Mountain View Whisman School District officials in March warned that the district was heading into deficit spending over the next few years, eating up nearly $9 million in reserves to offset growing costs between now and the end of the 2019-20 school year.
But it turns out that the gloomy forecast was completely off. A series of accounting errors recently discovered by the district's financial team revealed the school district had overestimated costs and under-counted money coming in, causing a cascading effect on each subsequent year's budget projection. The end result is that the school district is back in the black, and has close to $9.6 million in money district officials thought they didn't have.
In an email to parents on May 31, Superintendent Ayinde Rudolph said the district had errors in its calculations during a review of the budget in March that "led us to believe that the district's financial picture was worse than it is." These errors, described as "miscalculations" related to programs and curriculum spending in the 2018-19 budget, extending into future years and projected that the district would be deficit-spending to the tune of $4.9 million by the 2019-20 school year.
The letter, sent shortly before the May 31 school board meeting, states that lessons have been learned from the budget snafu, and that all of the adjustments since the March budget have shown only "positive results" -- ramping up revenues and and decreasing expenditures for each year.
"The cumulative effect is that we will save $1.6 million this year, which will carry forward," Rudolph said to parents in the email. "As a result, where we were once looking at a $5 million deficit in 2020, we will now be operating in the black for the next three years."
Over the course of three years, starting with the 2017-18 school year, district officials originally projected that the school district would be receiving a grand total of $220.7 million in revenue. This number failed to capture an extra $4.16 million in increased revenue, donations and special education funding provided by Santa Clara County spread out across three years, according to a district staff report.
Expenditures, which were expected to total just under $230 million over the same three-year period, went the other direction -- money was budgeted for staffing positions that were never filled and the creation and expansion of summer and after-school programs that were no longer planned. Total spending between 2017-18 through the 2019-20 school year is now projected at $224.4 million.
For the 2017-18 school year, drawing to a close at the end of the month, that means a radical shift from $874,000 in deficit spending to $800,000 in surplus cash, adding up to a delta of $1.67 million.
Although the school board was immediately briefed about the accounting errors, Rudolph told the Voice that he felt it was important enough of a change that he needed to notify the entire school community in a letter, particularly when budget projections radically change over the course of a couple months.
"When you see that we were $800,000 in the red and then that moved to $300,000 in the black (next year), you know that type of swing justifies an explanation," he said. "So we felt that the best thing to do was simply say, 'Hey, this is what happened.'"
At the May 31 school board meeting, Chief Business Officer Robert Clark told trustees that there was a 2018-19 budget document he called an "internal working copy" that was inaccurate, prompting a full months-long investigation that went line by line through the budget, looking at each program run by the school district.
What they found, Clark said, was a series of unspent curriculum and personnel costs totaling $1.4 million for the 2017-18 school year alone, which grew to an estimated $2 million in the erroneous 2018-19 budget back in March. He said the individual adjustments could be fairly small -- like budgeting for a full-time staff member for the year who actually starts in October or leaves early -- but it added up to a significant amount. Along with over-budgeting for certain academic programs, Clark said the district is in a much healthier financial position than originally anticipated.
"It was a sizable savings to the overall budget in the actual impact for the three years," he said.
The fixes to the budget are unlikely to change anything in the immediate future. Rudolph said the many adjustments to the budget in May will not trigger a bunch of new spending plans or alter the district's previous decisions to eliminate vacant positions or delay projects that don't directly relate to students. Big-ticket expenditures for the upcoming school year, like co-teaching at Crittenden and Graham middle schools and implementation of the new middle-school schedule, were not added or removed during the in-house audit of the budget.
Rudolph told parents in the letter that the district office will be working on its bookkeeping practices to make sure budgets are efficient and accurate in the future, and will double down on its commitment to catch errors before they start to affect school operations.
"I will be working closely with business services to ensure that errors like this are not only caught before we start making plans, but also dealt with in a clear and transparent way," he said.