Trustees debate health-benefits audit and board conduct as tensions surface

At the March 26 Laguna Beach Unified School District board meeting trustees debated how the district handled rising employee health-care costs and an independent audit of related payments.

Trustee Joan Malczewski told the board the audit "confirmed there was no evidence of malfeasance" and described a December appropriation of $1.4 million to cover an interim shortfall so employees would not face immediate financial harm. She framed rising health-care costs (which she said accelerated after COVID) as a structural problem confronting many districts.

Trustee Howard Hills and others disputed that framing and emphasized passages in the audit that characterized certain payments as not done "in accordance with the collective bargaining agreement" and in some respects "unlawful," and they said the audit recommended legal analysis and possible referral to authorities. Hills cautioned that board members and the public should not conflate absence of proven criminal conduct with the audit finding that procedures were inconsistent with policy or agreement language.

Trustee James Kelly and others said the conflict and public attention are harming morale and urged focus on students and staff. The discussion also included exchanges about whether prior boards or administrators fully disclosed budget implications when votes were taken and whether the current board was adequately informed at the time votes were made.

No formal board action on the audit or legal referral was taken at the meeting. Trustees said they had already authorized follow-up reviews and, in some cases, referral as needed. The board instructed staff to continue working with auditors and legal counsel to clarify the factual record and next steps.

Board members also debated communications and public framing for these financial issues, with several expressing concern about how the subject had been discussed publicly and the effect on staff and community trust.

Next steps: the board directed staff to continue coordinating with auditors and legal counsel; trustees asked to receive clarifying materials about the audit findings and the timeline of budget decisions.