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REEDSPORT — Programs and jobs are safe at the Reedsport School District after it ran out of money.

This month, Superintendent Dan Forbess assured students and other community members that no layoffs, program cuts or other reductions will need to be made in light of $300,000 the district had to pay to the ESD.

In a recent interview with The World and Umpqua Post, Forbess and interim Business Manager Laura Shivers provided more background on the funding challenge and what led to it.

"Nope. No cuts this year," Forbess emphasized. Looking at the big picture, he added that "I don't see huge (enrollment) growth."

Reedsport School District personnel failed to submit their audit for 2015-16 by the Dec. 31, 2016, deadline for state requirements. As a result, according to an article in The World, Oregon Department of Education employees began withholding Reedsport's monthly state payments. Then when the school district ran out of revenue, the district asked the South Coast Education Service District (ESD) for a $750,000 loan in July of this year.

The Reedsport School District received its audit a couple of weeks ago, earlier than the Aug. 15 deadline. According to the World article, then because of how early the audit came in, the Reedsport district used $300,000 of the $750,000. In better news for Reedsport officials, because the audit was turned in, Reedsport received its anticipated $2 million from the ODE.

School districts receive much of their funding based on student enrollment. The more students a district has, the more money it receives.

"Disjointed" history

"'Disjointedness' is a better term for how the Reedsport School District business functioned that led to this problem," Forbess said.

He emphasized district office staff turnover and training efforts and not simply a former employee convicted on embezzling charges led to auditing troubles.

In 2015, Judge Frances Burge found former Reedsport employee Tina Lynn Fulps guilty of one count of first-degree aggravated theft and two counts of first-degree theft. Douglas County Assistant District Attorney Jodee Jackson said Burge dismissed seven counts of first-degree theft and two counts of second-degree theft.

According to a state court document provided earlier this week by Jackson, Fulps has met all of her probation conditions. According to the document, as of Aug. 10, 2017, Fulps had paid $21,577 out of $50,540. In an earlier interview, Jackson noted that the amount Fulps took was "more in the high 30s," but because district employees had to spend money for investigative and auditing costs, that amount increased.

Forbess said there had been chaos at the district office in the last few years "because typically our job at the district office is to support the buildings and the staff."

"I mean honestly we probably do 80 reports a year (to the Oregon Department of Education)," Superintendent Forbess said. "When you have a change in staffing, you lose a lot of that institutional memory for someone who does the same report two consecutive times. You don't pick a document, look at it and then duplicate it. People like Laura and myself who have been doing this a while, we've done enough annual reporting, but we're not always the ones that do the report directly."

Thus, when the district lost staff, one loses a lot of budgeting knowledge.

As one of a number of required reportings, district personnel must submit a transportation report. In the case of Reedsport, the school board has contracted over time with Lewis Transportation for bus service. The report includes such items as reimbursable and non-reimbursable expenses, those for drug testing bus drivers and other costs.

"And here it is Aug. 8," he said, adding that the report is due in early September.

There are now two new employees in the district office, who in turn needed to be trained.

Then he said "circle back to the last two audit years."

"I guess you had an implosion of the district office staff in April, May and June," he said.

Forbess said Shivers "had a full-time job (with the ESD) before she came over." Additionally, Shivers and Forbess both work part time for the Reedsport School District.

"A lot of that stuff was not done correctly," he said. "So she had to basically redo the '14-'15 and the '15-'16 audit years."

"Well do the auditors have other customers and clients that they do work for? Uh huh," he said. "So that's what happened last year is because we got behind last year."

Forbess said "it's one thing (to) have a particular skill set at this particular job," ensuring accounting and auditing work is accurate. But "when things aren't in order," then other employees have to spend extra time to fix the issues.

"There weren't embedded systems in which everybody knows the process," Superintendent Forbess said.

In a July meeting with ESD, Shivers admitted to the board that when she stepped in to help the district during its turnover, she should have also made additional changes to how money was being handled.

“When we went in there, it was a fragile shift because the district was experiencing complete turnover in its upper management,” she said. “We were trying to be helpful, to reassure them that we would get through this together, but one of the things I probably didn't do as well as I could have is implement better business practices, where they can no longer guess as how much things are going to be but instead go through the same process every single time to get the numbers right.”

In a previous interview with The World, Forbess explained that this is why it's important to understand the dynamics of the entire situation.

"There was a whole new set of people in the district, so you had two different superintendents, two different business managers, four different district office employees, a lot of flux that was off the fail end of a year where they had terminated an employee for funds that were embezzled," he said. "So there was a lot of finger pointing going on because $40,000 had gone missing, so lots of variables leading up to ESD taking over the district before I stepped in.”

Looking ahead

Shivers and Forbess looked ahead too. At the board's request this year, she provides all records of outgoing checks.

"I think the reports that we do for the board gives them a better idea," Shivers said, adding that "because there's more than expenses. There's liabilities."

Adding to more district financial stability, Forbess strongly encouraged the board to have a $300,000 contingency fund in place, such as for building repairs.

"Reedsport had been a district that'd had good times and bad times and a lot of fluctuation," she said. "We were trying to make it where we weren't firing people one year and hiring and then laying them off again."

Shivers added that the district is working to bring back programs such as music, elementary physical education, and to build a system with continuity and stability long term. 

"It just means maintaining the staff," Forbess said. This is done through board policies and "managing district resources."

Shivers said that now "we have some staff that we do believe are the right fit." She added that "in both districts we had additional staff with additional experience."

Shivers emphasized the critical need in "these last six months getting these reports done and in a timely manner."

She said "and so we continually refining the process."

He said a district's revenue comes primarily from enrollment and "you don't want to rely on grants."

The district has about 670 students and he's anticipating 40 kindergartners will attend Highland Elementary this fall, less than the 50 that was estimated.

Forbess said the 670 population is "at a size where we have a small district." Still he emphasized that regardless of its relatively small enrollment, "You don't have any less requirements than the Portland Public School District."

All 198 school districts face the same requirements, including of course providing audits.

Forbess said if "we were to shift $50,000 to $100,000" to the district office for budgeting functions, "that means we have one less teacher in the building who is there to support the students who need it."

The World reached out to ESD, but ESD did not return calls for comment.

Oregon Department of Education provided a statement about Reedsport's now previous finance trouble, advising other districts to make sure "staff have the proper training and that reports are timely and accurate."

"The Oregon Department of Education stands ready to offer support to any district to help mitigate the risk of late submissions, but state law (ORS 327.137) is clear about the penalties once the deadline is passed," wrote Tricia Yates, ODE director of communications, in an email. "We are confident that this was a 'perfect storm' kind of event for Reedsport and don’t anticipate any late audits for the 2016-17 school year."

The Umpqua Post Editor Shelby Case can be reached at 541-269-1222, ext. 296 or shelby.case@theworldlink.com.

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