June 19, 2024

School district’s former financial officer increasingly blamed for deficit as angry parents ask who’s responsible

Parents and teachers got their chance to ask often angry questions about the surprising $9.5 million deficit facing the Juneau School District during a public meeting Thursday night. Some answers by leaders — such as closing schools starting this fall to cut costs — may not have made the questioners feel better.

However, as the question of “who’s to blame” gains prominence, some officials are beginning to make comments implicating the district’s former director of administrative services Cassee Olin, who resigned on Dec. 1.

At the time the district was expecting as much as a $7 million deficit, but a subsequent examination by a newly hired financial expert a few weeks later revealed the larger gap, due to what was called a series of significant accounting errors in projecting both income and expenses. An audit presented shortly before Olin’s resignation had also cited numerous substantial flaws in practices during the previous two fiscal years.

“Just to be blunt we were appallingly poorly informed about our budget projections, both revenues and expenditures last year,” said Deedie Sorensen, president of the Juneau Board of Education, during Thursday’s meeting in the Juneau-Douglas High School: Yadaa.at Kalé auditorium.

The board’s finance committee chair, Will Muldoon, “actually had to fight to get at the numbers” to sort them out, she said.

“Most of the rest of the board members relied on the professional expertise of our financial officer, much to our detriment,” Sorensen said. “So as to why we’re here, that’s one big piece of why we’re here.”

But it’s not the only reason, she added.

“The other piece of why we’re here is it has been very difficult for the board to accept that in Juneau our school district is shrinking,” Sorensen said. “And so we have not been as prudent as we should have been in projecting the number of students that we would have. However, that’s not the biggest piece of our problem. The biggest piece of our problem was bad bookkeeping.”

Juneau School District Administrative Services Director Cassee Olin (center) appears with Karen Tarver (right), an auditor with Elgee Rehfeld, to discuss an audit of the Juneau School District’s previous fiscal year with the Juneau Board of Education on Nov. 14, 2023. Olin resigned from the district as of Dec. 1. (Mark Sabbatini / Juneau Empire file photo)

Juneau School District Administrative Services Director Cassee Olin (center) appears with Karen Tarver (right), an auditor with Elgee Rehfeld, to discuss an audit of the Juneau School District’s previous fiscal year with the Juneau Board of Education on Nov. 14, 2023. Olin resigned from the district as of Dec. 1. (Mark Sabbatini / Juneau Empire file photo)

Attempts by the Empire to contact Olin have been unsuccessful. Officially, school board members and district Superintendent Frank Hauser have not commented on the reason for Olin’s departure or her role in the financial crisis, citing confidentiality regulations involving personnel.

But the implied comments are getting increasingly specific since the full magnitude of the district’s deficit was presented to leaders two weeks ago.

“I think we need to find a good CFO to prevent this from happening” in the future, said board Vice President Emil Mackey, putting a slight emphasis on the word “good,” in response to a question from an audience member. “Last year we actually wanted to hire a deputy. I really wish we did, because we probably wouldn’t be sitting here in this debt if we had.”

The district is expecting about $76.85 million in operating expenses for the current fiscal year ending June 30, plus about a $1.9 deficit remaining from last year — a total of $78.75 million — but only about $69.25 million in available revenue. Mathematically, it would require immediately cutting spending more than 25% between now and the end of the fiscal year to have a legally required balanced budget.

Audience members at Thursday’s meeting, in addition to seeking clarity about the situation and its impact on schools looking ahead, also questioned how the escalating series of errors and debt managed to elude the notice of school board members, auditors, and current and past top administrators.

“What I’m hearing allegedly is that the incompetence of one person could cause such a deviation from the budget,” said Aaron Spratt, a former school board candidate and frequent critic of the district’s policies. “I think many of us want to know what has Mr. Muldoon’s finance committee been doing? Is there no oversight here?”

Cindy Fuller, who said her children both attended public schools and were homeschooled, said she’s seen ongoing problems with inefficient spending on public schools relevant to results.

“Fixed your education, you’ll raise your student enrollment and you won’t have a budget problem,” she said. As for the current crisis, “Who’s accountable to the budget problem? Are there suits being filed? Is anybody fired? It was my money. And it’s my children.”

Kate Hudson, a parent of a JDHS student, said there is “just a little bit of confusion about how we’ve got from the past few years of ‘yes, it’s a struggle, finances are tight’ to suddenly ‘oh my God, we’re in this complete hole.’”

“I don’t really understand why there has not been a transparency around that really,” she said.

On that note, Hudson said she wants more clarity from district leaders about is going to happen.

“You’re making it sound very severe, which is fine, if that’s what needs to happen,” she said. “But let’s know what it is. Let’s hear what are you saying: are schools going to close? Are teachers going to be sacked? Are teachers going to be told they need to take retirement?”

Mackey told Hudson and other attendees “yeah, we’re going to have to close some schools” beginning with the coming school year. He offered as a concept an idea he first suggested a year ago.

“The concept, basically, was this: close down one school downtown — probably Marie Drake — close down one in the valley — it could be one of several — (and) move sixth grade back to elementary school,” he said. Elementary schools would then be split into grades K-3 and 4-6 facilities.

“By doing that we eliminate several problems,” Mackey said. “First of all the duplication of resources across schools are reduced. You don’t have to have as many office staff. You can eliminate some of the principals, which we have retirements and transfers of principals every year. Those administrative costs go down without ever touching the actual education in the classroom.”

Also, more densely packed schools means class sizes will be more balanced, rather than having some with many students and some with few Mackey said.

In addition to the elementary consolidation, all students in grades 10-12 could be consolidated into Thunder Mountain High School, with ninth graders placed in middle schools, he said.

Hauser, reiterating a presentation he made to the board Tuesday, said a series of short- and long-term actions are being evaluated — and some have already been implemented. At Tuesday’s meeting the board approved a hiring freeze, limits on travel and summer programs, and other immediate cutbacks intended to save about $350,000. He said he’s seeking $1 million in such cuts by June 30.

In addition to school closures and consolidation, Hauser said another significant long-term cost savings is increasing the student-teacher ratio by a few students per class. A four-day school week is another possibility, as is eliminating non-required courses such as Advanced Placement classes.

District officials, responding to questions both from the meeting and asked of them during the past two weeks, also noted:

• Auditors presenting a review of the district’s budget that found faults were looking at the past fiscal year, which ended with a $1.9 million deficit, not the current year which is projected to have a $7.6 million deficit.

• The district generally cannot accept donations or other monies for instruction purposes, which would violate state and federal laws related to districts getting equitable levels of funding. However, funding for some purposes such as athletic travel does occur and officials are examining options for whether entities such as the city can pick up certain non-instructional costs.

• Cutting district-level administrators rather than teachers to save costs isn’t practical or financially meaningful since there are relatively few such employees in a district where nearly 90% of the budget is spent on staffing. Consolidation will reduce overlapping administrative jobs at those schools.

• The district is required to have a balanced budget for the current fiscal year and pass a balanced budget for the next fiscal year. However, the state has declared it will allow the district up to five years to pay the current projected debt and the board on Tuesday authorized Hauser to explore options for a state-approved loan to help resolve the immediate crisis.

• A new budget newsletter that will be updated after each budget meeting is being published by the district, according to an announcement posted Friday at the district’s website.

• Contact Mark Sabbatini at mark.sabbatini@juneauempire.com or (907) 957-2306.

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