Archive for Thursday, August 24, 2006

Letters to the Editor

August 24, 2006

(Editor's note: Following is a letter to the editor from former Baldwin School District Superintendent James White, which was sent to all school district employees. It is followed by a response from the school board's attorney, Bob Bezek.)
To the editor,

In my position as superintendent it has been my normal practice to refrain from responding to criticism in the newspaper, but I feel compelled to respond to the article and comments that appeared in the paper August l7,2006.

In response to the district budget, I want to add a different perspective for interested patrons to consider. The board met on June 26th to look at the final cash summary postings. At that time the board was told the Food Service budget was $100,000 over budget and the budget was republished. Since the cash summary was believed to be final, I moved some maintenance expenses to the Capital Outlay fund to cover the $100,000 the costs exceeded the budget. I was told several years ago, when budgets were extremely tight, by Dale Dennis the state finance guru, that expenses for maintenance could be paid out of Capital Outlay. I made those transfers on that authority. Then, as I was leaving the district for the last time as superintendent on June 29, the bookkeeper stopped me to inform me there was approximately $170,000 in hand written checks that had not been posted. Needless to say, I was shocked. I told her to get them posted and I would come back on Saturday to make necessary transfers to once again close the books. On Saturday, I asked the bookkeeper to transfer 10% of all custodians salaries to Capital Outlay, since 10% of their work would qualify as maintenance (the six weeks in the summer when they maintain the facilities and are not doing routine custodial work). Those transfers of maintenance expenses allowed me to reduce the expenditures posted to the LOB to the approved budget level. All other funds were previously closed out accurately. I have copies of those cash summary statements to verify what I have just explained. Yes, paying those maintenance salaries out of Capital Outlay reduced the Capital Outlay ending balance, and allowed us to finish the year within budget in the LOB. Other funds were not moved around at all. We ended the year with a total cash balance of $694,466 on the cash summary statement. The previous year we ended the year with a cash balance of $807,777 on the cash summary statement. That's a difference of $113,311. I suggest that the Baldwin school district is not "broke" and I am sure that the situation is not "dire." The district will need to request some additional state aid as I suggested to the board.

The bottom line is the board was aware that some funds and some budget line items were over spent, such as food service, as previously mentioned. Like me, they can only make good decisions when good data is provided. I passed on to the board the best data I had . If Mr. Dorathy called the former auditor and the state, with no success, to find out information on the budget why didn't he call me? It seems logical that I would be the person to provide answers to budget questions. I know at least one board member asked him to call me. I told him on several occasions when he visited the office during the spring, prior to taking over in the district, to call me if he had any questions.

The petty cash accounts for each building operated in the same manner as they had every year since I arrived and before. That operation was within guidelines provided by the state, and again I have documentation to support the process. If this a violation of state law, why hadn't district auditors in previous years not questioned the process?

The district had few credit cards and purchases on those cards were always supported wirh documentation such as receipts. I would be interested in how many is considered "excessive." Is there a standard or other criteria that states when you have this number of credit cards it will be considered "excessive?" Or is that just one persons value judgment? One card may be excessive if its use is not documented properly.

The Capital Outlay fund authority was approved in 2004, not 2005 as has been reported. The newspaper that publishes the legal notice provides a signed affidavit attesting they published the legal notice according to requirements listed on the public notice document provided by the state. Has that affidavit been located?

The budget shows an expense for gasoline. Districts receive no state aid for gasoline costs according to state budget documentation. I hope the auditor is not "working on something non-stop" that does not exist.

I don't understand the comment "they robbed Peter and the whole gang to pay Paul", is "they" a reference to the board and how much the board is paying Mr. Dorathy or something else, but either way it does not sound very professional.

I became somewhat concerned when talking to Mr. Dorathy on August 7 when he told me he had asked the attorney to talk with the editor of the local newspaper about what was going to appear in the newspaper. Mr. Dorathy informed me the attorney had developed a good working relationship with the editor. I was baffled. Why would the attorney be asked to talk with the local newspaper editor? Is someone trying to discredit my service to the school district?

Last September, Baldwin USD 348 was recognized by Standard and Poor's as one of 16 districts statewide for achieving quality education and using tax dollars efficiently. The local paper proclaimed "The School District Is Lauded." I am proud of the direction of the district the past seven years. I am proud of the academic accomplishments, student achievements, land purchases, facility upgrades and new building additions that have been part of my legacy. I wish Mr. Dorathy and the board much success in the years ahead. Those of you who know me, know I would do anything to help kids learn. That's the bottom line.

James White

To the editor,

I have been asked by Board President Alison Bauer to respond to the letter of Mr. White in which he comments on U.S. D. 348's current fiscal situation. After reading his letter I can easily agree that Mr. White's motives were to help children learn and that he has much to be proud of. No one has suggested otherwise. However, in his letter there are many factual errors and mis-statements that require immediate response. Perhaps most importantly, Mr. White states that the "district is not 'broke' and I am sure the situation is not 'dire.'" This conclusion is wrong. I hope the following helps explain my position.

1. The ending unencumbered cash balance of $694,446 may appear to be sufficient, but it is not. For instance, out of those funds you must subtract the bond and interest fund of $543,000, leaving a cash balance of roughly $150,000 to cover all of the other funds, hardly sufficient for this district. More telling, looking at the bills that we know are due before the first of the year and the revenues the district will receive in the same time frame, and adding in the amount of cash on hand (and paying the bond and interest payments), there is not enough revenue to pay the bills. In simple language, this is what "broke" means, and the situation is "dire."

This is also the reality that drives the need to pass and implement the capital outlay mill levy, and then to bond against it if necessary. The board's recently passed resolution will allow the district to meet its needs and help put the district on sound financial ground.

2. Generally speaking, the capital outlay fund is for building purchases and capital projects. Regular maintenance is not a permitted expense in this fund. The auditors found all of the maintenance and grounds personnel salary, approximately $162,000, allocated to the capital outlay fund. I do not contest that Mr. White told someone to put only 10 percent of custodial salaries in that fund, I only know what the auditor's found. Unfortunately, this was not the only example of expenses posted to the wrong fund. Since fund accounting requires posting the correct expense to the correct fund, and the failure to do so violates sound accounting practice and Kansas law, proper posting and regular over-sight are now priorities of Mr. Dorathy and the board.

3. Over $170,000 in hand written checks that were not posted, showing up on the last day of the fiscal year, is a huge problem. Indeed, the district auditors believe that well in excess of $170,000 showed up in the last days. The district's ability to accurately and timely account for fund balances, determine cash on hand and allow the board to appropriately authorize district expenditures depends on the use of the district's accounts payable program. Hand written checks bypass virtually all of the district's protections and should never be used. Previously, over 30 or 40 hand written checks were written each month. The use of hand written checks has stopped

4. While it is true that Mr. Dorathy did not call Mr. White in the last few weeks, Mr. Dorathy did call the previous auditors, the new auditors, the board attorney, the Department of Education and a host of others. Unfortunately, after some initial confusion the situation became somewhat clear, and the issue was not what happened -- a question Mr. White could assist with -- but rather how do we fix what we knew to be a real problem.

5. Petty cash was used in violation of the limits placed upon that account by the board, and was not a violation of state law, at least as far as I can tell at this point in time. State law does allow petty cash to be used for "emergencies'" and only the board can refill the petty cash fund. Over $75,000 was run through the petty cash accounts last year, well in excess of the board approved limits. Similarly, the district used too many credit cards to pay for too many items, with little oversight and predictable, unfortunate consequences. The petty cash procedures have been tightened so that the board will closely monitor these accounts, and credit card use has been stopped.

6. The resolution of the board for the capital outlay fund, passed by the board in December of 2005 for the purpose of authorizing 8 mills for five years, beginning in 2006, was not published as the law requires. And, yes, the Affidavit of Publication was found and it states, correctly, that the resolution was only published once. I even went to the Signal's offices to read the papers immediately before and after publication to make sure there was no error. The patrons of this district are entitled to the notice required by law to initiate a tax, and the failure to provide that notice renders the previous resolution null and void. The law is absolutely clear, notice must be published once a week for two consecutive weeks, as is being done now. Fortunately, this mistake was discovered in the nick of time. If another week or two had passed the district would be unable to correct this problem and this source of funds, critical to the district, would be lost for a year.

7. The auditors noted numerous times that the school budget did not itemize funds for line items that would have allowed for reimbursement by the state. My example to the board, a theoretical example, was the "gasoline" example. A more concrete example would be the lack of Motor Fuel in the Special Education fund, which precludes reimbursement by the state. Thus, in one sense both Mr. White and I are correct. The fuel is in the budget, as Mr. White suggests, but it is in the General fund, not the Special Education fund where the district would get reimbursed for the expense. The auditors have other examples. Similarly, the "rob Peter to pay Paul" statement may not appear professional to you, but at the time it expressed the frustration of the auditors in finding many funds used to cover overcharges in other funds.

8. You are correct in noting that I talked to the editor of the Signal, but are wrong in assuming that you, your reputation or service to the district were discussed. My purpose was to inform the press of the reason the scheduled board meeting was postponed, and to inform and educate the press on the issues that would be soon before the board. Fund accounting, school finance and Kansas budget and cash basis laws are somewhat difficult to follow, and the process of explaining the issues to the press certainly helped me later when I tried to explain the issues to the board and the public. I try to have an open and honest relationship with the press, and have found that in the long run this policy benefits everyone.

Lastly, and perhaps most importantly, we are talking about the public's money and the public's support of our public school. All are entitled to a clear explanation of what happened, where we are now and how do we get the district's fiscal house in order. I anticipate Agler and Gaeddert will have the 05-06 audit done in November, and it will cover in detail much of what we have discussed. And in all of the above, I have tried to respect your service to the district. If I have not, then the fault is mine, and no-one else's.

Bob Bezek
Baldwin School Board Attorney

To the editor:

I would like to thank you all as a community for all you do and have done during the last 6 ½ years for the residents here at Vintage Park. We are truly blessed to be in such a wonderful caring community. It would be impossible to list all those community members, churches, businesses, students and faculty who have shared their time and talents with us. The fresh produce this summer has been especially enjoyed. A heartfelt thanks goes out to all of you.
When I speak to my colleagues associated with assisted living facilities in other communities about the community involvement here at Vintage Park, they are amazed. None of them begin to come close to what we share here. I am continuously proud to be a part of such a caring community. Being born and raised in the Baldwin City community, I always knew that we had something special going on here. But, until I became the director here at Vintage Park in 2000, I really had no idea just how special. I have witnessed first hand lives changed in incredible ways because of relationship's formed between people of very different age groups. The love and knowledge that senior citizens have to share with others is priceless. I know those of you who have been involved in any way with the residents here at Vintage Park will agree, what you receive from them is beyond measure.
On Friday, Baldwin City will be honoring senior citizens. There are more than 40 seniors ranging in age from 70-99 living here at Vintage Park. We are located between two other areas where seniors reside, Silverleaf Town Homes and the duplexes on FireTree Court. Down the road a bit is Signal Ridge Villas. On the other side of town are Hancuff Place, as well as Baldwin Healthcare and Rehabilitation Center. There are also many seniors residing in private homes within our community, several of which are still employed. I would be curious to know just how many senior citizens call Baldwin City home. I would venture to guess that the number is higher than most surrounding towns. We have an exceptional community in which to retire.
Take a moment on Friday or any day to get to know a senior citizen. Your life will never be the same again, take my word for it.

Sue Brown, Director
Vintage Park at Baldwin City

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