Sunday, October 30, 2011

Seattle Schools This Week

A quiet week in the district but it may be the quiet before big events/news pop up.

Wednesday, Nov. 2nd
Board Work Session on Demographics and Capacity Management from 4-5:30 p.m.   There are no agenda or presentation materials attached to this at the website but I will keep checking back. 

School Board meeting from 6-9 p.m.   A previous thread went over some of the agenda.  This will be the last School Board meeting before the election.  At the next School Board meeting on Nov. 16th, one or more directors could be lame ducks.  (Generally, the new directors, if there are any elected, are installed in early December.) 

Thursday, Nov. 3rd
LGBT Families Dinner from 6-8 p.m.  at the NOVA/SBOC (Meany building) at 300 20th Ave E.  All District families and staff are welcome to attend.   Dinner and entertainment will be provided through community donations.  Please RSVP to Lisa Love at the Health Intervention Office at 252-0982 with the number of people in your party. 

Saturday, Nov. 5th
2011 Seattle National College Fair from noon to 4 p.m. at the Washington State Convention Center.  Admission reps from many colleges and universities will be there to answer your questions as well as workshops. Here are some  FAQs about the fair.   Contact Janet Blanford, Coordinator, College &Career Readiness, 252-0184 or jlblanford@seattleschools.org.  

Also, just a heads up.  Besides the outcomes of the elections coming up next week which are big enough news in themselves, there is a bit of irony - Potter and his alleged co-conspirators are to be arraigned November 8th as well. 

And that "missing" money from the sale of district property in the early '2000s?

I did finally read the district's "status report" that was presented at the Oct 13th A&F meeting.  Not clear and, by cross-checking with news reports from that period, there seems to be some confusion/discrepancies over dates and amounts of sales.   I thought it was more than just a few misplaced documents to locate. 

It would be great if the district could fully document, in a linear and detailed manner, where money from the sale of district properties has gone over the last 10 years, how much of the JSCEE building has been paid off and how much is left to pay (not to mention what the remainder will be paid off with).

Chris Jackins was the early warning watchdog on this issue and I always thought that building - at $54M - was a bit of an albatross around the neck of the district.  It was always "we'll save money" on this building and on school closures and yet no one has ever documented that claim.


Carol Simmons said...

Does anyone know if the District ever found the lost twenty million dollars?

mirmac1 said...

When are they going to begin posting the 2011-2012 committee meeting minutes? C'mon, it's the end of October!

mirmac1 said...

Oops, clicked on the wrong link. Better put my specs on!

Dorothy Neville said...

Carol, once again, there is no missing 20 million dollars. The issue is that the accounting for paying the JSCEE bonds has been less than transparent. Like the epitome of less than transparent.

Mel, is that status report available on line? I can't find it. Perhaps you could share so others can read. If not, I might be able to scan my copy and post.

Yes, it is incomplete and I was frustrated with the narrative format that hid the incompleteness. But it is a start and the staff has promised that an audit of the funds (debt service, capital eligible and community schools) is in the works. As someone who has done some accounting, I am sympathetic to the fact that this forensic accounting cannot happen overnight. None of the senior staff has been around that long so its a puzzle (it shouldn't be, but it is). And staffing is reduced and there's current financial work to do, including closing the books on the fiscal year that just ended. Although it may be slower than you would like, they are doing exactly what you want.

The problem is not a few misplaced documents and I never said it was. The problem is that the accounting transactions are not easy to search and need to be gone through by hand to tease out what went where. That's for ten years, one hundred and twenty months worth of transactions. This includes all the sales, the rental income, the bond payments, other payments, and all the internal borrowing from the funds to pay for other things.

Dorothy Neville said...

Actually, let me be clearer with what I mean. There are several problems relating to the bonds. This will lead to outrage and frustration, but not 20 million missing dollars. The outrage and frustration will be because it will finally be apparent that SPS has needed to and perhaps will continue to pay for the JSCEE bonds with BTA or BEX dollars --- dollars that voters approved to pay for schools, not for administration.

This will also daylight that there is a fund set up to pay for deferred maintenance, but so far we haven't used it for that purpose much at all. Instead it's been paying for all the portables recently installed and the rest of the money has been borrowed to reopen schools. We should get that back in 2013 (with interest) when we get capital levy payments, but all that means is deferring maintenance even more.

Melissa Westbrook said...

Dorothy, I have no idea why you think anyone said you said there were misplaced documents. I didn't. I think it is nice that you are being so patient.

The issue is that Director DeBell has been asking about this for at least 2-3 years. Ron English, the Property Manager, should be able to tell anyone, in detail, when a property was sold, exactly how much, where the funds were deposited, and where the funds where moved to when they were used for district business.

That the staff's narrative does not follow what they told the Times - on various points of fact - when these properties were sold and the JSCEE came into existence - is troubling.

I don't care if this leads to a conclusion that funds were misused, not all accounted for properly or frustration. I just want an understanding of how we paid/are paying for the JSCEE because it may impact coming issues like capacity management and long-ignored issues like deferred maintenance.

Maybe the State Auditor would be interested.

Melissa Westbrook said...

This is not rocket science.

mirmac1 said...

If SPS uses anything more than a handwritten accounting ledgers (and I suspect they do), then each transaction is coded by fund, account, encumbrance/expenditure and capital or expense. Thus information is readily retrievable. if not, then more heads should roll.

As private citizens, we can't run our household finances off huge credit lines like deferred maintenancee and capital bond levies. Why should highly paid administrators be allowed to borrow against the integrity and safety of the buildings our children occupy every school day?

Melissa, the new internal auditor and two assistants should start earning their keep and attack this matter as a high priority. I think the State Auditor needs a vacation away from JSCEE.

dan dempsey said...

In regard to (Generally, the new directors, if there are any elected, are installed in early December.) ...

Installation could be at the November 16 Board meeting.

Back in November of 2007 the four newly elected Board members were letting MGJ know that Supervising her was not much of a concern.

Document of November 28, 2007 is HERE. .. Affirmation of Responsibility.

dan dempsey said...

Notice that on Nov 28, 2007 the Board planned not to supervise much. ... Last Board meeting in a one meeting intro/action on October 19, 2011 the Board did it again.

This time instead of an Affirmation of Responsibility they decided a list of 20 goals was a suitable evaluation instrument for the Superintendent.

These folks clearly are incapable of reading the State Auditor's report released on July 6, 2010 and making an intelligent decision.

SAO stated:
Our audit found the School Board and executive management must improve oversight of District operations.

To improve oversight ... the Board needs to have something more than 20 goals masquerading as a superintendent evaluation instrument.

Dorothy Neville said...

Election won't be certified in November 29th at the earliest.

As for head's rolling with the complicated accounting, yes. But who? We already got rid of Kennedy and the others in charge of facilities and only recently has accounting all moved under one umbrella.

Remember that the two assistant internal auditors won't be on board until January. Medina has a lot to do. Duggan and Bob have promised a forensic audit of the funds, which includes more than simply uncovering the bond payments. The state auditor or anyone, for that matter, simply cannot get the information any faster. I am impatient too, but practical.

Chris S. said...

Ron English? Is he a problem or a guy doing his best in a bad situation? Is he worth keeping for institutional knowledge?

Melissa Westbrook said...

Mirmac, they keep saying there are 2 people to work with the Internal Auditor. They have still not been hired.

Chris, you ask a very interesting question but I will keep my own counsel on that one. Let's just say that Mr. English has HUGE institutional knowledge of SPS history both good and bad and has been witness to many incidents and issues.

mirmac1 said...

Patience is NOT one of my virtues. The nice thing about accounting is, it should be like math. Follow the rules and you get to an answer. As a public agency, SPS must follow generally accepted accounting practices set up by the Governmental Accounting Standards Board. There should not be wiggle room for interpretation.

After observing this year's budget development cyle, I'm not surprised SPS claims ignorance. Many of their methods seem calculated to obfuscate use of monies. That leaves $1.8M holes for Potters to slip through.

Jet City mom said...

Mr. English has HUGE institutional knowledge of SPS history both good and bad and has been witness to many incidents and issues.

No doubt.
But speaking out is not his forte.

TechyMom said...

"The nice thing about accounting is, it should be like math. Follow the rules and you get to an answer."

But, SPS doesn't think math is like this at all. First you have to talk to your friends and derive your own rules... then you guess and check with your calculator. Perhaps they use constructivist accounting?

Sharon Peaslee said...

A few of us have been looking into the missing millions and will be posting info as we get it. It's true that $20m was used to pay off the B bond. But what's still missing is $8m from the $28m+ that came from the sale of 4 buildings. If you listen to the KUOW interview, Peter Maier said the $8m was put in CEP account. However, this is highly questionable and cannot be verified. Another point, the $20m that was used to pay off the B bond was intended to be used to pay it off over a 10-15 year period using the interest. Some of it was intended to also pay off the A bond of $30+m. Now that the principal has been spent there's no plan in place to pay off the $30m A bond, and the payments will have come out of money intended to be spent re-opening schools. So this will be delayed with more portables and capacity problems.

Sharon Peaslee said...

I would like to add another point of correction to something Peter Maier said at a recent candidate forum. I stated that schools with less than 55% students on free and reduced lunch get no Title 1 funds because the district has set this as a threshold. Peter stated this to be false and went on to give a completely incomprehensible explanation of how Title 1 funds are held back, flipped and flopped, then finally given out to Level 1 and 2 schools. Even if you could follow his explanation he was wrong. The district has a 55% threshold on Title 1 funds. It's understandable that Peter would want to deny this, but the fact is it's district policy set by MGJ and must be changed so that Title 1 funds follow the students they're intended to help.

RosieReader said...

"The nice thing about accounting is, it should be like math. Follow the rules and you get to an answer."

There's a lot more discretion in accounting than is suggested by this statement. That's why it takes years to master. Even in simple bookkeeping there's a reasonable amount of discretion.

Dorothy Neville said...

Sharon, can you link to the document that says the sales were 28 million? The A&F status report shows the sales were $21.9M. The original board action report predicted that sales would bring in about $19M.

The bonds that were retired in 2004. Are you saying that we should have kept the principal and used the interest to pay the bonds? Wouldn't we have paid a lot more interest on those bonds by keeping them longer? I suppose that depends on what the interest rate we could get vs the interest we were paying on the bonds. Do you know what they were?

The real source of paying for the bonds is rental income, but someone, Kennedy or Manhas or someone, started transferring half of that revenue to the general fund. What the further investigation will show is if the rental income is enough to cover the bonds or not. If not, we will have to find the money elsewhere.

Again, house of cards. The rental revenue that was moved to operating was unsustainable (given that it was improper to move and needed for the bonds) so once again, things looked OK from the surface downtown money-wise, but that's all collapsing now. No matter who is on the board next January, there is not a lot of magic that can be accomplished.

Dorothy Neville said...

Let's say the city did a crappy job building the road in front of your house. You complained for years as it got worse and worse. So the city finally fired all the guys in charge, put in a new team and they start to rebuild the road. And they tell you it will take a month. Well, is it appropriate to get angry at them, saying that a repair should be simple and take two days? So is it all their fault and heads should roll because they want to take a month? When really, yes, a simple repair on a well engineered road would have taken two days. But both you and this team know that the original wasn't well engineered. So do you want them to finish in two days anyway or do you want the job finally done right?

Melissa Westbrook said...

Considering the capacity management issues, it needs to be done sooner rather than later.

Chris S. said...

Dorothy, all I want is some reason to believe that all the upstream mistakes will not be repeated in the future.

Oh, WV is great - slymolab

Melissa Westbrook said...

Carol, the money isn't lost or missing. It's unaccounted for.

Is that better or worse, I don't know.

Should it be hard for a district to document when, to whom and and for much they sold a district property?

Should it be hard for a district to say where the proceeds were placed?

Should it be hard for a district to say how the money was spent and how much on what dates?

All this within the last 10-12 years?

And yet, apparently they can't. Or, maybe worse, they don't want to because there's something they don't want people to see (not illegal but probably not good).

At the end of the day, it's the public's money, money meant to help students in our schools. We need these capital funds more than ever.

I just don't think it's asking too much.

mirmac1 said...


That may be true in the private sector, ergo Madoff, however that does not hold true in the public sector. Otherwise, what would the State Auditor use as a guiding framework for its audit? And it is not like getting a leopard to change its spots. I am aware of a local agency with a much bigger budget that has made major adjustments to capital versus expense accounting, and allocation of overhead in the last year alone.

Federal laws and regulations have substantial impact on the private sector as well. For example, the Sarbannes Oxley Act led to considerably less "discretion" in corporate financial accounting.

mirmac1 said...


Using your crappy road analogy (the road is crappy, not the analogy), I would say if the city's Transportation Dept head changed (which it has, many times), but the road crew, inspectors, and QA/QC staff are the same, then I'll be moving to a new part of town.

Eric B said...

The materials for the work session will be posted Tuesday afternoon. Also, there's a FACMAC meeting Thursday Nov. 3 at 3:00. There will be a review of the demographics info in the first hour, followed by starting discussion of options to solve near-term capacity issues.

Charlie Mas said...

For the past several years, but particularly during Mr. Kennedy's time at CFO, the District transferred money betwen and among capital accounts very freely. Funds moved from CEP to BEX II to BEX III to BTA III to BTA IV and back again.

Any time the District needed a couple bucks for account A they found it in account B and transferred it right away.

I never heard anyone ever question the District's ability to track these frequent transfers. Nor did I ever hear anyone speak confidently about their ability to track them.

I thought all along that the District was creating an accounting tangle and, sure enough, they were.

I don't think the money is missing - that is, I'm sure the District has it somewhere (or has a receipt for how they spent it), but I find it totally credible that they cannot exactly account for it.

We can kvetch about how much time it takes them to write that accounting, but it will take some time. I've done this kind of work and it is more than just writing a query. The whole thing is exceptionally knotted and I can believe it could take a couple months to untangle it.

I'm sure that the folks in the JSCEE aren't just un-knotting the CEP account, but the various BEX and BTA accounts as well.

It's not that I want to be patient, or that I like being patient; I just accept that I will have to be patient.

Once again it appears that the District will be spending the next couple years undoing the mistakes of the past three years.

dan dempsey said...

"Once again it appears that the District will be spending the next couple years undoing the mistakes of the past three years."

While in pocket MGJ and Kennedy walk off with $363,000.

Melissa Westbrook said...

I'm not asking for this info quickly. I get the tangle. But given that DeBell has been asking for 3 years, I don't think it's asking too much. It has to get solved because the bonds still out on the JSCEE have to be paid and yet we have to find money for capital improvements for capacity management.

mirmac1 said...

Take a good look at MGJ's "improved" Superintendent staff procurement procedures, revised at the close of the Capitol Projects Performance Audit last winter. In the authorities matrix, page 5 to be exact, is a NEW provision to allow transfers within capital budgets without EVER getting approved by the Superintendent or Board. I complained vociferously at the time but neither the SAO, nor SPS cared a whit.

At this rate, they'll always have an excuse to claim ignorance.

BTW, managing capital project budgets is what I do.

Sharon Peaslee said...

In response to Dorothy's question, "can you link to the document that says the sales were 28 million? The A&F status report shows the sales were $21.9M. The original board action report predicted that sales would bring in about $19M." My info comes from a few sources. The $28m, which is approximate, includes Briarcliff ($6,911,363), Maple Leaf ($2,727,616) and Old Cooper ($487,236). The total with the other 4 buildings is $28,601,513.

In response to the question about whether or not the $20m should have been used to pay off the B bond, my understanding is that it was done contrary to the School Board directive that the interest be used to pay off both the B bond and some of the A bond over a 10-15 year period. And now that the $20m is gone the payments on the A bond will have to come out of capital money intended to reopen schools.

As I see it the problems are lack of transparency, muddled accounting, and poor oversight. Realize we still only have one auditor even though the incumbents are saying we have 3. The plan to hire 3 has been in place for some time and they should have been hired much sooner.

Dorothy Neville said...

Ah, yes. 8 million in sales of school buildings was not originally earmarked for the JSCEE debt. The status report claims that it was used to pay the JSCEE debt. Why do you say this is highly questionable? Do you have information that contradicts this A&F status report? If so, please share!

I am sure we are all eagerly awaiting the untangling.

As for the three auditors. I totally agree that the incumbents should not be saying that we have three. But I suspect reasonable people might disagree on whether the two assistants ought to have been hired by now. Medina needed some time to become familiar with the district and figure out a work plan. Waiting until after he has a work plan to hire his team seems like a reasonable cost saving measure. Yes, we are all impatient that a team of internal auditors uncovers every mess, practically speaking, it's going to be a long slow process. There is a lot to uncover.

Sharon Peaslee said...

Dorothy, My understanding is this is part of the investigation that Bob Boesche is undertaking. And you witnessed both Peter Maier and Sherry Carr vote to delay the report until November instead of October. Right? If you can get your hands on the CEP reports from the past 2 months you may be able to find out if the money is in there. Wish I could tell you more but I can't verify anything at this point.