HomeCity NewsSchool Board Addresses $11 Million Budgeting Error

School Board Addresses $11 Million Budgeting Error

More details have surfaced regarding a serious accounting error that was disclosed to the Burbank Unified School District Board of Education ahead of the Board’s surprising decision to place BUSD Superintendent Matt Hill on administrative leave.

The error: Nearly $11 million in funds — $8.7 million of which was intended for raises and vacation pay for district staff — were not counted in this year’s budget balance.  When the additional funds are accounted for, the budget balance increases from $25 million to $36 million, a positive increase in reserves.

“Throughout the year, we’ve been misstating our financial position by about $8.7 million for that one issue,” said Andrew Cantwell, assistant superintendent of administrative services.

Additional budgeting errors took place under Hill and Cantwell’s watch, including double counting more than $1 million in salary expenses.

The net effect is that the district will end this year with an unrestricted balance of $36 million instead of the $25 million balance. This greatly affected policy decisions and contract negotiations with the Burbank Teacher’s association. In April, BTA began picketing ahead of district meetings to advocate for a 9% sweeping raise, which the district claimed they could not afford at the time.

Hill was placed on administrative leave on June 7 immediately following a closed meeting regarding the accounting error, which was attended by the board, the district’s labor negotiator, Hill and Cantwell.

“I would like to apologize to the board. I stand up here every few months and give you a report on the finances of our district … where I give you my assurance that we have thoroughly reviewed our budget, ensured its accuracy and that we are giving you information that you can rely on,” Cantwell said.

“The information I gave you this year was wrong. … I in no way want to sound like I was not at the head of multiple budgeting errors that took place. I am deeply sorry,” he added.

At the second interim report of the district’s budget in March, administrators anticipated a balance of about $16 million in unrestricted funds for the rest of the fiscal year, Cantwell explained in a Thursday meeting of the Board.

Cantwell said that, as negotiations progressed, the district was going to be unable to pay teachers a raise in fiscal year 2022-2023 because an agreement likely would not be reached until after July 1, the beginning of the next fiscal year.

As a result, Cantwell said that, in adjusting for the delayed contract negotiations, the district would end the year with about $25 million in the fund balance.

On May 31, Cantwell became aware of the additional accrual of $8.7 million that had been reserved for raises for teachers, school and district employees and vacation payout for last year but had not been applied to this year’s accounting. This error, combined with other unrelated accounting errors, brings the budget balance up to $36 million, Cantwell explained.

“Our integrity is so crucial,” said Ferguson. “Our journey towards integrity and clarity that we can trust after a moment like this is really critical,” he added, calling for a third party audit of the district’s finances.

Cantwell suggested the Fiscal Crisis and Management Assistance Team vendor could carry out an audit, signaling a crisis at the district. FCMAT’s primary mission is to “help California’s local TK-14 educational agencies identify, prevent and resolve financial, operational and data management challenges by providing management assistance and professional learning opportunities,” according to their website.

The district hopes to adopt a contract for the audit by its next regular meeting.

“Make no mistake about it, this is a crisis of confidence in this district,” Board President Ferguson said. “When we [incorrectly] say to bargaining units over and over again that we are out of cash. What the heck?

“I’ve lost confidence in the numbers I’m looking at this point. I just can’t look at them and tell members of the community that we can stand by them until a review is done,” Ferguson said.

Debbie Kukta, a former assistant superintendent from August 2019 to September 2022, took to the dais to dispel rumors that she said Cantwell’s report implied she held any responsibility in making the errors.

“By inference, this report impugns my integrity, my reputation and my professional standing. The finger-pointing at someone who hasn’t been with the District since September 2022, and is receiving blame for things I would have had no control over, is typical of the culture and District leadership which has caused so many principals, administrators, and other staff to leave,” Kukta wrote in a letter to the Burbank Leader, published on page 3 of this issue.

Cantwell took responsibility for the errors on multiple occasions during last night’s meeting.

“I’d like to personally apologize to Mrs. Kukta. It was not my intent as the author of this disclosure to imply that she or anyone else did something to hide money. If that was how my report was interpreted, again I truly apologize,” said Cantwell during the Thursday night’s meeting.

Assistant Superintendent John Paramo has agreed to take the helm as acting superintendent in Hill’s absence.

In a statement to the Leader, Hill endorsed Paramo, saying:

“I am excited to see Dr. Paramo take on this new role. Dr. Paramo is an amazing educator, leader, and person. I look forward to hearing about the wonderful things he will do for this district in his new role. We have had an amazing run of instructional impact and outcomes over the past eight years, which speaks to the brilliance and excellence of our students and their caregivers.

“I will fully support Dr. Paramo as he transitions to his new role. It has been an honor and privilege to serve the Burbank community over the last eight years. I have been inspired by the achievements of our students during their time at BUSD and beyond. I have loved the opportunity to help over 14,000 students realize their dreams each year,” Hill added.

“Our student success is based on the amazing partnership with parents and caregivers and the dedication and passion of the over 1,700 BUSD employees. I know the team in place will continue the amazing work that we have been doing. I look forward to hearing about the success of our current and former students in the future,” Hill wrote.

First published in the June 17 print issue of the Burbank Leader.

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