An audit by financial watchdog group, the Fiscal Crisis and Management Assistance Team, has found that there was no “nefarious intent” to blame for the $11 million budgeting error that was made by the Burbank Unified School District this summer, said district staff last week.
The report by FCMAT is not yet ready for review by the public, but a recent overview of it to the Board of Education by BUSD Assistant Superintendent of Administrative Services Andrew Cantwell provided a first look at the extent of the audit, particularly that the district is working off an antiquated system for accounting.
“If you were cryogenically frozen in 1970 and then woke up and wanted to be the director of fiscal services in Burbank Unified, you would not have a different process than 50 years ago,” said Board Member Amy Pontzer Kamkar.
On June 15, the district disclosed that it had overbudgeted about $11 million of the district’s funds and had not counted those dollars in the last fiscal year’s budget balance. When the additional funds were accounted for, the budget balance for fiscal year 2022-23 increased from $25 million to $36 million, a positive increase in reserves. The district began the year with a hefty budget surplus as a result.
“That was a very significant error. It eroded our credibility with our partners both in the classroom and support staff, as well as in this community,” said Cantwell.
The error, which was made over the span of eight months, significantly affected district business, as Board members set priorities for Burbank schools with the understanding that funds were limited.
Notably, Burbank teachers began picketing over stalling contract negotiations in April after advocating for a sweeping 9% raise, which the district claimed they could not afford at the time.
But of the $11 million in miscounted funds, $8.7 million was intended for raises and vacation pay for district staff. After identifying the error, the district closed a contract deal with the Burbank Teachers Association, which was widely accepted by teachers.
By then, the damage was done. BUSD found itself in a crisis of confidence with the Board and district stakeholders. Former Superintendent Matt Hill was placed on administrative leave and was eventually let go from the position following a closed meeting regarding the accounting error, which was attended by the Board, the district’s labor negotiator and Hill.
That week, the Board elected to authorize a third-party watchdog audit, conducted by FCMAT, to “identify, prevent and resolve financial, operational and data management challenges” within district affairs. Board members said that the need for a FCMAT investigation signaled a full-blown crisis for BUSD.
District leadership said that FCMAT would ensure no “nefarious dealings” were at the heart of the budgeting crisis and would identify failures in BUSD’s accounting processes. The audit took place in the last week of October, and the FCMAT team met with more than 20 BUSD staff members, a member of the Board, and reviewed more than 10,000 pages of documents from the district.
“This is an intrusive process, they are focusing their attention on budget development, budget monitoring, position control, accounts payable and accounts receivable,” said Cantwell.
According to Cantwell, FCMAT did confirm that there were no intentional acts that led to the budget omission. In other words, there was no “nefarious” activity by district staff.
Instead, he said, the cause identified for the budget area were a number of system failures and outdated systems that created an environment that allowed for the failure.
In the future, FCMAT will appear before the board with a more in-depth report.
First published in the November 25 print issue of the Burbank Leader.