HomeSchools & YouthWatchdog Reports on Burbank School District Accounting Error

Watchdog Reports on Burbank School District Accounting Error

Almost a year after Burbank Unified School District leaders announced an $11 million accounting error, the Fiscal Crisis and Management Assistance Team — California’s education watchdog group — has finalized its report on the district’s operations.

Last June, BUSD disclosed the accounting error ahead of the surprise decision to place Superintendent Matt Hill on administrative leave. Of the misreported funds, $8.7 million was earmarked for district staff raises and vacation pay — and they were not counted in the 2022-23 budget. As a result, the district ended last year with $36 million, as opposed to an initially projected $25 million.

FCMAT analysts stated at a March 7 board meeting that an antiquated system for accounting is largely to blame for the misrepresentation of funds in budget projections. The miscalculation 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 it could not afford at the time. 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.

“It was a really critical time in our district in which we identified a number of accounting errors that led to overstating our budgetary position by about $11 million,” said Andrew Cantwell, assistant superintendent of instructional services, during the meeting.

Now, Cantwell says, district leadership is working to push a path forward that builds back confidence with the school community in its ability to appropriately track and report on its finances.

And BUSD is doing just that, according to John Von Flue, Chief Analyst for FCMAT, the K-12 fiscal watchdog organization which is often brought in to review a district — usually without an invitation — when it is in a financial crisis.

“The efforts to regain the [public] trust are evident here. The district responded right away after finding that error and have made efforts continuously to work on it,” said Von Flue, adding BUSD administrators swiftly invited FCMAT to review the district’s budget operations following the error’s discovery.

According to FCMAT, the district had been utilizing out-of-date software that no longer met the standards of modern systems. When it came time for data to move from one program to another, it could not be done automatically. Instead, personnel had to enter data manually, opening the district up to potential errors or omissions.

“This budget error that you experienced, it was found, but it just took time. And why did it take time? Because the systems weren’t integrated and talking,” said Von Flue. “A budget is a living document. It changes every day. We advise that the budget revisions be frequent and detailed … and that they are reviewed for accuracy.”

According to the FCMAT report, district staff used various scattered means to supplement failures in archaic accounting software.

“Out of necessity, district staff use individually developed spreadsheets to manage and track financial and personnel data. Staff use various forms of Google Docs and Microsoft Excel worksheets to accomplish their tasks and fulfill their responsibilities,” the report stated.

“It’s amazing what they’re doing with the systems they are working with. There is, again, a transfer of data from one system to another that is cumbersome and the efforts to reconcile that put us in a spin,” said Von Flue.

Managing the budget means tracking staff positions, a practice Von Flue called “position control.” Understanding that payroll costs usually constitute 85% to 90% of a district’s expenditure means that tracking the number of people in each position and the cost of that position is vital to managing the district effectively and ensuring the budget is being managed wisely.

The district also has many vacant positions in the accounts payable department, according to Von Flue. Recently, a district clerk was terminated after she allegedly embezzled more than $10,000 from the district’s after school care program. FCMAT recommended that new hiring and training occur right away in this department.

“There was a lack of procedures in place. … When revenues come in, especially cash or checks, having a double count and having oversight is important. And obviously with the challenge of staffing and the lack of experienced staff, there were gaps in that,” said Von Flue.

On a districtwide level, FCMAT recommended sweeping staff training and frequent budget monitoring among other suggestions.

Topping the list of FCMAT’s recommendations were changes to the district’s “ad-hoc” business technology systems, including that the district research and invest in software systems and tools that would consolidate and integrate the processes and data,” stated the report.

“It would shock people to know that a $200-plus million dollar budget is managed by a dozen or less people,” said Board member Steve Ferguson, directing his comments to district financial staff. “There was no wrongdoing on the part of any one person or group. It was systems. It was procedures. And if that’s what we have to fix, fantastic.”

First published in the March 16 print issue of the Burbank Leader.

Most Popular

[bsa_pro_ad_space id=3]