‘Catastrophic’: Superintendent resigns amid district’s $36 million gaffe
18th November 2024 · 0 Comments
By Marta Jewson
The Lens
NOLA Public Schools Superintendent Avis Williams formally announced her resignation last Thursday morning, following a $36 million budgeting gaffe that’s left schools in dire financial straits.
In a prepared statement issued Thursday morning, Orleans Parish School Board President Katie Baudouin thanked Williams for her work, saying that Williams brought new energy to the role and that schools showed improvement in test scores during her tenure.
Williams said she will serve until Dec. 1; an interim leader has not been named. At the OPS Board meeting on Thursday evening, Fateama Fulmore, who serves as Deputy Superintendent has been named as the Interim Superintendent.
In the fall quarter of the 2024-25 school year, school leaders were met with a disastrous reality – the district’s financial forecast was based on the wrong amount of sales and property taxes it expected to receive from the city.
This month, NOLA Public Schools officials informed schools that, due to the accounting error, the district’s budget forecast had been inflated mistakenly by $36 million. The shocking shortfall was first announced as $20 million in October, then nearly doubled this month. School leaders are worried that amount could increase further.
The district’s budget numbers, released each spring, are the basis for all public-school budgets in the city. No charter school will be spared from the pain of deep budget cuts — especially small single-site charters with extremely tight budgets.
This month’s estimates equate to nearly $1,000 per student, putting an elementary school with 600 students in the hole by $600,000, for instance. Unless and until the board approves funding assistance, schools are faced with making substantial, swift cuts to balance budgets by the end of the 2024-25 budget year.
“This could be catastrophic for schools and students across the city,” KIPP New Orleans CEO Rhonda Kalifey-Aluise said.
Questions and criticism have mounted in recent weeks as district officials continued to tally the shortfall. At a Tuesday committee meeting, officials hinted they may not understand the full impacts until the beginning of 2025.
“It’s very difficult to understand how and why the district’s projections were this far off from reality,” Louisiana Association of Public Charter Schools CEO Caroline Roemer wrote, noting that budgeting math is a “core function” of the central office.
In New Orleans’ nearly all-charter district, charter leaders are reliant on the NOLA Public Schools district’s financial forecast — specifically the sales and property tax the city collects on schools’ behalf. So the fallout from the announced error started a few months before the superintendent’s resignation.
Chief Financial Office Stuart Gay left the district in September, right before the dire miscalculations became public. At the time, district spokeswoman Taslin Alfonzo said Gay “moved on to pursue an exciting new career opportunity.” Multiple attempts to reach Gay for comment were unsuccessful. Williams also did not return The Lens’ requests for comment.
Nyesha Veal began serving as interim CFO, as of October 2024, Alfonzo said. Veal has previously worked as a Senior School Finance Officer and Comptroller with the district, according to its website. Prior to that she was a Grants Analyst at ReNEW Schools.
Budgeting
Each spring, school leaders envision dream budgets – hoping to go beyond essential staffing, transportation, and light bills – by adding new extracurriculars, shiny science lab equipment, better laptop computers, books with crisp pages, new band instruments, student incentives like pizza parties, and a student-assistance budget to cover field-trip fees and extra uniforms for students who can’t afford them.
But ultimately, school leaders spend arduous hours fine-tuning the forthcoming year’s bottom line to meet the reality of ever-tight school funding. As the district’s enrollment office finalizes student counts over the summer, charters must further adjust the budget to ensure proper staffing within their offices and classrooms.
Schools are in a really tight spot because the mistake was announced more than a quarter of the way into the school year, KIPP’s CEO, Kalifey-Aluise said.
Inevitably, to make such deep cuts, schools will have to chop from their biggest costs: staff salaries, benefits, and transportation, charter leaders say. That means that schools may not fill vacant positions and may need to reduce bus routes — meaning longer bus ride times for students, or fewer after-hours buses for children participating in band or sports. Some activities and events may also be scaled down, to help move budgets closer to reality.
Realistically, there may not be enough fat in existing budgets to get the numbers back on track, said Kalifey-Aluise. At this point, drastic shifts to budgets are “virtually impossible,” she said.
Charters could also be affected years down the road, because “financial health” is a factor that the charter evaluators must consider with every contract renewal, along with a variety of academic, financial and operational metrics.
That’s troublesome in this scenario, because of the parameters set by the district’s accountability framework.
“Because the NOLAPS Charter School Accountability Framework (CSAF) penalizes schools for running deficits, this will impact student programming, staffing and compensation, and ability to sustain current vendors who support our schools,” Kalifey-Aluise said.
To demonstrate sound fiscal management, charters typically try to carry over 10 percent of their operating budget into new budget years. That’s required by the district to receive high marks on their annual charter evaluations. But now, charters must decide whether to spend their fund balance to cover the shortfalls — and risk endangering next year’s charter evaluation.
Six weeks into the budgeting-error saga, school leaders are worried that the error’s size could increase further.
The nature of the “accounting error” has yet to be explained. Some sources say the city, which is responsible for collecting taxes and remitting them to the district, contributed to the district’s poor forecasting. It’s unclear how often the city communicates tax collection estimates with the district.
However it happened, the district projections were gravely off the mark, the Louisiana Association for Public Charter Schools found.
The district’s budget was based on a projection that the city’s property taxes would increase by 18 percent, but they only went up 8.75 percent. The budget also leaned on an expected city sales tax increase of three percent. Instead, sales tax decreased one percent.
“Schools are not privy to sales tax receipts or ad valorem information from the City, and we must instead rely on the information provided by the district,” Roemer wrote.
Still, if the error’s genesis can be traced to tax-collection information from the city, then it would be fair to say that the fault does not lie entirely with Williams or her staff.
On Tuesday, district leaders did not provide any answers about the current size of the error or how much of the blame rests on district leaders versus city administration. The City of New Orleans also did not respond to multiple requests for comment about its sales-tax and property-tax contributions.
Until a full investigation is complete, fingers will continue to point in many directions.
In light of the seriousness of the error, education advocates have begun to question the board’s responsibility in approving this year’s budget, based on such a serious miscalculation. The elected school board bears fiduciary responsibility for the district.
Shrinking enrollment, pandemic funding, already stressing budgets
After a national search to replace Superintendent Henderson Lewis Jr., the board hired Williams in April of 2022. This fall, Williams opened the district’s first intentional direct-run school in the modern charter era — The Leah Chase School, a win for traditional-education advocates in the city. But the decision to create the new school within the Lafayette Academy building came amid a chaotic charter renewal process. Lafayette Academy families were first promised their school would remain open, then told it would close, then received a third message, one week later, that the school would remain open, but would be managed by the district.
But critics say that Williams has made little progress in one of the key assignments she was given when she arrived. When she arrived, she was charged with downsizing the all-charter district because local schools, mirroring national trends, face shrinking enrollment. The district asked her to create a “right-sizing” plan.
Other district superintendents, facing similar declines, have closed schools. But in New Orleans, Williams faced a particularly unique challenge, because the city’s charter schools operate on multi-year contracts and revoking them — to close schools — is only done in serious situations. Schools only come under high-stakes scrutiny at the end of their contracts.
Though some charter networks consolidated campuses in the face of enrollment declines, seats in many open schools continue to go unfilled. Given the growing insurance, maintenance and operating costs for each school building, it is increasingly expensive to keep the doors open at under-enrolled schools. And lower-performing schools are more likely to have empty seats, further straining the budgets of schools where students arguably need the most.
Within this under-enrolled climate, the accounting error hits harder. “We are currently already facing significant declines in enrollment and a lack of portfolio management or right-sizing of the district,” Kalifey-Aluise said.
From the start, this year was financially tenuous, said Dana Peterson, CEO of New Schools for New Orleans. “This incident is compounded by the larger issue of financial strain our schools are facing – federal pandemic relief funds are drying up, systemwide enrollment continues to decline, and too many of our students are learning in aging, inadequate school buildings,” he said.
Like Kalifey-Aluise, Peterson sees little progress with the district’s efforts to close schools and shore up operating budgets. “Collectively, we need to refocus our attention on rightsizing the district to address these issues so that each school can have the resources it needs to support students in the ways we all expect,” he said.
Financial Assistance alongside Accountability
Earlier this month, Orleans Parish School Board President Katie Bauodoin wrote a letter to school leaders promising that the district was “working tirelessly to understand the true scope of this issue.”
She offered two potential solutions in a letter to school leaders co-signed by Finance Committee Chair Olin Parker. Both options would require board approval and could come before the board on Thursday night, Nov. 14.
• The district could use a $5 million surplus from last school year to “help offset the funding gap for schools experiencing economic hardship”
• The district could approve up to $15 million in funds from its fund balance – the money it saves year-to-year to maintain a healthy budget, and in case of emergencies– The money would be loaned to schools to support them this year the district would repay its fund balance as future sales tax revenues increase.
The district immediately tapped its fund balance during the COVID-19 pandemic.
At committee meetings on Tuesday, district leaders did not provide any answers as to how much of the faulty accounting came from district ledgers versus city calculations.
The two solutions proposed by the district are a good first step, but other, broader solutions must follow, Kalifey-Aluise said.
“I’m hopeful that we’ll move beyond the idea of loans,” she said. “This simply kicks the can down the road and does not make schools whole.”
This article originally published in the November 18, 2024 print edition of The Louisiana Weekly newspaper.
