The Hope Elementary School District, which oversees three elementary schools in Santa Barbara, (Hope, Monte Vista and Vieja Valley) faces a $687,000 budget shortfall for the remainder of the 2016-2017 school year.
The number is surprisingly high even to veteran educators and shocking to many employees in the district given that a six-figure adjustment took place in June.
"To put it simply ... the district has for the past few years been under-budgeting and overspending," said superintendent Anne Hubbard.
Hubbard told NewsChannel 3 that she realized there were "a few things" back in April when she was researching the position and noticed that the Hope District had applied for certain loans that her previous district didn't need to.
"In closing down 2015 and 2016 books, she was finding more and more shortages," Hubbard said of Sandra Knight, the district's current business manager who took over the position from Sandy McBride.
Hubbard said she came to realize the scope of the financial problems in the early part of summer, after she'd been hired to replace Dr. Dan Cooperman, who had announced his retirement in February.
"We worked with a fiscal specialist," Hubbard said. "I call it forensic auditing because there's a lot of digging and investigative work. At no point was it ever considered that there was anything illegal ... or suspicious activity."
Hubbard said the school board was notified and Santa Barbara County, the district's fiscal agency, ordered a second audit.
"I can understand, actually ... you can look on former (Hope District) budgets and see calls of ... there's a concern about a cash flow, but then taxes would come in at a higher rate. Or, we've spent down our reserve, oh, but then we would get these one time funds from the state," she explained. "There'd be a little bit of panic, something would come in to alleviate the pressure. So, that's really what masked the problem."
Hubbard said as of now, $670,000 dollars is the amount needed to get the district through the end of the school year, with no debt. On top of that, the state requires a 4 percent minimum reserve.
NewsChannel 3 asked to meet with former superintendent Dr. Dan Cooperman for his input, being that the accounting in question came during his tenure.
"I'm very saddened to hear this," Cooperman said. "At the June meeting, we made budget adjustments that would've reduced our expenditures for the next year, over $700,000 dollars. And those adjustments are posted on the district website."
Cooperman revealed that mistakes and miscalculations were discovered by Knight during her overlap with McBride, before her retirement.
"As soon as we knew there was a problem, we got to work," Cooperman said.
Cooperman cites a change in funding models and increased rates in special education charges, overseen by the county office, in the amount of $130,000 that was taken out for the previous year, but failed to be marked in the books.
The former superintendent also revealed that Knight discovered more than one accounting error involving employee benefits in amounts exceeding $100,000 that were never entered. Cooperman said those human errors amounted to roughly $474,000 dollars.
NewChannel 3 asked Cooperman if he believed ineptitude may have been the root of the problem.
"I don't know. I know that there were mistakes in the budget when (new) Sandy pointed them out to me," Cooperman said.
NewsChannel 3 asked Cooperman, If it's (the Hope District) audited every year, how did it get to this point?"
"I can't answer that," he said. "I mean, those are the things, checks and balances that the board and I rely on to make sure we have accurate information."
Cooperman praised the work ethic and commitment of the teachers and educators in the district but was dumbfounded that the shortfall is so large, as he learned in August from Hubbard.
"Right now there's a lot of hustle and bustle going on," Hubbard said. "We have to get a budget to the county, an approvable budget, by October 7."
Hubbard said the district's management team, including her, has voluntarily agreed to a 2 percent reduction in compensation and that she is also taking a $15,000 salary cut from the contract she just negotiated. Her next move includes approaching the union and certificated teachers.
"They're the ones in the trenches and I really need their voice to say, 'This would feel less painful than that!' Believe me, there's no super easy option."
A Town Hall meeting, open to the public, will be held Monday in the Hope Elementary School auditorium at 7 pm.