SUPERINTENDENT RANDY PANIETZ The Mariposa County Unified School District’s budget issues have taken a virtual 180 degree turn from where they were perceived to be just one month ago. In November, the district presented the unaudited actuals to the board.

At that time, MCUSD had an ending fund balance of $1.7 million in 2008-09, which represented an increase of nearly twice the projected amount. What a difference a month and state politics can make.

Last Thursday, Business Director Linda Levesque presented the district’s first interim budget report. Her news was not good, and some of it opened the proverbial can of worms into how the district’s financial details were being managed before Levesque came on board.

The first interim report is a representation of budget changes made between the adopted budget and Oct. 31 of each year. According to Levesque, the district has lost

877,826 in revenue limit funding.

There were significant losses in other state revenues, as well. At the end of the reporting period, Levesque shows that the district’s expenditures for the year are $19,617,980. Its revenue is $18,451,373. The difference is more than $1.1 million. That leaves the district with an ending fund balance in the red.

Levesque said the district is working on a “plan of action” to cut current year expenditures by $369,761. The board approved the interim report as “qualified” which means the district may not meet its financial obligations over the next three years.

“This is where we’re at right now,” Levesque said. “It’s what I refer to as being in the hole. We are in a very compromising position.” Levesque said the district should have certified the report as negative, but the current year spending cut plan will help it maintain qualified status. “We’re looking at areas that have the least amount of impact to students,” she said. ”We need to take care of this ASAP and start making reductions.”

To that end, Superintendent Randy Panietz issued a memo explaining the district’s immediate plan. He wrote to staff on Dec. 16 that “all funding that is not critical to keep the doors open is immediately frozen.” He also said that categorical programs are being looked at for further reductions, general fund accounts are being reviewed for reductions and that “plans are being developed for lay-off for the 2009-10 school year.” Federal stimulus funds are also being deployed to relieve any general fund expenditures possible, the superintendent said.

Levesque noted an important part of the general fund that had previously not been mentioned. She said the district had “drawn down” a TRAN (Tax Revenue Anticipation Note) loan for $995,152. She called the district’s cash flow status critical. “You have been floating on this money,” she said. “We’re surviving on property taxes. That’s significant,” she said.

The confusion over the TRAN began. The loan is actually a more complex form of a payday loan. The district can borrow from itself against revenue it anticipates in the future. There were far more questions than answers at the meeting, but the

GAZETTE has since learned more about the process.

During the meeting, Panietz said the TRAN money is “what has allowed us to pay salaries,” but then said “Nobody was aware” of how the money got to the general fund.

The board approved the TRAN on March 26, as a rather routine safeguard to have in place in case of a cash flow shortfall. Panietz signed the TRAN documents on June 16, and the money was wired to the Mariposa County Treasurer’s Office on July 6.

Levesque, who was not on the job at the time, was left a hand written note by former business consultant Hilda Miranda that indicates the matter needed her “immediate attention.” She said the turnover in the business office contributed to the problem. “There were so many hands in there, we can’t determine who drew down what.”

Panietz explained on Tuesday that his June 16 signature was only to transfer the money to the County treasury, where it would receive a higher interest rate. He said the County treasury was to use the TRAN funds for “investment purposes only.” That fact was not mentioned at Thursday’s meeting.

Panietz said last Thursday that he had “given very specific direction for this not to happen,” in terms of the money being placed in the general fund account. He did not say to whom that direction was given.

The superintendent said that David Marshall, the former business director, had authorized the TRAN, but wasn’t specific about the process. “At this point, we don’t know all the answers,” he said at the meeting.

Marshall had not been employed by the district for some time before the March 26 meeting during which the board authorized the TRAN.

On Tuesday, Panietz clarified that position. He said that in researching the issue, the district discovered e-mails directed to Marshall from the County in October, 2008, discussing a TRAN loan from the 2008-09 school year. That memo also discussed transfers from one school district fund to another, “which led us to believe that it had some relevance to the transfer of the TRAN proceeds,” Panietz said. “We have since determined that these e-mails do not have relevance to the current TRAN issue.”

In the end, the problem appears to be one of communication between the district, the company that issued the TRAN to the County and the County treasury itself. Panietz provided copies of emails that show the company should have provided the investment instructions to the County.

County Treasurer Keith Williams said it did not receive instructions until Friday, Dec. 18, after the issue came to light. The repayment accounts have now been established, and the TRAN funds will accrue interest effective July 6. The money to repay the TRAN “will be taken first from any unused TRAN funds,” Williams said in a release on Monday.

Panietz explained on Tuesday that he “had no indication that my written direction was not being followed by the County treasury.” He said it was the County’s responsibility to set up those repayment accounts. Williams said it is the responsibility of the school district.

Panietz said that the County is reporting that the TRAN funds have not been used, so repayment will not be a problem. The district is set to make its first payment in February, 2010, for roughly $556,000. The total amount of the TRAN loan was $1.4 million. The district received $995,152, and the County Office of Education got the balance.

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