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Utah education officials make $25M school funding mistake

Published April 11, 2012 7:13 pm

Education • State leaders say schools won't likely be hurt by the miscalculation, which leads to the resignations of two top finance officials.
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A miscalculation at the State Office of Education has led to a $25 million mistake in Utah's education budget for next school year — and the resignation of two top finance officials.

Education leaders, however, say they don't expect the potential shortfall to hurt schools or districts. State leaders are considering solutions ranging from using education money expected to be left over at the end of this school year to calling a special legislative session.

"We committed to fund [enrollment] growth and this is an important part of growth," said Senate Budget Chairman Lyle Hillyard on Wednesday. "We would hope to get it fixed, and I think that's going to be our first priority."

The $25 million represents less than 1 percent of the state's overall $3 billion-plus education budget.

The problem was that the state office essentially underestimated the number of students expected in schools next school year. The correct number will cost the state $25 million more than anticipated.

State Superintendent Larry Shumway attributed the mistake to "a faulty reference" in a spreadsheet. He emphasized that no money was misappropriated. He called the mistake "significant" but "manageable."

Still, he said, "I don't want to say in any way it's an acceptable error." He said the seriousness of the problem is reflected in the consequent staffing changes at the state office.

Todd Hauber, associate superintendent, and Larry Newton, director of school finance submitted their resignations due to the blunder.

Hauber said he learned of the gaffe March 29, told the state deputy superintendent about it that same day, and voluntarily submitted his letter of resignation the next day. He'll continue to work until new staffers can be hired.

"There will be no school that will not receive money because of the error, so from that standpoint, it's an unfortunate calculation or forecasting error, but one that can be managed," Hauber said Wednesday. "But on the other side, it's an error that shouldn't have happened in the first place. It's an error that should have been caught earlier in our regular review process."

In fact, lawmakers, education officials and the legislature's fiscal analysts had been asking questions about the numbers since late last year, saying they didn't look right.

Shumway said the explanation that was given for those numbers has since proved flawed.

Hauber said in response to those questions he found a mistake in a different program, which was fixed.

He said he also analyzed the larger school budget and found that if there was a mistake, it was within the usual margin of error when working with such estimates.

He said he didn't feel he had adequate time to review each formula and spreadsheet by the deadline for the data — a decision he said in hindsight wasn't the best.

Ultimately, the $25 million gap was within the margin of error, but it was much higher than Hauber had anticipated

"I need to step out of the way," Hauber said of his resignation, "so somebody else can come in and be able to provide that assurance to the governor's office and legislature that when the [state office] submits data, it can be relied upon."

Newton said he believes he was asked to resign because "we did not have systems in place to be able to catch this kind of an error."

But, he cautioned, "To avoid this kind of thing in the future more resources are going to have to be plowed into school finance."

He called his resignation fair, and said he is content to retire early.

Shumway said of the resignation request, "there have been other errors and it led me to believe changes were necessary in order to correct the problem." Asked whether more staffing changes may follow, he said, "not that I'm prepared to talk about at this time."

He added, "We have to examine every aspect of our systems, both personnel and systems, to make sure that these kinds of errors are caught when they occur in a timely way."

Sen. Howard Stephenson, who co-chairs the Public Education Appropriations Subcommittee, said state leaders have talked about calling a special session or delaying the use of a computer-adaptive testing program to fix the problem.

Or, they may wait until the end of the fiscal year this summer to see how much money is left over in public education or use money left over from last year.

Shumway said there's typically been more than $30 million left over each year, partially due to conservative budgeting. That money is typically put back toward the next year's budget. Also, there's still an unspent $16 million carried forward from the previous year, he said.

Hillyard, R-Logan, said Wednesday he'd prefer to wait until the end of 2012 when the state will have a better idea of how much revenue it will have available to put toward the problem.

Stephenson, R-Draper, said lawmakers and education leaders seem to generally agree that they're not going to address the issue by reducing basic per pupil spending.

"The general agreement that I'm hearing from most of my colleagues and staff people, both at the state office and the legislature, is that we want to give assurance to the public and the K-12 community that we are not going to reduce the value of the weighted pupil unit [basic per pupil spending]," Stephenson said.

"We're not going to cut education spending by $25 million because of a mistake," Stephenson said.

But plugging the hole with money this year won't help fill the same hole in the next year's budget unless that money is from an ongoing source, Hillyard said.

Hillyard said Wednesday he wasn't overly surprised by the miscalculation.

"Public education is so complicated, [with] so many parts playing into it, I'm amazed we don't have a problem like this every year," Hillyard said. "If there's a glitch occasionally, that shows we're all human."

lschencker@sltrib.com

Twitter: @lschencker