Problems in the Antioch Unified School District


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 1.  Guest Commentary in the Antioch Ledger-Dispatch by Citizens for Democracy Chairperson Ralph Hernandez

 2.  Findings Presented by ACCT Chairman Ken Hambrick to the Antioch School Board (Jan. 22, 2001)

 3.  Follow-up Ledger-Dispatch Editorial by ACCT Chairman Ken Hambrick, (Jan. 27, 2001):  "It is interesting to note that  
      the board is comprised of three former AUSD employees and two outsiders. The three former employees band 
      together regularly to form a majority...."

 4.  June, 2001 Comments in the Ledger-Dispatch by ACCT Chairman Ken Hambrick:  "I predicted in my analysis 
      that the district would be in dire financial straits for the next and future budget years. And, guess what? That is 
      exactly what has come to pass. At the moment they have a shortfall of almost  $4 million."

 5.  The Contra Costa Times reports that " Without across-the-board pay cuts and other employee concessions, 
      the Antioch school district will become financially insolvent by the end of next school year, officials said." 
      (Mar. 5, 2004)

 

Commentary by Ralph A. Hernandez, Chairperson
    CITIZENS FOR DEMOCRACY  

          The Antioch School Board majority, consisting of Joe Olenchalk, Joyce Seelinger and J. Dale Hudson, should be ashamed of themselves for their recent approval of the excessive and unnecessarily expensive Employment Contract for the District's new Superintendent. Their unjustified actions will directly have a negative impact upon our children and their education. The Contract essentially takes money away from them and instead enriches the Superintendent. The other two Board Members, Francine Hand and Claire Smith, deserve our appreciation for their stated disapproval of the Contract's terms and benefits.

          The in-house person, promoted one position to the Superintendent's position, Dennis Goettsch, was previously one of the District's Associate Superintendents, earning about $101,000 yearly in salary alone. The recent past District Superintendent, Lee Jenkins, was paid a yearly salary alone of about $124,000. The new Superintendent's Contract pays Mr. Goettsch a yearly salary of $144,788. Therefore he has effectively been given an increase in salary alone of $43,204.00 for his new position, and unbelievably $20,684.00 a year more in salary alone than the recent past experienced Superintendent. The District must be 'swimming' in money now in order to give these kinds of increases and salaries. We wonder when the Board majority will plead a lack of funds to our community, and our children, when it is time to fund our Students' needs. We assume they'll just ask for increased Student and parent fund-raising efforts to make up for the extravagances of the new Superintendent's Contract costs.

          Other increased monies and benefits for the new Superintendent under the Contract are; (a) if necessary, a termination buy-out of about $350,000 - versus the former's $200,000 buy-out, (b) $8,400 yearly to use as he likes - $2,800 more than the former one, (c) 18 months continued District-paid Health Plan benefits - 50% more than the former, (d) a $675 vehicle allowance, plus mileage and reimbursements if more than 30 miles travel from the District - again, more than before, (e) 45 days vacation maximum accrual and buy-out if necessary (50% more than the former), and, believe it or not, (f) unspecified work hours or days - very ambiguous and very difficult to hold the Superintendent accountable for.

          The School Board majority of Joe Olenchalk, Joyce Seelinger and J. Dale Hudson, have shown a lack of responsibility in this matter. The District's Mission Statement, first sentence, should instead read "The School Board majority is NOT dedicated to its Students, parents or community." Even when I complained at the meeting about the absence of the Contract, its background, and its formation, before they voted on the Contract, it fell on the majority's deaf ears. The small audience there and I were given some undocumented and vague verbal rationale by Board President Joe Olenchalk. But, the majority still refused my request to postpone their vote until a full public review and inquiry concerning the information could be had. To their credit, Francine Hand and Claire Smith sought to postpone it, citing such for responsible reasons, but the majority closed such avenue and approved the Contract as written. Quite frankly I doubt that Board majority has the knowledge, skills, or ability, to fully understand the implications of what was before them.

          The public essentially was kept out of the process as much as possible, and prevented from checking into the Contract's terms, justification, etc. The Board majority may very well have been good Teachers and/or school managers in the past. They are quite possibly even nice individuals, parents, etc. But, they have shown themselves to be incompetent and lousy School Board Members when balancing the needs of our children, the community, and the District as a whole. In fact, their actions are believed to have now set in motion other future School District management and line employees to seek parity and "adjustments" in line with salary levels established over the years. It even gets worse beyond this District. Other Superintendents in other districts can and most assuredly will point out the disparities in their compensation packages, as will other school employees, using Antioch's as one of the bench marks. Oh, what evil has brought!

          In conclusion, we ask the School Board and the Superintendent to reconsider the Contract and renegotiate it more fairly, as is possible pursuant to the Contract's Sections #2-c, #6-a, and #18-d. To the Students, parents, and community, we ask that you become more directly involved - before it is too late! If you would like a copy of the Contract you can get one from the District or by calling us at #757-8943.


  

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925.930.2825

www.alliancetaxpayers.net


January22, 2001

Board of Education
Antioch Unified School District

510 G Street
Antioch, CA 94509

Board Members:

The Antioch Unified School District (AUSD) has been plagued with financial problems and questions of fiduciary responsibility and proper financial management. This situation has existed since at least 1993 and continues to be questionable.

Grand Jury Reports

Two Contra Costa County Grand Juries have issued reports within the last five years, each highly critical of the district’s financial management and use of public funds. Grand Jury report # 9708, dated May 30, 1997 criticized the district for land speculation, overpaying for properties, buying properties that were questionable school sites and using financial methods that were costly to the public. It was also critical of some of the highest construction costs per student in the state as well as not controlling and managing its construction projects adequately.

Grand Jury report 9907, issued on April 4, 1998, concluded that the district board was "improperly prepared to exercise its fiduciary responsibility" and was not knowledgeable in financial matters of the school district. It found that the board ignored warnings of financial problems, ignored the recommendations of the previous Grand Jury report, formed the Antioch School Education Foundation (and made inappropriate contributions to it) and did not request adequate financial information from the staff for carrying out its fiduciary responsibility.

The strongest indictment in Report # 9907 was that the board was "….apparently unwilling to exercise thoughtful, forward looking, conservative fiscal stewardship." Even with the seating of two new members since that report, it appears that this situation still exists.

Recovery Plan

In January the Contra Costa County Superintendent of Schools contracted with the Fiscal Crisis and Management Assistance Team (FCMAT) to analyze the financial condition of the AUSD because of its dismal financial outlook and the likelihood it would fall below the 3% reserve required by state law. Among the FCMAT report conclusions were:

  • The condition of the financial records of the State School Building Fund were not auditable.

  • The deficit would have to be refunded by the general fund unless another source could be found.

  • The deficit was estimated to be at least $2.2 million with another $1million to $ 4 million deficit probable.

  • The district was reluctant to liquidate unused real property.

  • The district has a history of using certificates of participation (COP) for general fund purposes.

  • The district had no plan for recovering from its dire financial situation.

  • There is a COP debt service payment of more than a million dollars a year through 2007 and almost a million dollars a year after that until September 2027. The general fund is responsible for these payments.

  • The SSBF is owed $3,821,183. The general fund is responsible for re-payment of this debt if another source of income is not found.

As a result of the FCMAT report, the Contra Costa County Office of Education (CCCOE) declared that the district was not a "going concern" and laid out actions that were to be taken. The CCCOE then appointed a financial advisor to oversee the districts financial affairs.

All of this, the Grand Jury reports, the FCMAT report and the actions of the CCCOE, speaks to the lack of ability of the district to adequately manage its finances. The resulting Recovery Plan, dated June 1998, outlined numerous steps for implementation. It is questionable today as to how many of them have actually been carried out. For example, no district unused land has yet been liquidated.

The Recovery Plan requires that a portion of any COLA increases be used to pay debt to the SSBF and COPs. The entire COLA is passing into salaries in violation of the Recovery Plan.

The Plan also requires any other unanticipated income, such as higher COLA, etc., go toward paying debt rather than into salary increases.

Note: Even with the financial burden of servicing the COPs mentioned above, the district issued COPs in the amount of "up to" $7.5 million in March 2000. An estimated $6.5 million was designated for energy saving improvements. What the other $1 million is to be used for is a mystery. With a history of the district using COP money for on-going expenses, it makes one suspicious.

Current Financial Decisions

Certificated and Classified employee salary increases ($6,014,980 + $940,248)

  • The district’s decision to grant a 12% retroactive raise to certificated staff and 11.5% (plus increased benefits) to Classified staff is questionable due to the district's financial condition and the methods used to fund the increases.

  • One-time revenues have been used, a dangerous and risky act.

  • Use of Special Education settlement funds for salaries (one-time revenue)

  • Some $300,000 of block grant money is going to salaries by passing it through deferred maintenance (one-time revenue).

  • Allocating "per student" funds to salaries means students will have fewer items such as paper, pencils, materials etc.

  • Use of "outyear" ADA growth to fund current salaries – This is mortgaging the future and guarantees more serious financial problems in the future.

  • With the COLA planned for the next two years, the compounded percentage increase over the life of the contracts is more than 21%, with a very good possibility the funds won’t be there – which, if true, will require cuts in program affecting students adversely.

  • In the interest of giving these large increases, the district is willing to negatively impact students by cutting the "per pupil" funds and applying them to salaries.

  • With the growth of the Antioch district and new schools coming on line, the money will not be there to pay for the necessary staff.

  • Using "one-time" funds for on-going salary expenditures is risky and not a sound financial decision.

                         Management Salary increases ($783,240)

    Management employees are being given a 12% increase, the same as the certificated staff and the classified staff (when increased benefits are added in).

  • It is apparent that management salary increases are tied to those of certificated and classified staff. When this is the case, it is always in management’s interest to grant large increases to other staff groups.

  • As with certificated and classified staff, management increases are being funded with one-time money such as special education settlements along with cuts in funding pupil needs.

  • With the AUSD finances in the shape they are, a 12% increase in management is out of line and does not demonstrate good, conservative financial management.

New Superintendent’s Contract

The contract just awarded to the incoming superintendent does not show proper fiscal responsibility and conservative financial management. A comparison of the last superintendent’s compensation with the new contract shows:

Administrative Compensation

New 
Superintendent

Former Superintendent

            Starting Salary            $144,780              $120,104
            Other Benefits                  8,400                   5,600
            Car Allowance                  8,100                   7,200
            Total            $161,280             $136,904
            Difference     + $24,376 (20.3%)  

Even taking the salary of the former superintendent at the time of his departure, $124,104, the new superintendent is receiving $20,676 or 16.7% more in his initial package. In addition the new contract calls for an 18 month buy-out while the former superintendent got 12 months. If the board, at some time, decided to exercise the buy-out option in the new contract, it would cost the public an estimated $350,000.

Qualifications should be taken into account when establishing a "new hire" compensation level. The former superintendent had a Ph.D. and 14 years of experience as a superintendent. The new superintendent has a Masters degree and no superintendent experience.

This compensation package hardly demonstrates a responsible fiscal approach and accountability, and certainly not in a district facing numerous financial challenges.

In Summary

  1. Two Grand Jury reports severely criticized the school district for its poor financial management for being "…apparently unwilling to exercise thoughtful, forward looking, conservative fiscal stewardship". There is reason to believe that this is still true.

  2. The FCMAT review of AUSD’s finances found serious problems. The Recovery Plan developed following that review called for a number of significant changes in the financial process. There is also reason to believe none of the important steps, such as selling unused and surplus properties, have been implemented.

  3. There are large debt service payments on the COPS through 2027. These are obligations of the general fund. To meet these requires astute and responsible financial management by the district without impacting student instruction and programs. The district has not demonstrated its ability to do this in the past.

  4. The large salary increases being granted to staff and management (a total of $7,738,468) are uncalled for in a district in this financial condition. It is irresponsible fiscal management to fund these by taking from student needs, utilizing one-time money in a three year contract and using "outyear" ADA growth to fund current salaries. This raises a significant question of how to add staff in the future if the district has already spent that money on current salaries. This practice is frowned upon in school financing circles.

  5. The new superintendent’s compensation package does not demonstrate good fiscal stewardship. The increase over the former superintendent’s compensation flies in the face of reasonableness, especially when qualifications are compared.

WITH ITS LATEST SPENDING ON A SUPERINTENDENT’S COMPENSATION PACKAGE AND THE LARGE STAFF SALARY INCREASES, THE DISTRICT IS MORTGAGING THE FUTURE OF ITS STUDENTS.

THE PUBLIC SHOULD EXPECT THAT A NEW TAX WILL BE PROPOSED BY THE DISTRICT WITHIN A YEAR IN ORDER TO BAIL IT OUT OF THE FINANCIAL PROBLEMS IT HAS GOTTEN ITSELF INTO.

  


Antioch School Board Controlled by Spendthrifts
by Ken Hambrick, ACCT Chairman
Appearing in Antioch Ledger-Dispatch, Jan. 27, 2001

         Monday night I attended the meeting of the Antioch Unified School Board (AUSD). The willingness of the board to spend money it doesn’t have is frightening. At issue is a very large salary increase for all staff (teachers, managers, administrators, custodians, etc.) to the tune of more than $8.2 million dollars. Over the three year life of the contracts the increases total more than 21%.

          While staff needs to be treated fairly, this package is scary since AUSD does not have the money to pay for it. Among things it is doing are: taking away classroom supplies (impacting students) and utilizing one-time funds such as state block grants and special education settlement payments (with no assurance that these will be available in the future).

          Worst of all, they are using half of the daily student attendance money AUSD will receive from the state in the future in order to fund current salary increases. This is very risky, is frowned upon in school financing circles, and mortgages the future. Where will the money come from to educate the 720 new kids forecasted for each year if the money has already been spent on current staff salaries?

          AUSD has been taken to task by two Grand Juries for poor financial management, the most recent in 1999. The 1999 report stated that the board is "…apparently unwilling to exercise thoughtful, forward looking, conservative fiscal stewardship". Apparently this is still true.

          Another issue is the unbelievable contract given to the new superintendent. He was given a raise of more than $40,000 with his promotion from Assistant Superintendent in the district. This is also $24,376 more than what the last superintendent started at. This is a real "sweetheart" contract, one which is not only unreasonable but one which the district can ill afford. His total compensation package is $161,280.

          I was also shocked at the vehemence of Board President Olenchalk in his verbal attack on an Antioch resident who was requesting a review of the new superintendent’s salary package. No citizen should be treated this way by an elected official. The resident making the request was very polite. Why couldn’t Olenchalk have treated him with respect?

          The Board Room was packed by school district staff some of whom stated that they had been "ordered" (requested?) to attend. They clapped loudly when the Board President chewed out the Antioch resident. Makes one wonder about the quality of these folks.

          It is interesting to note that the board is comprised of three former AUSD employees and two outsiders. The three former employees band together regularly to form a majority such as they did in approving the new superintendent’s contract. Again one must wonder how unbiased and objective these individuals can be when dealing with issues like those above. Most likely the citizens of the community are being less well served than they should be.

          The people of Antioch must realize the board has endangered the future education of their children by these actions.

          They should also realize it is likely they will be faced with a proposal for new taxes to pay for the apparent unwillingness of the board "to exercise thoughtful, forward looking, conservative fiscal stewardship". Otherwise how can the board pay for the future if it has already spent the money?


Guest Commentary in the Antioch Ledger-Dispatch
by Ken Hambrick, ACCT Chairman
Appearing in Antioch Ledger-Dispatch, June 2001


          At the January 22, 2001 board meeting of the Antioch Unified School District I presented an analysis of what the board was proposing to do with salary increases and compensation for the district superintendent.
The analysis dealt in some detail with the impact on the budget, not just for 2000-2001, but for future years.    A copy of this analysis was given to each board member.

          The gist of the analysis was that the board was continuing the irresponsible financial acts that were criticized by two Contra Costa County Grand Juries. The latest Grand Jury report, dated 4/1/99, stated that the board was “…..apparently unwilling to exercise thoughtful, forward looking, conservative fiscal stewardship”.

          The decision at the January 22 meeting to grant salary increases of $8.7 million (for the 2000-2001 school year) and giving Superintendent Dennis Goettsch an unheard of salary of $144,780, a car allowance of $8,000 and another $8,000 for miscellaneous expenses (with health insurance and retirement benefits on top of that), set the stage for financial disaster. Conservative fiscal management was nowhere in the room. I sat there and heard the board say that these decisions would not have any negative impact on the district’s finances.

           To grant these exorbitant increases, the district did a number of things. It used one-time money for a three year contract (a no-no in school financing), used special education settlement funds and block-grant funds, took money away from the supplies students need and mortgaged the future by using future “average daily attendance” payments from the state to pay current salaries.

          I predicted in my analysis that the district would be in dire financial straits for the next and future budget years. And, guess what? That is exactly what has come to pass. At the moment they have a shortfall of almost  $4 million.

          The reasons put forth by the district are: shrinking funds from the state for year round schools; higher energy bills; increased health insurance premiums; more special education mandates; and the need to hire more teachers because of the increase in students. The big item though, which the district soft-peddles, is the double-digit salary increases granted in January.

          Let’s look at the district’s arguments one at a time:

          1. "Shrinking state funds for year-round schools."  The district says it planned on getting $1 million. It knew when it used the $1 million figure that this was unrealistic. These funds have declined steadily each year. The trend says that $400K would have been more reasonable.

          2. "Higher energy bills. This is not new news."  The district knew full well that energy prices were soaring when it spent the salary money in January. And the district had just spent about $6 million in bond money on energy saving equipment.

          3. Increased health insurance premiums. The district has known for at least a year that these increases were coming.

          4. More special education mandates. It spent the special education settlement funds to pay for the double-digit salary increases.

          5. The need to hire more teachers. The district spent a good portion of next year’s student “average daily attendance” increases to fund the pay raises (mortgaged the future). My analysis said this action would assure financial problems in the future.

          6. The double-digit salary increases. Had the district used responsible financial management it would have given salary increases of no more than half of what was given. Had the increases been more like 6% the district would not have the budget shortfall it is facing.

          Now the district has a $3.8 million deficit. Interestingly this is about the amount of the pay increases called for this year in the union contracts. Since the contracts approved in January were for three years, they specify an increase equal to this year’s COLA be given to all employees. The district claims it has an escape clause in the contract.

          What it actually it has is a wage re-opener where these increases can be discussed. If it is really an escape clause, why didn’t it specifically say so? What if the union says no, we don’t want to pass up this year’s 
increase?

          In short, the whole budget of the school district is a house of cards.   It is built on shuffling money here and there, spending money it doesn’t have, shortchanging the students and mortgaging the future. The
rationale used for the budget shortfall is full of holes.

          Astute financial management could have avoided the current problem of balancing the budget. The district has a long history of poor financial management and seems dedicated to continuing that on into the future.

          Now Superintendent Goettsch has come up with another scheme to spend more money the district doesn’t have. And, unfortunately, what he proposes does not provide one benefit for students. He proposes to add a deputy superintendent to do his job for him. This is incredible especially in light of the outrageous salary he is already receiving.

          I won’t try to go into all the details of his plan here (an article in the Ledger Dispatch on 5/15/01 did that). Suffice it to say that none of this is necessary if Goettsch does the job for which he is so well paid.

          Any money available should be spent on the children, not to make Goettsch’s job easier. For example, in order to give the huge salary increases earlier this year, the school board took away 80% of the funds for student classroom supplies and kids are sitting on chairs and using desks that came west by wagon train. Shouldn’t these kinds of things be fixed before making life easier for the superintendent? My guess – the board will approve his plan since he has the majority eating out of his hand.

          Watch out, citizens of Antioch. The district will soon be coming after you for more tax money to pay for its financial mistakes and mismanagement. If they do, remember what you did with the lighting and landscaping tax proposal. You defeated it because it didn’t make any sense to commit more of your hard-earned income to new taxes.

          Do the same with any new tax taxes proposed by the school district.  Make the board shape up and get the job done by managing the money it has in an efficient and fiscally responsible way. If it doesn’t, replace the whole bunch.