In fiscal year 2002, the District’s administrative costs per student were 82 percent higher than the comparable districts’, primarily due to some higher-than-average salaries and excessive legal expenses. Other concerns related to the District’s contract with its superintendent, subsidies to a charter high school, failure to follow procurement rules, and inappropriate use of some district monies. The District’s food service program was self-sufficient. However, largely due to costly contract provisions and contractor overcharges, the District subsidized its transportation program with more than $49,000 from its Maintenance and Operation Fund. Plant operation and maintenance costs were higher than comparable districts’, primarily because of higher utilities and labor costs. Additionally, the District inappropriately used capital monies and lease proceeds to pay some operational expenses, which resulted in the District exceeding its fiscal year 2002 general budget limit by more than $295,000. After correcting for these and other errors, the District’s classroom dollar percentage was 55.6 percent, below the state average of 58.2 percent. The District’s Proposition 301 monies were spent appropriately; however, the District needs to clarify its performance pay plan and ensure the Governing Board approves it. Desegregation monies were spent to help students become fluent English speakers, and almost all expenditures appeared to be related to the District’s desegregation plan.