Top officials resigned after ‘significant' financial errors at Glendale-River Hills schools. Here’s what’s next.

After accounting errors set the school district on track for financial disaster, School Board members in the Glendale-River Hills School District are quickly charting a new course.

That course could include one of the last moves a school board member ever wants to make: cutting staff.

Officials have assured the community that any budget cuts will not affect staffing for this school year. The district could still notify staff in the coming months if they will not have a job for the 2024-25 school year. After several closed-door meetings, school board members could vote in a public meeting Wednesday on a plan for making cuts.

The district is also exploring other measures to avert the unexpected financial crisis, including a state loan as early as this summer, and potentially asking district voters later this year to raise school taxes. Financial advisers have said those steps, along with budget cuts, would allow the district to stabilize.

Officials haven't fully explained the accounting errors, which appear to have set the district on a path to run out of money before the next school year. As of February, the district was projected to run $2.7 million short on funds for this school year, though officials have said they're still working to finalize that figure.

The district's finance director, Lindsay Johnson, shocked board members in January when she explained that she had grossly misestimated the district's financial position during the budget process. Johnson resigned the next week.

District Superintendent Alyson Weiss submitted her resignation in February, though she said she will continue working through June. She declined an interview with the Journal Sentinel. Her resignation letter did not include an explanation of her resignation, nor did the School Board meeting where board members accepted her resignation.

School Board President Danielle Bailey has said the board will not close any schools and will share more information as it becomes available.

"The board will continue to work with urgency to improve board policies and oversight, build stronger checks and balances, and ensure that going forward we receive timely, accurate, and complete information about the status of our revenue, spending, and budget," she said in a statement.

What were the accounting errors in the Glendale-River Hills School District?

While it's unclear what exactly went wrong, it is clear that board members had an inaccurate financial picture when they voted on this school year's budget.

The workbook they had didn't paint a great financial picture, but it wasn't disastrous. It looked like the district was entering this school year with a "fund balance" cushion of over $2.8 million. The district would eat into that balance to fund its priorities, but it would still end the school year with a positive balance of about $570,000.

In January, Johnson broke the reality to school board members. She had enlisted help from Baird, a financial firm, to analyze district spending. They found the district was on track to run out of funds, including its entire fund balance, by the end of the school year.

Johnson told board members that they had, in fact, entered the school year with a fund balance of just $1 million. The district was now projected to blow through its fund balance and still be short by $2.7 million for what it planned to spend this school year.

As board members peppered her with questions, Johnson explained that Baird had different modeling tools that showed a different outlook. "The information was there, but I just wasn’t looking at it in the right way," Johnson said, failing to satisfy board members, who called for an audit of what went wrong.

Since Johnson's resignation, the district has sought help from more experienced professionals.

It immediately brought in Todd Gray, who served 12 years as superintendent in Waukesha, to review Johnson's work over the last two years. Within days, board members also hired an interim business manager, Gus Knitt. They are tasked with presenting a clear budget picture to board members as soon as possible, as well as analyzing what went wrong.

Bailey said board members are carefully monitoring their work.

"Significant errors in accounting and budgeting made by staff that are no longer with the district have increased the complexity of this accounting investigation, but it is progressing as quickly as possible while ensuring proper due diligence is taken," Bailey said in a statement.

What staff are at risk of cuts at Glendale-River Hills School District?

It's not yet clear how many staff members, if any, could lose their jobs. The district might be able to cut some positions without laying off any staff, depending on how many staff members retire or resign this year.

At a board meeting March 5, Weiss explained that any reductions would follow a board policy for such situations.

The policy tasks the superintendent with determining which employees would be laid off, based on the following factors, which are not in order of priority: educator licenses, performance evaluations, input from direct supervisors, and how long they've worked for the district.

Is the Glendale-River Hills School District considering a referendum or loan?

At a board meeting March 5, advisers from Baird laid out a possible course for the district.

In the next month, the School Board could determine how much of a loan it should seek from a state loan program for municipalities and school districts. That would allow the district to access those funds as early as June. Baird advised that the district should ensure it has cash on hand before August, when it has a major bill due.

While that loan will float the district through this school year, it will set the district up for tighter budgets in future years as it pays back the loan. Baird suggested the district could make major budget cuts, turn to a referendum, or both.

Board members have discussed the possibility of bringing an operational referendum to voters in August or November. It's not yet clear how much money they might seek with a referendum, which would ask voters to agree to raise local property taxes to increase the district's funding.

District officials plan to share another budget update at the school board meeting Wednesday.

Contact Rory Linnane at [email protected]. Follow her on X (Twitter) at @RoryLinnane.

This article originally appeared on Milwaukee Journal Sentinel: Glendale-River Hills schools could cut staff after accounting errors