Let's Check Their Math

The Seattle School District claims black ink is back. Inspired by a persnickety watchdog, we find that's only sort of true.

Just in time for the election, the Seattle School Board and newly named Superintendent Raj Manhas announced the district has gotten past its financial crisis and is now in the black. But schools watchdog Chris Jackins still finds himself in the dark. Has the district, he wonders, truly climbed out of what now turns out to have been a $38 million deficit it created while asleep at the wheel year after year? And are public officials being up front with taxpayers?

He has good cause to roll his eyes.

Early last year some district officials discovered that other district officials had somehow sneaked two "balanced" budgets past the School Board that in fact were millions out of whack. The 2001-02 budget was $24 million in the red (not $21 million, as the district earlier reported), according to the latest accounting. The 2002-03 budget was overspent by $14 million. No one but the chief financial officer, who allegedly covered over the deficits, seemed to have been aware of the ongoing crisis. Then-Superintendent Joseph Olchefske supposedly first discovered the overspending last summer and waited at least three months to publicly reveal it.

He and Manhasthen the chief operating officerand the board approved giving former chief financial officer Geri Lim $53,000 in cash and benefits and quickly pushed her out the door with a confidential agreement. She has not publicly spoken since.

The board, whose mission includes watching over the district's dollars, claimed ignoranceand who would argue with that? Directors knew nothing about computer systems that were $7 million out of sync, a $5 million deficit that was buried year to year, or a $2 million economic shortfall. All this happened after six straight years of critical audits by the state auditor. Yet the board did little to repair its accounting lapses.

SO WHEN THE district this month said it went from red to black, Jackins, a regular at board meetings, was among the doubters. As coordinator of the Seattle Committee to Save Schools, he takes the time to plow through district finances and arcane documents to verify official proclamations. His microscopic analyses even turn up spelling errors and misplaced decimal points. After reviewing the latest documents, Jackins wondered:

*If money was being shifted around to create a favorable impression. That's possible, since the district has two major budgets, one for operations ($437 million) and another for capital investments (about $150 million).

*If the cost of the new district headquarters was being understated in the budget process.

*If some board members had misled the public about other building costs.

HE LAID ALL THIS out in a detailed letter to the board and school officials on Oct. 12. He asked the district to clarify those issues for the public. He hasn't received a reply yet. So we asked, too. And here are the answers. Yes, yes, and yes:

*To balance its 2001-02 budget, the district borrowed $10 millionfrom itself. Finance director Steve Nielsen says that in addition to millions of dollars in staffing and other cutbacks to balance the budget, the district loaned itself $10 million from an energy-retrofit loan repayment fund. "We have to pay back that $10 million by the end of fiscal year 2007," he says. Additionally, district facilities director John Vacchiery says the district borrowed $4.1 million from the capital budget to help balance the general operating budget. That must be paid back "or we won't be able to complete some of our [school building] projects," Vacchiery says. Thus, the district and the board can say they're in the black today. But they got there, as Jackins suspected, by borrowing against the future.

*The supposedly $54 million new school headquarters in SoDo actually cost $104 million, the district confirms. Officials just prefer not to mention the $50 million in loan interest that taxpayers will be paying over 25 years. Originally, the building was to be paid for by the savings and income from consolidating operations. Now it won't be. The rosiest projections leave the district $33 million short, and Nielsen candidly admits that such estimates are "nonscientific." Conservatively, the loss will eat up more than $1 million annually the district had promised would go to classrooms. That miscalculationwhich is not necessarily the fault of former CFO Limhasn't been clearly cited as one of the reasons behind the budget hole and the subsequent borrowing.

*The district's Building Excellence I program to build and renovate schools will end up with about a $5 million deficit, Vacchiery confirms. That's also what it says in documents Jackins obtained in January. Yet some district and board officials claim the program is on budget. In a March op-ed piece for the Seattle Post-Intelligencer, board President Nancy Waldman and Vice President Steve Brown said the program was "on time and on budget" (with "modest allowances"). Board member Barbara Peterson said building programs should "continue" to come in "on time and on budget" in her re-election statement published in The Seattle Times in September. How could they make the on-budget claim? We asked Vacchiery. "I won't comment on that," he answered.

Vacchiery paused and added: "I guess it's subject to interpretation. But the bottom line is, I've been reporting this [$5 million overrun] pretty consistently. Nobody was hiding the ball. I have to say, Mr. Jackins probably has as good [financial] records as I have on it. Mr. Jackins is very accurate."

A quick bow, Chris. Now get back to those decimal points.


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