Independent investigation finds no evidence of fund mismanagement in Tumwater Schools
.JPG "Tumwater School District Building on Thursday, April 14, 2016.")
When Superintendent Sean Dotson announced last summer that the Tumwater School District was implementing an emergency hiring freeze due to unforeseen budget shortfalls, many people looked for someone to blame.
Once the 2021-22 school year started, it still hadn’t been made clear how large the budget shortfall was. Then on Oct. 21, district leadership sent a letter to Dotson about his performance and culture concerns within the district. The letter states that his lack of leadership has “resulted in a toxic culture district-wide carrying negative consequences to the students and staff we serve.”
District leadership included 25 responses from administrators and supervisors. Many of those responses blamed Dotson for mismanagement of district funds, among concerns.
The district then hired Wayne Leonard, a consultant through Educational Services District 113, to conduct an outside, independent investigation into the emergency hiring freeze and the rumor of mismanagement of funds.
Superintendent Dotson spoke about the review, which has been published on the district’s website, the Tumwater School Board meeting Thursday. In the report, Leonard says, “No mismanagement of funds was found.”
Instead, Leonard blames the district’s problems mainly on a lack of communication and follow up on district planning. But that doesn’t mean there aren’t consequences and cuts still to come.
Problems stretch back a decade
Leonard provided further background information in the report to show how he came to his findings, which stretches back to the implementation of decisions made in the 2012 lawsuit McCleary v. Washington.
In short, the lawsuit was filed on behalf of two families against the state of Washington for failing to meet its constitutional obligation to amply fund education. The King County Superior Court sided with the families, followed by the State Supreme Court.
In 2013, the state Legislature raised school funding 11.4% to $15.2 billion. However, Leonard says in his report, the state also put new limits on local school district levies and raised state taxes to pay for the McCleary decision.
“This change had wide and varying impacts, negatively affecting many districts that had higher levies, including Tumwater, having little to no effect on others and actually benefiting many districts,” the report says.
Leonard says many districts have balanced their budgets by reducing programs that were typically funded by tax levies. But Tumwater avoided making those cuts by using reserve funds and COVID-19 relief funding over the past few years.
The use of these emergency “rainy day” funds combined with a teachers strike in 2018 that substantially raised salaries, as well as the retirement and hiring of a new superintendent and many challenges of the pandemic left little room for budget or staffing cuts.
Similar to many districts in the state, the pandemic resulted in a significant enrollment decline in Tumwater, which affected state funding by $1.8 million. Then came the 2021-22 school year and more federal relief funding. According to the report, the district decided to expand the Tumwater Virtual Academy in an attempt to recapture students who might have moved to different districts.
Here is where the communication gets wonky, Leonard’s report says.
Somewhere along the way, district leaders decided the online program could be expanded without hiring additional staff, and instead having some staff reassigned. Some analysis showed the district had a surplus of staff, following the decrease of more than 200 students. But Leonard says that decline spread across all the schools in the district wasn’t enough to warrant reassignment and risked not having enough staff in person.
The district hired more staff to keep the online program running, Leonard wrote. But it’s unclear whether this was communicated between the Human Resources department, the leadership team and the business department.
When salary and expenditure reports were filed, the numbers were much higher than anticipated, the report says. The district’s balance had dropped $2.3 million in 2021 after expenditures exceeded revenue.
“The resulting hiring freeze surprised many but is certainly not an issue of mismanagement of funds,” the report says. “The freeze is a symptom of larger issues of communication within the district.”
What happens now
According to the report, the district’s finance director retired since the hiring freeze and a new one has been hired. There are still discussions about budget cuts, but it’s unclear just how much and where the cuts will be made.
The district has a goal of keeping a minimum of 4% of revenue by the end of the year, and the district was still within that in 2021 at 6.3%. But that becomes more complicated once you factor in that the regional Skills Center takes a portion of that balance, which isn’t currently seen as its own entity financially.
Tumwater also is dealing with declining revenues from the state and levies. According to Leonard’s report, Tumwater’s local levy and levy equalization is about $4 million less annually since the McCleary decision. It’s a constant game for the Tumwater School District to get ahead of its expenditures, the report says.
Leonard ends his report saying it’s time to realign the district’s staffing and budget expenditures with state and local revenues.
“Further reductions to the fund balance will leave the district vulnerable to any and all economic shifts,” he says. “Rebuilding the reserves will be easier with the economy doing well and state and local resources in good shape.”
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