State, GISD bicker over $16M payment

GALVESTON — The Texas Education Agency began demanding millions of dollars from Galveston school district as early as October, according to memos and e-mails.

The state education commissioner even threatened to de-annex district property or consolidate it with another district if it didn’t pay up, memos show.

Meanwhile, district officials argued in e-mails and memos that by demanding return of millions in aid, the agency violated promises made by Education Commissioner Robert Scott after Hurricane Ike.

Board President Andy Mytelka said district officials tried to keep the dispute “out of the press.”

The district released the memos after interim Superintendent Ann Dixon announced last week the district faces a $16 million shortfall in 2009-10, and possibly another $16.5 million shortfall in 2010-11, largely because it planned to receive more state aid than the state is willing to give.

The Promise

Scott agreed two weeks after Hurricane Ike to give the district state aid for two years at pre-Ike levels, Mytelka and former Assistant Superintendent Arnold Proctor argued in memos to the agency.

They said Scott agreed to fund the district on estimated 2008-09 enrollment. That “legislative payment estimate” predicted an average daily attendance of 7,599.

The state pays districts based on the estimate. Districts with an average attendance lower than the estimate repay the state; districts with higher attendance get more money at the end of the year.

The agency predicted the district would have 7,599 students in 2008-09, but its attendance was only 7,071 before Ike struck on Sept. 13, 2008. The agency learned the district’s pre-hurricane average was 500 less than estimated when the district applied for disaster relief in September 2009.

First Memo A Year Later

In a Sept. 22, 2009, memo, Proctor outlined a meeting with Mytelka, then-Superintendent Lynne Cleveland, state Rep. Craig Eiland and Scott.

Scott said the agency would allow the district to use the 2008-09 estimate of 7,599 students for 2008-09 and 2009-10 funding, Proctor wrote.

The memo, dated a year after state and district officials met for the first time after Hurricane Ike, is the first written record of conversations about hurricane relief.

Scott agreed that changing the funding estimate after trustees had approved a budget and adopted a tax rate would be “unfair and detrimental to the instructional welfare of students,” Proctor wrote.

Problems Begin

The agency sent Proctor an e-mail Oct. 19 saying the district had been overpaid by $7.1 million in 2009-10 for students who weren’t enrolled.

The agency owed the district $1.1 million, so officials asked the district for $5.98 million, according to the e-mail from Leo Lopez in the agency’s state funding division.

Lopez’s assessments contradicted guidance agency officials had given before, Proctor wrote. He asked Lopez to recalculate the funding using 7,599 students.

Lisa Dawn-Fisher, deputy associate commissioner for school finance, wrote back that the funding division had “not received instruction from the commissioner’s office to implement the agreement” outlined in Proctor’s Sept. 22 memo.

The next memo from the state is dated Dec. 7, 2009, almost two months later.

In that memo, Helen Daniels, the agency’s director of state funding, tells Cleveland that all disaster relief is contingent on the agency having a surplus in its school funding account, called the Foundation School Program.

The agency doesn’t have a surplus, so it can’t give the district any of the promised disaster relief for 2009-10.

Mytelka’s Letter

In a Jan. 7 letter to Scott, Mytelka argued Scott had pledged on Sept. 24, 2008, to forgive so-called Robin Hood payments the district owed in 2008-09 and to continue funding based on pre-hurricane attendance estimates.

Dawn-Fisher met with Proctor on June 26, 2009, and directed him to use the 7,599 estimate to plan his 2009-10 budget, Mytelka wrote.

Proctor did so, and the district approved that budget.

Mytelka and Cleveland met with Scott again on Sept. 22, and he “affirmed that the Texas Education Agency would honor the commitment made by you and Dr. Fisher,” Mytelka wrote in his Jan. 7 memo.

District officials didn’t hear from Dawn-Fisher until December, when she wrote the district did not actually have 7,599 students when school started in fall 2008, before Hurricane Ike hit, Mytelka said.

Dawn-Fisher said the agency would adjust aid to reflect the actual average daily attendance of 7,071 students at the start of the semester, Mytelka wrote.

She also said the agency couldn’t fund any relief for 2009-10 unless it found a surplus, which was “not likely to happen.”

Mytelka asked to meet with Scott to discuss the matter before getting lawyers involved.

“To unilaterally change previous guidance to the detriment of the district is unconscionable,” Mytelka wrote. “Bankrupting a school district hardly seems fair and just given the other turmoil to which the district has been subjected.”

Scott did not respond, Mytelka said.

Demanding Money

In a March 3 memo to Cleveland, Scott reiterated that the district should have disclosed it had 7,071 students, not 7,599, when the fall 2008 semester began.

He also said relief hinged on the agency having a surplus.

The state agreed to forgive the district’s recapture payment in lieu of disaster relief payments, Scott said.

However, the district had received disaster relief funding for 7,599 students when it actually had 5,600 students, and it never sent the recapture payment required under the Robin Hood law.

Scott demanded the district wire $16.5 million in unpaid recapture payments to offset the $16.7 million in disaster relief money.

The district didn’t send the money.

Scott sent a second memo April 30, warning Cleveland that if the district didn’t pay the $16.5 million, he would de-annex property equal to that amount, or consolidate the district with another district.

He wrote he had directed his staff to begin researching those options.

The district sent the money.

Dixon is predicting the district will have a deficit of $16 million, which would drop the surplus from $39.2 million to $23.1 million.

The depth of that deficit depends on how many students the state agrees to count toward its 2009-10 aid payment.

She predicts an average daily attendance as low as 5,695 students, 1,904 less than predicted for state funding.

The district budgeted for $24.6 million in state aid in 2009-10.

But if Dixon’s projections are correct, it will receive only $15.5 million, $9.1 million less than planned.