Dates of six furlough days announced; hiatus will help balance budget

By Damian Mann for Ashland.news

An audit found “significant deficiencies” in the Ashland School District’s 2023 budget, such as failing to properly account for $677,841 in a contingency fund.

As a result, the Ashland School Board Thursday night passed a resolution correcting three budget errors that should have been addressed in 2024.

The audit, prepared by KDP Certified Public Accounts LLP, found year-end account balances in 2023 that weren’t prepared or reviewed properly, resulting in a negative balance, a violation of local budget law.

Internal controls did not ensure that calculations and expenses were reported accurately, KDP found.

The corrected budget will be forwarded to the Oregon Secretary of State.

Board member Jill Franko attempted to figure out how the error occurred in the contingency fund.

“I thought we couldn’t approve a negative balance,” she said.

Finance Director Scott Whitman, who will be retiring in February, said he’d reviewed the document but acknowledged the negative balance “got by me.”

The contingency dollars were not included in the district’s internal service fund, which created the negative balance.

Despite the audit findings, KDP stated in its Dec. 17, 2024, report that the district was in “substantial compliance” with laws, regulations, grants and Oregon Revised Statutes.

The audit recommends the district institute better internal controls that include having a preparer and reviewer of all accounts.

The audit also found other errors, including that the district improperly used bond money to fund a temporary cash shortfall.

As a result, the district’s use of the bond money is out of compliance with the bond agreement and Oregon Revised Statutes, according to KDP. The district has agreed to stay in compliance with the use of the bond money.

Another issue found in the audit was the failure to properly prepare records required for federal Title 1 grants, which helps school districts support low-income families.

Of the nine employees who were audited, two did not have the time or effort to warrant the payroll expense charged to the federal program. A total of $26,335 in costs to the federal program were questioned.

The district has agreed with the audit findings and will provide the correct documentation going forward.

Whitman on Friday said the corrected budget issues don’t affect the district’s budget shortfall issues, which will require cutting school days this year and other measures.

Going forward, he said, there are sufficient internal controls now that should prevent these issues.

Another problem raised in the audit was that the corrective actions for the deficiencies were not addressed sooner.

Whitman said he was aware of the deficiencies when the district had already entered the 2024 budget cycle.

“The resolution probably could have been identified and resolved sooner,” he said.

Whitman said the district has had staff turnover and has faced looming deficit pressures for the past three years.

A new interim finance director, Sherry Ely, will be taking over for Whitman and she has already been involved in figuring out steps to improve the finance department.

At Thursday’s school board meeting, Ely, who has worked at a number of school districts including in Grants Pass and Central Point, said she has developed a spreadsheet that she uses to keep track of a school district’s budget rather than relying on overly complicated third-party systems that track the budget machinations of schools.

Ely said that in her 30 years of working on school budgets, she hasn’t had any of these types of audit issues and she finds that her spreadsheet helps avoid any missteps in budget preparations. She said everyone makes mistakes, so it’s important to have proper controls in place in preparing budgets.

She said it will take time for her to analyze whether the finance department has adequate staffing levels and procedures to make sure any further budget problems don’t arise.

The district meanwhile has made headway in finding ways to cut $2.2 million out of its 2024-25 budget year, though more cutbacks are expected in the future..

Six days will be cut from the remainder of the school year: March 5, March 6, March 7, April 11, April 14, and June 2. It costs the district roughly $150,000 daily to operate the schools.

In the 2025-26 school year, no days are expected to be cut, though the district will likely have to make other efforts to deal with looming shortfalls.

To address this year’s $2.2 million shortfall, a number of measures have been taken, including field trips that are cost-neutral, reductions in contracted services and extra-duty contracts, spending freezes, and cuts to travel and professional development for administrators. These changes total $1,339,000 toward reducing the shortfall.

Districtwide, schools have already significantly reduced that amount of copies being made.

An anonymous donor has given the district $890,000 to help with the shortfall.

Joseph Hattrick, superintendent of Ashland schools, announced Thursday night that a collective bargaining agreement had been reached with the Ashland Education Association, which represents about 210 teachers and other educators in the district. A special session might be called next week to ratify the contract, he said. No details of the agreement were released.

Hattrick told the school board that the new interim budget director, whom he worked with previously, said the district is making strides to avoid any further audit issues and to get a better handle on the budget.

“A lot of the systems are in place for next year,” he said.

Reach freelance writer Damian Mann at dmannnews@gmail.com.

Jan. 15: Spelling of school board member Jill Franko’s name corrected.