MCUSD million was a mistake, not a mystery

2010-01-21 / Front Page

By Jill Ballinger, Gazette Editor

The Tax Revenue Anticipation Note (TRAN) loan that caused so much confusion in December was a mistake of the bond company, not the result of work not completed by Mariposa County Unified School District officials.

Mark Farrell of Piper Jaffray told the board that his company sent information to the County and district, “but forgot to attach an email saying to put it into a separate account.” When the County received the money in July and didn’t have instructions on what to do with it, the treasurer’s office put it into the district’s general operating budget.

Superintendent Randy Panietz said his office did not requistion the funds, and in fact he was glad when he learned the money had been transferred to the County for a better interest. All the while, the superintendent thought the County had the proper instruction from Piper Jaffray. “I did not know the funds had been put in the general fund,” Panietz explained.

The TRAN money is typically held by a third-party bank, but because the financial markets were so unstable last year, the money was transferred to the County, where it could earn a higher interest rate. Mariposa County Treasurer Keith Williams told the board that it may actually net the district about $10,000 by the time the TRAN is repaid.

For complete coverage of this issue and the MCUSD Board of Trustees regular meeting, see the Jan. 28 edition of the Mariposa Gazette.

If you would like to make a comment on this story, or read other comments, visit our Web site at www.mariposagazette.com

Return to top

Re.Anonymous blog: "How could

Submitted by Janette Gamble (not verified) on Sat, 2010-01-23 13:36.

Re.Anonymous blog: "How could a million dollars"... Someone in our school district office did in fact notice that these funds, which were directed to be deposited into a separate restricted account, somehow ended up in the district's general fund account at the County Treasury. It has been confusing, I agree. One would automatically think, “if someone deposited money into my checking account, I'd know about it immediately.” I balance my checkbook constantly. School district cash fund accounts at the County Treasury are weird to me. That’s why government agencies hire full-time accountants. There are “deferred” revenues in the cash account, and I’m told that sometimes the state “overpays” and the money has to be sent back, that sort of thing. So while that account is constantly monitored by the County Treasurer and the District’s business department, the Governance Team itself doesn’t “balance” the cash account each month. However, this is my understanding of what happened: Shortly after the Dec. 17 board meeting, our current CBO Linda Levesque readily shared with me a “Financial Summary Report” showing that when funds are deposited into the county treasury they are marked with an (appropriate) object code. This "9000 series" code deals with cash - as opposed to budget. That “million dollar” amount was in the 9135 object account, but had not yet showed up in a "budget" category, because of the transition of business managers. There are notes that indicate that staff was aware of this deposit, but because this was the first time for TRAN funds to be invested at the County Treasury (instead of being left with the investment firm – in which case we never see the funds until we need to use them) guidance was needed on how to handle it, that is where to place it within a budget category. Hilda Miranda (interim business manager) left a note asking our newly hired business manager (Levesque) to look into it. When I asked Ms Miranda about this, she said she brought the deposit to Mr. Panietz’s attention, and he (quite understandably, in my opinion) determined it was indeed appropriate, as he was relying on the County Treasurer to follow instructions he had been given about how to “invest” the TRAN funds. She further shared with me that every month Mr. Panietz met with her to discuss “cash flow” to make sure we were going to be able to “make payroll”. When Ms Levesque joined us she had several immediate tasks to attend to (including preparing the report on unaudited actuals, developing an operating budget for 09-10, and then jumping into the First Interim – and more). She looked into Ms Miranda’s note just before the Dec. 17th board meeting and determined, based on her experience with TRANs, that the funds should not have been deposited into that account. Mr. Panietz felt her concerns needed to be brought to the Board’s attention, even though there hadn’t been time to fully investigate what had happened, and so included it under an item already on agenda: 12.1 Approval of the First Interim Report. I’m grateful, as a Trustee, that we now have a business manager who has sufficient experience to be able to help me understand budget transactions even better, because as you know, school budgets are really complicated. On Dec. 30 Trustees received a copy of an email from the County auditor-controller (Chris Ebie) indicating that the TRAN money had been “transferred [to the appropriate County fund 084, and that] interest earnings will be posted….” as Ms Levesque had requested. Furthermore, I am confident that Mr. Panietz did the right thing to bring it to our attention immediately so that it could be resolved quickly, which it was, and at no financial harm to the District. It is unfortunate that the issue generated so much confusion and public accusations before being fully investigated and understood. I hope this helps address your concerns. Feel free to contact me via the district web page if you have more questions.

What about the fact that no

Submitted by Anonymous (not verified) on Sat, 2010-01-23 10:08.

What about the fact that no one even remembered approving the trans in the first place? Does this money automatically get sent to districts?

Re.Anonymous blog: "What

Submitted by Janette Gamble (not verified) on Sun, 2010-01-24 21:01.

Re.Anonymous blog: "What about the fact that no one remembered approving the tran"... That isn't a fact. The TRAN investment was publically approved at a board meeting on March 26, 2009 Item 6.1 "Resolution No. 09-21 Tax and Revenue Anticipation Note". Quoting from the minutes of that meeting: "Mr. Panietz explained that this resolution allows the District to take advantage of a pool of funds borrowed by a financial entity in case we run short of working funds. Our anticipated tax revenue [State Revenue Limit funds under Prop.98] is the 'collateral' for the loan.... It was further noted that this arrangement has been utilized by the District for the past several years [15 times in the past 20 years, as it turns out] and it is common practice for school districts. Mr. Cardoso asked about the procedure for obtaining the note. Mr. Panietz explained that this is an administrative function and as such, is typically handled by staff. Mr. Cardoso requested that an informational item be brought to the board if a TRAN is triggered [drawn upon]" Motion to approve the resolution was unanimous. Mr. Panietz brought this item back to the Board at the Dec. 17th meeting after he became aware that it looked as if the TRAN funds had been "triggered" somehow, as they had been deposited into the District's General Fund account at the County Treasury. There was concern that they had not been invested as instructed. Funds are not automatically sent to districts. The resolution of March 26 gave Mr. Panietz approval to set the TRAN "investment" in motion, and he therefore signed appropriate documents to do that. He did not sign to have funds placed in the District's general fund, and there was confusion about how they could have gotten there since he was the one who would have "triggered" that deposit, and only with Board approval. He brought his concerns to the Board's attention with plans to continue investigating the issue. Within three working days, he was able to ascertain (and shared with me) that this was simply an error of where the funds had been deposited for investment purposes; that the TRAN funds had not been budgeted or "tapped into" as it originally appeared. That error has since been traced to the TRAN management firm's failure to send proper instructions to the County Treasurer. The error has been corrected: TRAN funds are now correctly deposited, and the District will realize additional security as far as being able to pay our employees, even as the state continues to defer revenue to districts. The TRAN is not costing the district any money; furthermore, investing it in the County Treasury will likely earn interest dividends (thousands of dollars) for the district, even if the TRAN is “drawn down”. The TRAN is fully paid back at the end of the school year as "anticipated revenue" gets allocated to the district from the state. In the meantime, the invested TRAN is earning interest, and we are able to manage monthly cash flow. School funding and budgets are extremely complicated to understand. Board members are elected to oversee operations to ensure fiscal solvency of the district, which has become more and more challenging with all that's happening at the state level. I hope this explanation helps, but feel free to contact me via the district webpage if you still have questions.

How could a million dollars

Submitted by anonymous (not verified) on Fri, 2010-01-22 14:10.

How could a million dollars appear in the general funds and no one in our school district office noticed?! I'm not buying it.