State officials are investigating whether the Val Verde school district gamed the system that parcels out construction funds.
A top official at the state's Office of Public School Construction said her office was looking into whether there were any "material inaccuracies" or false certifications in the paperwork the Perris-area district submitted in recent years to get financial aid to build its schools.
Kathy Hicks, the agency's chief of program services, said she was also examining whether Val Verde officials had violated regulations by making significant changes to state-approved projects -- such as adding weight rooms and artificial turf -- without approval from state architects.
The district took a hit Wednesday, when the state panel that doles out bond funds voted unanimously to remove the district from the state's financial hardship program. Under the program, the state has paid the entire cost of nearly two dozen district building projects. Most districts receive just 50%.
Val Verde got into trouble by independently borrowing $89 million to cover cost overruns on state-funded projects.
District officials said they had to borrow the money because state grants were inadequate. But officials criticized the district's spending on locker room whirlpools, large weight rooms and elaborate sports stadiums.
The State Allocation Board, which oversees the distribution of school construction money, ruled this week that the funds Val Verde borrowed should have been deducted from the aid that Val Verde was getting from the state. In at least one instance, the district also failed to notify the state that it had borrowed some of that money -- one of the issues under investigation.
"They are no longer eligible to participate in the [financial hardship] program," Hicks said. "They have too much money."
Supt. C. Fred Workman said the State Allocation Board's action meant the district must now delay the construction of at least two projects -- Southeast High School and Perris West End Middle School -- as it scrambles to find money to pay its 50% share of new construction.
The delay will lead to major overcrowding at Rancho Verde High School, Workman said. The school is already exceeding its 3,700-student capacity and is expected to have 6,000 students by 2010. The school is already using 45 portable buildings, he said.
"The growth is not going to go away," Workman said.
This month, the district sued state officials in Riverside County Superior Court, contending that state grants were inadequate and that schools in financial hardship should get enough aid to build schools equivalent to those in wealthier districts.
"We don't believe there was any material inaccuracy" in the financial records presented to the state, said Jonathan Mott, the school district's attorney. "It's a distraction to the board from the real issue that Val Verde is bringing up, which is that state grants are inadequate."