MLSD considers trust, past and future funding

MOSES LAKE – The Moses Lake School District Board of Directors and MLSD administration have begun discussing the process of putting forth a levy proposal to voters in the spring of 2025.  

While budget cuts during the calendar year are impacting the 2024-25 school year, Interim MLSD Superintendent Carol Lewis said the district is still facing challenges through the end of the 2025 calendar year. School districts budget on school years rather than calendar years due to the academic calendar, while levy measures are always set during calendar years. The last levy passed by MLSD voters expires Dec. 31, and no levy funding will be available to the district starting in January. If voters permit a levy in the spring, funding from that measure won’t be available to the district until January 2026. 

“So, 2024 the year we're currently in, it was the voting year where there was a double levy failure in our community. I think we all know that. And so, the calendar year impacted by that though will be 2025 so we're not even there yet. We're not to the full impact in a calendar year of not having a levy. But we are in the school year because we're in the 24-25 school year,” Lewis said during the Thursday night meeting. 

Rough finances 

District voters declined a levy twice this year, many citing a lack of trust in the district’s administration associated with finances, feeling that changing from a second high school to Vanguard Academy being built was a bait-and-switch and similar issues. The levy failed in February and April. Then in May, as the district was planning how it would function without the support of a levy from voters, accounting errors were discovered that put the district in the red, financially, by about $20 million. 

The accounting errors had multiple aspects, according to various district staff in presentations over the last several months.  

The MLSD Finance Department had expected a certain level of enrollment that was not realized this past school year. Per-student funding from the state is about $18,000 in allotment funding for each enrolled pupil. Initial projections by the district were that the district would have 8,299 full-time K-12 students, but MLSD later found and announced that the projection was overcounted by 200 students because alternative learning students had been counted twice. 

The aftereffect of that projection error was that funding provided by the state was taken back. The state provides allotment funding based on the projection at the beginning of the school year. Afterward, the actual enrollment is reported at the close of the semester and any discrepancy adjustment is made. In this case, that totaled out to about $3.6 million being pulled back. Had the district underestimated enrollment, the state would have made up the difference with a deposit rather than a claw-back. 

“Enrollment is the biggest driver in our funding,” former MLSD Finance Director Stefanie Lowry said during a July 2023 school board meeting.  

Some improper spending occurred as well, with documents from the district identifying at least one unapproved purchase of a $100,000 sound system for the Moses Lake High School pool facility.  

MLSD Interim Superintendent Carol Lewis said the district has put in safeguards against such unauthorized spending after the hiring of Executive Director of Finance and Operations Mitch Thompson. Lewis said Thompson had established firmer processes and alerts that ensure all purchases are properly reviewed and approved and that all purchases of $25,000 or more are reviewed by the MLSD school board prior to being made. 

Multiple MLSD officials, current and former, including Lewis have agreed that increased expenses due to inflation played a factor as well. 

Concerning intent 

Former Moses Lake School Board members Shannon Hintz and Susan Freeman spoke with the Columbia Basin Herald and said they felt they had been intentionally misled by Lowry when financial information was provided to them during their tenure on the board.  

Hintz explained that Lowry provided a snapshot report to the board to show them where the district was financially. However, when issues came to light in May after both spring levy votes, district officials made it public that the accounting errors had occurred. 

“We were told everything was hunky-dory. Our documents show everything was hunky-dory. ... Somebody was trying to paint a better picture than we really were at. No. That’s financial fraud. That is deception. That is a crime,” Hintz said.  

Hintz indicated that she had not filed a police report with regard to the issue and Moses Lake Police Department Chief Dave Sands said there has been no investigation into Lowry nor former MLSD COO Jeremy O’Neill, who oversaw the Finance Department as part of his job.   

However, in a Friday interview, O’Neil said he had never seen any indication prior to May 2024 that accounting was inaccurate. MLSD had always had a strong financial audit record and he had felt he could depend on Lowry to provide accurate data to himself, former Superintendent Monty Sabin, the board, and the rest of MLSD administration.  

Lewis has said it appears that a change in how apportionment is managed by the state in early 2022 was part of the problem, and MLSD finances appear to have been off track since shortly after that change. Lewis said there is no indication that Lowry intentionally misled the district, the board or the community. 

O’Neill, who left in May after the financial situation arose, said he “did not have line of sight” on the financial issues because he was focused on various projects associated with constructing two campuses, safety and security and similar matters. He had depended on Lowry to provide information and agreed with Lewis in the assessment that Lowry had not intentionally misled anyone but had made genuine mistakes in the lead-up to the budget crisis.  

Grant County Treasurer Daryll Pheasant said that he contacted Lowry and had advised her of the discrepancies with the district’s accounts multiple times last year, in writing. However, Lowry had responded that everything was fine.  

Pheasant wasn’t alone in his efforts to advise Lowry of the issue. North Central Educational Service District Superintendent Michelle Price said the district had informed Lowry of concerns with the budget as well but had also been told by Lowry that the finances were on track. The ESD contacted the district multiple times about the issue, including communication with O’Neill and former Superintendent Monty Sabin.  

“The contact with Stefanie Lowry, that first happened in October (2023), and then again in January, and that had to do specifically with enrollment count,” Price said.  

Sabin was notified and said he was confident that the numbers were fine, according to Price. Price said she and NCESD CFO Trisha Schock met with Lowry at the beginning of the year. 

“We met with (Lowry) in January and said, ‘Help us understand what you’re seeing that you think the enrollment is accurate, and what we’re seeing that it doesn’t look accurate,’” Price said.  

The ESD next met with the district in May, when Lewis asked for information regarding the district’s finances. After doing a deeper dive into the finances with Lewis, Price said she called Sabin to alert him that the Treasurer’s reports weren’t aligned with the internal reports. 

That’s when the accounting errors became public and the district began to look at reductions in force and other cost-saving measures.  

Price also said she believes that the purchase of the pool sound system is out of the norm for the district, not a consistently occurring issue.  

“That was a one-off,” O’Neill said in a separate interview. 

Lewis said the state audit is expected to identify for certain whether the pool sound system purchase was a unique situation and that district staffing hadn’t allowed a full internal audit of all purchases. 

O’Neill said internal analysis of the budget was what caused the issues, from his perspective.  

“Reports we were looking at – in hindsight – the data was accurate. The high-level analysis was flawed,” he said. 

O’Neill said he is hopeful that changes that have been made at the district work and said he has a lot of respect for those doing the job of making things right, including Lewis and the sitting school board. 

“I applaud the district. I'm hopeful there is structural changes that come out of this. And, I think that’s what they’re working on. I trust that that’s what they’re working on,” he said. 

To date, there has been no concrete evidence of any criminal activity and Price, Lewis, O’Neill and others maintain that the situation arose from human error.  

Hintz and Freeman feel the data shows intent, but that has not been proven and no police reports have been filed regarding Lowry or any other official’s actions.  

Under Washington law - RCW 40.16.030 - intentionally filing a false report carries a penalty of up to five years in prison and up to a $5,000 fine; however, it must be intentional and not an error.

Current situation 

In an interview with Lewis last week, she said the district is working hard to move forward and re-earn the MLSD community’s trust. She knows it will take a lot of work, but she is confident that the current administration – none of the staff directly associated with the accounting errors still work at MLSD – and school board are working hard to earn that trust and be accountable.  

She said everyone on the board, including Board Chair Kirryn Jensen, Vice-Chair Carla Urias and members Amy Breitenstein, Paul Hill and Ryan Coulston have worked tirelessly to help balance the district’s budget, improve transparency and ensure the public has good cause to trust the district again. 

Price, who served as MLSD superintendent for several years, ending her tenure there in 2017, said that during her tenure, before and after, the district had a reputation for doing enrollment projections accurately. 

“For the most part, for a long time, the school district had been kind of doing the thing where you underestimate your class sizes, and then whatever extra there is, is kind of a proverbial bonus of sorts. And then a few years ago, that changed for some reason,” she said. 

She believes Thompson and the new administration has reestablished that dependability. 

Thompson previously served as the supervisor of enrollment and institution funding with the Office of the Superintendent of Public Instruction. 

While financial tallies at the ESD, Grant County Treasurer’s Office and MLSD did not match prior to May, reconciling of the records appears to have occurred and those numbers appear to align. The district is posting financial information to its website and Lewis has held multiple community town halls to explain the district’s finances. 

During Thursday’s board meeting, Lewis reviewed the results of a recent community survey relating to public confidence in the district. Generally, the community appears to still have a lack of confidence in the district.  

Of the 163 responses to the survey received so far, Lewis said 12% indicated they were confident in the financial information provided by the district so far, while 48% said they felt a state audit that just began – costing the district an estimated $70,000 – would be needed. About 15% indicated that a forensic audit – at a cost of roughly $250,000 – would be needed to feel confident in the district’s financial information.  

Board Member Paul Hill, who previously supported a forensic audit, said he feels the state audit is likely to be sufficient at this time, and said he appreciated the administration’s efforts to gather more information.  

“We all know that I have championed the forensic audit, and in the early stages, I really, really thought that was what we needed because I didn’t know what we didn’t know. I didn’t know how much had been shuttered from the board, but between (Thompson) and (Lewis) and the cabinet, it’s like – It's amazing,” Hill, the longest-serving board member, said.  

The board has not decided to move forward with a levy proposal as yet, but the process for reaching that decision was begun at the Thursday meeting.  

Recently appointed Board Member Ryan Coulston said he felt a levy is absolutely necessary for the district to move forward into the future. 

“I was kind of imagining holding a sign on the street corners that said, ‘If you think this year is tight, wait until next year without the levy,’” Coulston said.  

Board Chair Kirryn Jensen asked the public to come forward with whatever their concerns might be so that they can be addressed.  

“I would just like to say, as a board member, that I feel like the information has been given to me fully, like, I have no questions. When I ask questions are answered to me, and I feel very confident in that. So, I guess what I’m saying is, if you’re a community member or a parent and you do have a question or you want more information, you need to tell us what it is that you want, because if you have a question – I have a question,” Jensen said.  

    MLSD Finance and Operations Executive Director Mitch Thompson
  

    Stefanie Lowry, former MLSD finance director, speaks at a school board meeting prior to her departure. Lowry is no longer with the district.