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Error causes $2.5 million shortfall for 509-J

A mix-up in codes on reports sent to the Oregon Department of Education has led to a $2.5 million headache for the 509-J School District.

Recently, district deputy clerk Joan Starkel discovered the error while reviewing the past three years of State School Funding records.

After having former chief financial officer Dan Chamness review and confirm the mistake, the district reported the error to ODE.

Current CFO Martha Bewley told board members at their July 8 meeting, “There was a mix up in object codes when the report was uploaded. All interest for general obligation bonds and PERS bonds was accidentally recorded as bus and capital improvement interest.”

“Those figures were misreported (two years in a row) and we got too much money, for a total of $2.5 million for the two years,” she said, adding, “We will start off the year $2.5 million short.”

The state didn’t catch the error because there is a two-year lag in the paperwork. Bewley said because the 509-J District self-reported the error, the ODE might reduce the amount that needs to be paid back.

“The ODE is willing to work with us and work out a payment plan, but for accounting purposes, we have to record this as money we don’t have,” Bewley stated, noting the district’s recently passed budget is no longer accurate.

Board member Lyle Rehwinkel asked what the district financial office was doing to make sure such an error wouldn’t happen again.

“Now, we will double check each line item before we upload the report,” Bewley responded. She noted the office records were correct; it was just the uploaded report that had the error.

To address the shortfall, Superintendent Rick Molitor said the board has to decide, “Do we eat it out of our reserves, or do we have to make cuts?”

Bewley said in the budget for next year, “We approved using $2.75 million out of our reserves in our budget.”

The board decided to wait for ODE’s response on the amount that will have to be repaid, and then they will reconvene the budget committee to rework the budget.

“We should know the next steps by the next board meeting,” Molitor said.




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