MLSD Community,
The following message is posted on our website and was shared with the community in the Columbia Basin Herald today. I know it is long, and I encourage you to spend a few minutes reading through it. I also encourage you to consider attending one on of the community meetings detailed in the message below.
Thank You,
Carol Lewis, Interim Superintendent
A MESSAGE TO THE MOSES LAKE SCHOOL DISTRICT COMMUNITY
The past four months have been difficult for the Moses Lake School District community – students, parents, concerned citizens, staff, leaders, and school board members alike. Financial difficulties of the magnitude with which we have been confronted have led to concerns about the educational opportunities we will provide our students, and the need for decisions that have impacted people’s livelihoods. Students, families, community members, and the dedicated staff members of our district face serious questions about our future.
We have worked hard, and continue to work hard, to not only prepare for that future, but even more importantly, to provide meaningful learning and support for the 8,350 students we are privileged to serve. We have had to make short term sacrifices to ensure enough financial stability for a future that can offer more opportunities for our students. Our focus remains on them, and our commitment is to the assurance that adversity will not detract from what our students need and deserve. We intend to learn from mistakes that were made and ensure they do not happen again.
As Thomas J. Watson said, “Success is on the far side of failure.”
What happened?
In early May, through consultation with North Central Educational Service District 171 (ESD 171), it became apparent that the financial position presented to our community and Board of Directors of the Moses Lake School District (MLSD) was not represented accurately. In the days, weeks, and months that followed, accounting errors and inaccurate accounting practices were discovered. Additionally, failure to provide supervision and oversight of accounting staff became evident. After significant efforts to understand and investigate this problem, we do not believe that funds were misappropriated or stolen, or that intentional or malicious fraud occurred. At this time we believe we have a full understanding of when and how the accounting errors occurred.
The staff members who were closest to the accounting errors, and those who were responsible for supervision and oversight of accounting when the errors occurred, are no longer employed by the Moses Lake School District. Our commitment is, and will remain, to LEARN from mistakes and put practices into place that safeguard from future accounting errors.
What now?
Despite all the difficult and painful financial and staffing decisions we have made, we have successfully begun a new year of learning for the young people of our community. Citizens, businesses, and many community organizations have stepped forward on behalf of our students and their needs. We are actively working internally and in partnership with North Central ESD and with the State Auditor’s Office, to correct mistakes that were made and to learn from them. Though our challenges are not fully behind us, together a bright future is ahead of us. We are committed to open engagement with citizens groups and organizations across our community – and with our employees and the associations who represent them – to hear and respond to questions and concerns, and to build trust and transparency that can be depended upon.
Community Meetings
Community members are invited to attend one of four in-person community meetings where the basics behind school district finance will be shared along with details about what happened with Moses Lake School District’s finances. Community members will also be invited to ask questions of the interim superintendent. The focus of these meetings is on sharing facts, answering questions, and working together to move our school district and community forward.
Spanish interpretation will be available for all meetings.
Community Meeting Schedule (All meetings will provide the same content)
Meeting #1- Tuesday, October 1, 6:00-7:00 pm at Sage Point Elementary School, 4000 W Peninsula Dr.
Meeting #2- Monday, October 7, 6:00-7:00 pm at Endeavor Middle School, 6527 Patton Blvd. NE
Meeting #3- Monday, October 14, 6:00-7:00 pm at Vanguard Academy, 740 E Yonezawa Blvd.
Meeting #4- Tuesday, October 22, 6:00-7:00 pm at Frontier Middle School, 517 W 3rd Ave.
As Winston Churchill said, “Success is not final; failure is not fatal; it is the courage to continue that counts.” With the grace of the engagement of our community, we intend to continue.
Explanation of Accounting Errors
Misrepresentation of Projected Enrollment
Enrollment projections are made prior to the start of each school year, and those projections determine funding for the following school year. The projections are corrected in January (adjusted up or down) based on actual enrollment. The enrollment projection for Moses Lake, prepared by the accounting office during the 2023-24 school year budget process was overstated by approximately 200 students. This was an accounting error, and did not occur because someone actually thought 200 more students would enroll in our school district. This enrollment projection occured because alternative learning students were double counted.
In January, ESD 171 notified financial staff at MLSD that enrollment was overprojected and would result in a loss of revenue. MLSD financial staff responded by saying ESD 171 was incorrect, and that MLSD numbers were accurate. ESD 171 does not have any financial authority over school districts unless they are in binding conditions, which MLSD was not, so they did not have the authority to demand more information. Thus, to correct the over projection, OSPI reduced our school district's apportionment for the remainder of the school year by approximately $2.1 million in January of 2024. However, this reduction in apportionment was not noted by MLSD finance staff. As a result, a spending freeze was necessary last May to ensure payroll could be met for the remainder of the school year.
Accrual Accounting
Accrual accounting is an accounting method where revenues and expenses are recorded when they are earned or incurred, rather than when cash is received or paid. This is best explained with a practical analogy. Suppose you knew someone was going to give you $1000 in December, but you wanted to spend the $1000 now to buy a new washer and dryer. Knowing you are going to get it later, you might record the $1000 in your financial records now and go make the purchase of the washer and dryer. What you would need to do when the person gives you the $1000 in December is NOT record it again in your financial records. If you forgot and recorded it again, you would think you have $1000 more to spend than you actually do. In the case of MLSD, a large amount of money was recorded twice.
Accrual accounting is required for school districts our size. Accounting practices that ensure anticipated revenues are not recorded twice are essential, and several checks and balances have been put into place to make sure this kind of error does not happen in our school district again.
ESD 171 identified that several small accrual accounting errors happened beginning in January of 2023, and one very large error of over $9.9 million dollars happened in the 2023-24 school year.
Steps taken over the last three months to ensure transparent and accurate accounting:
Two School Board members review all accounts payable transactions twice per month.
We have started to routinely post details of all accounts payable transactions to our website at www.mlsd161.org/finance. More financial information will be added to this page in the near future.
Checks and balances have been established between the payroll and human resources departments of our school district.
Our school district accounts are now being balanced against the County Treasurer’s report every month.
Budget status reports will be provided to the school board and the public on a monthly basis.
As is required by Moses Lake School Board Policy 6210, the School Board will be required to provide final approval for single purchases over $25,000.
All expenditures of any amount will require authorization from the appropriate supervisor; if purchases are made without proper authorization, the purchaser can be held liable for the expenditure.
Automatic alerts embedded in financial records to ensure accrual accounting is used accurately.
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