steve Chaney. The paid tax preparer is Charles S. Chaney Jr.
Line 28a/c asks: “Was the organization a party to a business transaction to with one of the following parties: A) A current or former officer, director, trustee,or key employee? C) An entity of which a current or former officer, director, trustee, or key employee was an officer, director, trustee, or direct or indirect owner?
Both were marked no.
Sections 30, 31
inewsource: “The college saved a ton of money by outsourcing to me,” Chaney said, adding that the school previously paid four times the amount his company charges for the same services.
Nonprofits making more than $50,000 a year are required to file public tax returns detailing yearly revenues and expenses.
San Diego Christian: San Diego Christian College files our public tax returns and obeys all requirements from IRS and the State of California.
inewsource fact-check: The story is accurate.
Section 32
inewsource: During fiscal 2012, 2013 and 2014, undocumented “other expenses” and “fees for services” at San Diego Christian College amounted to more than $20 million. The IRS requires documentation that explains those costs. None was attached.
San Diego Christian: The IRS clearly received and processed the tax returns mentioned. The requested information is contained on supplemental schedules. This information is available and reconciles to audit reports.
The tax software package did not transmit the schedules as intended. The IRS provided support and guidance to not amend as it was just supplemental information. Using the same form, this outlines what the IRS received relating to “Other Expenses”.
The chart is an accumulation from the information provided for different 990’s.
inewsource fact-check: inewsource requested this additional information multiple times. The college refused to provide it.
Sections 33, 34
inewsource: Chaney told inewsource he would need to “refresh” his memory about the documents missing from the 2012 and 2013 returns. As for the 2014 documentation, he said a “system glitch” prevented its upload to the IRS. He contacted the IRS about the return, he said, but the IRS told him “don’t worry about amending it.” When asked what documentation he had on this interaction – a tracking number, for example – Chaney said he hadn’t asked for any.
Owens, the former director of the IRS’s Exempt Organizations Division, questioned Chaney’s account.
San Diego Christian: Again, SDC has no connection to Mr. Owens. SDC did not provide any documentation to him, nor communicated with him.
inewsource fact-check: Owens is an expert in nonprofits’ tax filings and requirements as former head of the division for the IRS.
Section 35
inewsource: “That’s simply not what the IRS does in that sort of situation,” he said. “Normal procedure would be that the missing schedule would be solicited from the organization and associated with a return.”
San Diego Christian: The IRS has in no way contacted SDC for the missing information. Just the opposite, they have received and accepted the reports without findings. The IRS agent must be discussing the situation in general. Moreover, Megan Wood does not have a power of attorney to discuss any matter with the IRS regarding SDC’s tax return. The IRS would be violating internal rules if they shared anything specific or answered anything specific regarding SDC.
inewsource fact-check: Owens is speaking generally. As noted in the next line, when asked by inewsource, the IRS would not comment on San Diego Christian College.
Section 36
inewsource: The IRS declined to comment on the college’s finances.
San Diego Christian: This proves that Megan Woods did not discuss SDC’s return with the IRS.
inewsource fact-check: The story is accurate.
Section 37
inewsource: inewsource sent three years of the school’s audited financials and tax forms to Owens, who is now a partner at the law firm Loeb & Loeb in Washington, D.C. “It looks like the organization is really suffering from a lack of personnel,” he said, confirming the expenses needed to be detailed.
San Diego Christian: Marcus Owens could not know the specific situation regarding SDC and the elements of personnel needs. He does not know the depth of checks and balances in place within SDC. Through every single successful independent audit, SDC has not had any material deficiencies. Certainly not related to lack of personnel. As this is the case, there is also no need to add additional personnel to a non-issue.
inewsource fact-check: Owens is offering an expert opinion.
Section 38
inewsource: Owens also addressed the fact that Chaney works more than 500 miles away from the college, out of his office in Roseville. “If they had a chief financial officer on campus, 40 hours a week, I suspect they would not have the sort of gaps and problems they’re facing,” Owens said. “Which are in the order of somebody doesn’t have the time to pay close attention to what’s going on.”
San Diego Christian: Leadership led the organization to financial stability as recognized by the WASC report and reaffirmation of accreditation. The college has experienced positive change in net assets for the past three fiscal years. It is interesting that Mr. Owens is able to provide an opinion about SDC’s operations in San Diego, when he is located over 2, 685 miles away in Washington D.C.
inewsource fact-check: The story is accurate.
Section 39
inewsource: Two lawsuits were filed against the college by a food vendor and landlord in the past two years over missing payments. The total amount owed the two companies was more than $309,000, according to the lawsuits. Both cases were settled for undisclosed terms.
San Diego Christian: Allegations and claims are not fact. Additionally, SDC had a cross claim against the former food vendor. SDC settled with the food provider to finalize the relationship.
inewsource fact-check: The story is accurate.
Sections 40, 41, 42
inewsource: Chaney would not comment on the lawsuits, but said they were “minor.”
Taylor Maddox, a former co-owner of the school’s past food vendor, Philoxenia, catered the school’s cafeteria from 2014 to 2016. He said the college was perpetually $80,000 late in payments. There were times when the company had to notify school staff that it could not serve food the next day without getting paid, Maddox said. “Sometimes, the food quality would be lower and (students) would come to us and ask questions, because in their minds, they paid for their meal plan,” he said.
Another indication of financial trouble at San Diego Christian College is its annual federal financial responsibility score. Colleges and universities that receive a score of 1.5 or higher from the U.S. Department of Education — based on a -1 to 3 scale — are considered financially responsible and can receive federal financial aid without additional oversight. Scores are based on a school’s cash reserves, net income and ability to borrow as reported in its audited financials. In 2014, the college was given a score of 0.1 – which “pushed the College into the ‘fail’ zone”, according to its accrediting agency.
That required the college to provide a $1.47 million letter of credit to secure federal student aid for the following year. The college’s most recently released score was 1.1 in 2015. That’s considered financially responsible, according to the Education Department, but requires cash monitoring. Records show the college was placed under this oversight from June 2016 to at least December 2016.
San Diego Christian: Throughout the past few years, the federal financial responsibility score has strengthened. This is evidence that the federal agencies approve of the direction SDC is going financially. They review various KPIs to determine a number, for each institution. SDC has been transparent regarding the transition year of 2013-14. Leadership has worked hard to improve this result every single year since.
inewsource fact-check: San Diego Christian College’s U.S. Department of education financial responsibility score in 2014 was 0.1, in 2015 it was 1.1. The 2016 score has yet to be publicly released by the Department of Education.
Sections 43, 44, 45, 46
inewsource: Chaney attributed the failing financial score to the school relocation and the distribution of too many college-funded scholarships. The college’s financial aid department — managed by the vice president for student affairs — over-awarded student scholarships by $1.4 million in fiscal 2014, according to its latest reaccreditation report. That year, the school awarded $5.7 million in scholarships. The prior year, it awarded $4.3 million. As a result, school officials hired new financial aid staff and shifted oversight of the department to Chaney. He said the fiscal 2016 financial score — which is not yet publicly available — will be reported at 1.6.
In 2019, the regional school accrediting agency will return to San Diego Christian College in a special visit to monitor what progress has been made since its reaccreditation in 2016.
Before moving to its new campus, San Diego Christian College retained the same financial auditor for at least four years.
“Year after year, it was perfect, perfect, perfect,” Chaney said about the results of the audits. But for fiscal 2014 — the year it received its failing financial score — the college’s board hired a new “national” auditor to “scrutinize” the school’s finances, he said.
San Diego Christian: SDC’s audit committee recommended to the board to hire a new auditor after the move from the previous campus. The audit committee wanted to have a fresh set of eyes on the audit. The College selected a nationally recognized audit firm, CliftonLarsonAllen.
It is important to note that Sarbanes and Oxley recommend that organization change their audit firms every few years.
CLA had findings that were very typical for an organization that experienced a complete department transition. SDC’s financial aid department implemented all the recommendations and did not experience any findings in the future year audits. Regardless of the findings, CLA provided an “unqualified opinion”.
inewsource fact-check: The story is accurate.
Section 47
inewsource: “That was our desire,” Chaney said. “We had nothing to hide.”
The audit found the school had two material weaknesses and nine significant deficiencies, noting federal aid recipients like San Diego Christian College are expected to have none. The audit found a majority of the issues were due to the turnover in the college’s financial aid department and changes in administrative roles. It also noted certain internal controls, such as payroll transactions and adjusting journal entries, were not reviewed. Several other deficiencies included students not receiving financial aid disbursements in the timeframe required by the Department of Education and not meeting federal reporting standards.
San Diego Christian: SDC disagreed with this finding from CLA. SDC showed CLA that all journal entries are reviewed and approved by multiple personnel before entered. CLA adjusted its findings and shared ways to electronically track the reviews and postings. Payroll processes have been multi-layered for the past five years. Each step of the way, leads to further approval and provides appropriate checks and balances to ensure proper governance.
Journal Entries - Management’s Response - SDC believes there is a thorough review and approval process for journal entries. Each journal entry is supported by a source document. The review and approval process is completely electronic in the college’s accounting system. Management has retroactively addressed the concern to establish a documented review and approval process.
inewsource fact-check: inewsource accurately quoted the financial audits.
Section 48
inewsource: That audit was done by the Clifton Larson Allen accounting firm. It’s now done by Ken Mierzwinski, a certified public accountant who has done work for Chaney in the past.
San Diego Christian: The College has used well-known and independent auditing firms to perform its external audits. All firms have extensive experience in higher education and have represented many colleges before accrediting agencies.
All three firms provided “unqualified opinions” thereby showing appropriate accounting measure have been followed.
inewsource fact-check: The story is accurate.
