Area school districts caught in ESD funding dilemma
Fallout from audit of education service district blankets local education centers
By JESSICA KELLER
ARGUS OBSERVER
Sunday, November 9, 2008 12:30 AM PST
ONTARIO—An Oregon Department of Education plan to force school districts to repay funds they received through the beleaguered Union-Baker ESD has some area school officials more concerned than others.
Districts that contracted with the Union-Baker ESD to provide alternative high school programs are obligated to repay the funds to the state after it was discovered those school districts were overpaid.
The repayments revolve around a state-conducted audit of the Union-Baker ESD that concluded in 2007. At the conclusion of the audit, the state told school districts the ESD had misreported enrollment of students in 41 school districts it contracted with to provide alternative schooling, and the school districts would have to repay the state those funds that otherwise would be used elsewhere.
The Oregon Department of Education will start withdrawing funds from the allotted money that would normally be issued to area school districts beginning in January. However, area school districts that contracted with Union-Baker Education Service District for alternative school programs have filed appeals to the state in hopes of reducing or eliminating the amounts they owe.
Through its role as the contractor, the ESD kept track of enrollment figures, student eligibility and the hours students attended the different schools. The funds, however, initially went to the school districts, who forwarded 80 percent on to the ESD and kept 20 percent. Because the school districts were the “employer,” the state is requiring them to repay the bulk of $1.951 million.
Although the Union-Baker ESD has offered to repay a portion of the overall amount, area school district officials, however, contend the ESD should be required to pay more.
Unlike smaller school districts in the area, such as Huntington and Nyssa, Ontario School District is not as severely impacted by the repayment program.
“We’re a fairly minor player in it, but we have some in it,” Ontario School District Superintendent Dennis Carter said.
When OSD contracted with Union-Baker ESD for Ontario students to attend the alternative program, only the equivalent of five full-time students were involved. When the state issued its first repayment figure to Ontario, based on what it determined it overpaid for Ontario students, the cost came to be $27,988. Based on the figure Union-Baker has agreed to repay the state as a result of the errors — $256,000 — Ontario’s final number would be reduced to $24,883.
That, however, does not satisfy the school district and others who contracted with Union-Baker. Carter said Union-Baker ESD was responsible for submitting all the information about the students attending the alternative schools to the state, including how many there were. When the state calculated how much money each school district should get for the alternative school students, school districts received that money but sent 80 percent of that to Union-Baker ESD.
Carter said since school districts only kept 20 percent of the total amount some districts, including Ontario’s, contend they shouldn’t be responsible for 100 percent of the amount because they already paid 80 percent of their share to Union-Baker. Instead, officials assert, Union-Baker should be responsible for that amount.
Carter said, while he doesn’t know if all the school districts that contracted with Union/Baker have filed an appeal, many of them have, including Ontario. The Nyssa, Huntington and Vale school districts have also appealed. If the appeals fail, the school districts will then decide if they want to pursue legal action.
Otherwise, the state indicated to the school districts, they will start taking out portions of the amounts owed.
If everything fails, Ontario is not going to feel the bite as much, but Carter said other school districts stand to lose more.
“It’s going to be a lot bigger hit to some of the districts than ours,” Carter said. He said Adrian, Nyssa, Vale, Harper and Huntington all have larger amounts the state says they must pay back.
“We don’t like to lose $25,000, and we’re still continuing with our appeal, but if we lose, it’s not going to change significantly what we’re going to do,” Carter said.
The Huntington School District stands to take a tremendous hit should the Oregon Department of Education not grant its appeal. Huntington School District Superintendent Brian Wolf said he is very concerned about the potential long-term impact to the school district a negative ruling could have.
The Huntington School District stands to pay back up to $123,713 after the Union-Baker ESD’s commitment of funds. Before, Wolf said, it was $140,626.
“We’re in an era of declining enrollment and shrinking state fund support, and any additional loss of revenue is very damaging,” Wolf said.
The school district has already made significant cuts to its programs based on declining enrollment in the past year. Wolf said the Huntington School District slashed its vocational arts program, reduced librarian hours, dropped a school counselor position, dropped the football program for a year and cut back on custodial, maintenance, secretarial and food service hours.
Those cuts, Wolf said, brought the district’s ending fund balance to $183,000, when $300,000 is considered a reasonable safety net.
Repaying the state for the high school alternative program funding, Wolf said, will make more cuts inevitable.
“That’s about $12,000 a year,” he said. “Yeah, that’s a chunk of change. So that could translate to a part-time educational assistant or a part-time secretary.”
Although the state has given school districts five years to pay off the debts, Wolf said, in the district’s appeal to the state, 10 years was requested.
Nyssa School District Superintendent Don Grotting said, should the school district have to pay back the alternative school funds, the cost comes out to about $102,000, after Union-Baker’s commitment. He said, however, the school district has been budgeting to pay back the state, putting off maintenance projects, ever since the state’s audit began, in case it should become necessary.
“So the money’s accounted for. However, it would be nice for the Department of Education or Union- Baker ESD to do what, I would say, do what’s right,” Grotting said.
ODE Chief of Staff Ed Dennis said he is hopeful the ESD will offer more money.
“Really, they should be contributing $1 million to this, and frankly even more than that,” Dennis said, adding, however, the state can only hold the school districts accountable legally. “There’s nothing in legal statute to make Union-Baker ESD pay more, and there’s a limit to our persuasive powers when money’s involved.”
