A state-assigned fiscal advisor shared serious financial news with the Plumas Unified School District and Office of Education governing board March 5. Members of the public reacted with questions and criticisms at the special meeting, held at Quincy Junior-Senior High School.
The meeting, which drew 100 people, focused on the school district’s $2 million budget shortfall, announced in a routine financial update at the the board’s Dec. 11, 2024 school board meeting. Since then, the deficit is estimated to have grown to $3 million.
State assigns fiscal advisor to PUSD
When a district adopts a negative budget, it triggers an investigation by the California Department of Education, said Robert Shemwell. Shemwell is a fiscal advisor leading the investigation into PUSD’s financial shortfall. He is working alongside a Fiscal Crisis Management Assistance Team, a state agency designed to help local TK-14 educational agencies identify, prevent and resolve financial and data management challenges.
Shemwell opened PUSD’s March 5 meeting with a short slide show providing an overview of his role in Plumas County. “We must understand the severity of the problem and then work on a fiscal recovery plan,” said Shemwell. “We are finding out how large the fiscal issue is and then creating a transition plan for support for a long time. School districts throughout the state have had this happen before. It happens.”
He called the board’s efforts to reduce staff and expenditures “a good step forward.”
The fiscal crisis team is currently looking back at multiple years of financials and expect to know more “in a week or so.” It is doing a deeper dive into the fiscal financial situation and looking at systems and practices, said Shemwell. The ultimate aim is to develop a positive budget and recovery plan for review and approval by the board before the next budget is due in July. That package may include an emergency loan from the state, he said.
Portola board member Joleen Cline asked Shemwell to review what led the district to this point. The problems that surfaced in December happened over several years, Shemwell responded, citing changes in district leadership, the COVID pandemic, the Dixie Fire and declining enrollment, which impacts how districts are funded.
East Quincy/Graeagle board member Leslie Edlund asked Shemwell to explain how the community will be kept informed. Shemwell said that there is a community transparency plan which includes progress, community input, the scale and scope of the problem and the recovery plan to address it.
Chelsea Harrison representing Chester, asked whether the investigators will know more within the next couple of weeks. Shemwell replied, “Yes. We will have a draft idea and knowledge with solutions. We will have lots of conversations and difficult decisions to make.”
Shemwell mentioned the big turnout of community and staff and turned from the podium to address the audience, repeating again: “You will get through this. Other school districts have been through it.”
Emergency loan may be needed
Michael Fine, the chief executive officer of FCMAT, appeared before the California Senate Budget Review Committee Feb. 27, where he provided an update regarding PUSD’s financial situation. At the session, he raised the possibility that the district may need an emergency loan. If approved, it will be the first emergency loan from the state to a school district since 2013.
“We’re very, very concerned about Plumas.”
Michael Fine, fiscal crisis team chief executive officer
In a recent interview with John Fensterwald of EdSource, an education journal, Fine elaborated on the trouble: “We’re very, very concerned about Plumas. They have already borrowed to a point they can’t pay back, and there has been some finessing of the data to make it look better than it is,” Fine said.
Public calls for resignations
During the public comment period that followed the fiscal advisor’s presentation, Julie Tanaka, parent of a Quincy high student, did not mince her words: “Numbers don’t lie, the board is responsible and the administrative staff is incompetent. There is a lack of transparency and ethics. You are not following the mission statement on the district website. You have failed our county and failed the public. The board needs to step down and resign.”
“The board needs to step down and resign.”
Julie Tanaka, Quincy parent
Dan Patterson, parent of four PUSD students, also asked the board to step down. He said he visited the district website to read the mission statement, vision, and values. The district accounting practices are questionable at best and that the board has not verified budget information presented for board approval.
Greenville teachers Maria Johnson, Crystal Williams and Heidi Kingdon all delivered pleas to the board not to lay off Indian Valley teachers due to the trauma the children and community have suffered during and after the Dixie Fire. “When our town burned down only the school and grocery store survived. The valley has been through unmatched trauma. This year we are seeing so much progress and success with the kids. People are coming back and rebuilding,” said Johnson.
Citizens discover unpublished, unapproved audit
In recent weeks two Quincy residents told The Plumas Sun they have taken the initiative to uncover the source of the financial crisis at PUSD. Tanaka, parent and business woman, and Vicki Poh, a former administrative assistant for a local water district, have spent hours researching the school district’s audits and board minutes. As part of their investigation, the pair noticed that the 2022/23 audit was missing from the district website.
After Poh requested it twice from the district and did not receive it, Tanaka said she called the State Controller’s office and the California Department of Education. Finally, she received a copy from the state and discovered it had never been approved by the board. According to Tanaka and Poh, the state instructed the school district to approve and post the audit. The two have also been in touch with Fine, the FCMAT executive officer.
The missing audit was finally brought before the board for approval March 5. Mallory Marin, chief business officer for the district, presented it. The audit was ready for approval in August 2024, she said.
Board member Harrison asked Marin about the delay. Marin said that her office has not caught up after the Dixie Fire and COVID. Everything is a year behind, she said. She expects the 2023/24 audit to come before the board in April, seven months after it was due. Staff are currently working on the 2024/25 audit.
The audit identified 12 findings, issues or errors that can range from minor mistakes to serious problems. Some were repeat findings from the previous year; recommendations had not been implemented.
The 2022/23 PUSD audit findings included: accruals not done, bank accounts not reconciled, deficiencies in internal control over financial reporting, questions about following the Public Contract code regarding bidding procedures in construction projects, not following the district’s own policies for time accounting and allowable costs, unable to verify ratio of administration employees to teachers, a noncompliant home-to-school transportation plan and classroom teachers salaries not meeting the required minimum fifty-five percentage for classroom teacher salaries.
Edland asked what steps are being taken to improve the findings. Marin pointed to several staff administrative retirements in the 2021/22 fiscal year as the source of the problem.
“Now we have more consistent staff and repeat findings are being addressed,” she said. “Corrective action plans are being worked on in my office,” she added later. Edland asked for updates and quarterly reports, to which Marin agreed. Harrison asked for corrective plans presented to the board with solutions by May of this year.
Board member Cline asked Marin whether the audit needed to be approved, or if the board could wait to compare it with the 2023/24 audit expected next month. The state had asked for the audit to be board-approved, Marin stated.
Dan Kearns, an Indian Valley parent, asked the board whether they read the audits. He said that audits had repeat findings and solutions for two years. “Two years to become compliant and legal is not rocket science,” said Kearns.
Harrison said this was the first audit she has seen since she came on the board in December of 2022.
What’s next?
Read adjourned the meeting and announced that the board would meet again March 6 in closed session to discuss the superintendent search with the hired consultants.
The next regular meeting is planned for Wednesday, March 12 at 4:00 p.m. at Greenville Elementary School. It will include a public interview session with District 2 candidates, then closed session and another public session starting at 5:30 p.m.