By Ann K. Williams
Staff Writer

February 15 -- With a little bookkeeping finesse and a lot of caution, the School District should be able to afford a 5 percent raise for its teachers, according to an independent review of its books.

School officials see the State’s Fiscal Crisis and Management Assistance Team’s (FCMAT) letter dated February 8 as a vindication of their approval of the deal with the teachers union, which has yet to be formally ratified by the School Board.

“To us, the main message is that the letter confirms our judgment that we will be able to give our teachers a 5 percent raise and maintain the reserve three years out,” board member Jose Escarce told the Lookout Wednesday.

The FCMAT letter advises “using the resources we have more productively and more efficiently,” Escarce said.

Its recommendations include:

• Removing restricted funds from the general fund reserve,
• Showing all lease payments on the books,
• Making debt service payments with capital outlay and facilities funds, and
• Taking a hard look at declining enrollment figures with an eye to cutting staff or increasing the interdistrict transfer student population.

A large part of the letter deals with accounting minutae likely to confuse the uninitiated. But some corrections seem to mirror criticism repeatedly brought before the board and the financial oversight committee by former teachers union president Jim Jaffe.

For years, Jaffe has complained that the district’s transfer of funds from Fund 40, a restricted capital outlay account, into Fund 17, where the monies can be counted as part of the required 3 percent reserve, was a sleight of hand on the part of the administration.

When Jaffe complained to district officials, he said he was told, “It’s our money, go away Jaffe.”

The response, Jaffe said, is part of what he sees as a “shoot the messenger to the nth degree” culture in the district. “It’s a problem in our district,” he said. “It’s endemic.”

FCMAT seems to agree with Jaffe’s take on the district’s misuse of restricted funds. Its report recommends returning $3 million from Fund 17 to Fund 40.

But then it recommends that the district reimburse the general fund $2,941,986.50 from Fund 40 to retroactively cover debt service payments made with unrestricted monies for the past three years.

And it recommends booking more than $1 million in annual lease payments in the general fund. In recent years, these payments have not shown up on the books at all. The incoming checks were simply deposited in a Wells Fargo bank account, forming the source of payments on debt service obligations.

The net effect of all of this is to create a sufficient reserve three years out to satisfy state budget requirements, according to the report.

But FCMAT warns that this may not be enough. If student enrollment continues to decline, state per-pupil revenue will go down, threatening the financial stability of the district, the report warned.

While it recommends the district consider upping the inter-district transfer student population, at least one board member thinks that’s not the best solution.

The “newly stated preference of our community” is to reduce the number of transfer students, to alleviate overcrowding in the district’s classrooms, Escarce said.

“It’s exactly the right thing to do,” Escarce said. Instead, faced with a 900-student drop, school officials should seriously consider cutting staff, he said.

The proposed teachers raise precipitated a storm of controversy when Chief Financial Officer Winston Braham refused to certify the district’s financial report sent to the County Department of Education last October.

His refusal triggered a County-mandated inspection of the district’s financial records and placed him in opposition to his new Superintendent Dianne Talarico, who approved the report.

Shortly thereafter, he resigned with a $189,653.94 severance package. The details of his resignation are obscured by a gag agreement that has recently been challenged by City Council members, who will vote soon on whether or not to give more than $6 million to the district under a facilities use agreement.

In the near future, a “new and accurate” budget report will have to be prepared based on the FCMAT recommendations and made public before it is sent to the County Department of Education, Escarce said.

He anticipates that the Board will vote on the new report at its March 15 meeting.

The Board will discuss the FCMAT report tonight at 5:30 p.m. at the City Council Chambers, 1685 Main Street. A video of the meeting will be archived on the web.