UPDATED: Turnover in APS Finance Office Contributed to Budget Crisis

ALBUQUERQUE, N.M. — District’s superintendent, CFO explain to school board how accounting errors occurred that contributed to $43 million shortfall

 

Frequent turnover in the Albuquerque Public Schools finance office contributed to the accounting errors that led to the current budget crisis, officials said Friday morning.

In a special meeting, school board members grilled the administration on how a $24 million cut from the state grew to a $43 million shortfall.

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The board has passed a preliminary budget plan that would cut school budgets, slash non-school departments and lay off 176 “double dippers,” or employees who retired and returned to work, earning both a salary and a pension.

“How is it that it took so long to realize we have a shortfall?” asked board member Lorenzo Garcia.

The answer hinges on the district’s cash reserves, which were depleted during the past two fiscal years. The district used $8 million from the reserves to cover employee benefits that went over-budget — two years in a row.

Chief Financial Officer Dupuy Bateman said the problem was with the formula the district used to project employee benefit costs. Projections came up $8 million short, so the district had to dip into reserves to make up the difference. This somehow went unnoticed, so the same formula was used again and the district had to pull another $8 million from the reserves.

Board President Martin Esquivel pressed administrators on how the problem wasn’t fixed after the first year.

“I don’t understand why the red flag didn’t go up then,” he said.

Bateman said by the time the shortfall came to anyone’s attention, the formula had already been used to craft the fiscal 2010 budget.

“There was no awareness by the accounting office, by the budget office, or by me,” he said.

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Superintendent Winston Brooks said the finance department was going through a period of upheaval.

“I’m not intending this to sound like an excuse, but we’ve had three CFOs in four years, and we’ve had at least four budget directors, I think, since I’ve been here,” he said. “We went along limping with a cane for several months during the same time we were missing this formula problem.”

Since Michael Vigil resigned as CFO in April 2006, the district has had three CFOs, including Bateman. In between were Bill Moffatt and Gina Hickman, as well as a span between September 2007 and February 2008 when the district had no permanent CFO.

Brooks assured the board the formula has now been fixed.

“I think it’s had a significant effect on people and to a certain extent it’s been embarrassing,” Esquivel said after the meeting. “So I think we’ll be more sensitive to this in the future.”

 

 


 

Friday, 16 April 2010 10:11

 

The APS school board met this morning with the finance department to ask
some tough questions about how a $24 million cut from the state turned
into a $43 million shortfall.

The Journal has written about the issue here.

Check out tomorrow’s paper for more on what the board learned.

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