Schools win stay on withholding of funds

State Superintendent of Public Instruction Susan Castillo will not withhold money from the Sisters School District starting in January.

Castillo has agreed to a stay of at least 60 days to her order of October 11 to start withholding from the district $1,208,286.15 in state school funds for overpayments for a homeschool program at Sonrise Christian School (now Sisters Christian Academy).

An investigation that took more than a year to complete conducted by the Oregon Secretary of State's Audits Division determined that the Sisters School District was overpaid by the state school fund from 1999 to 2004 for students the district claimed in its Average Daily Membership (ADM) count. (See "State comes down hard on school district," The Nugget, September 19, 2006).

In a letter dated December 8 addressed to the Sisters School District's counsel Neil Bryant of Bryant, Lovlien and Jarvis, Castillo informed the district of her decision to reconsider her October 11 order. Her action provides the district with the opportunity to review the secretary of state's audit and conduct its own investigation.

"They're going to give us a chance to present our side of the story," said Superintendent Ted Thonstad with a feeling of relief.

Weeks ago Bryant, on behalf of the district, requested copies of the audit and the materials upon which its findings were based. Randy Harnisch, Adviser to the State Superintendent of Public Instruction, told The Nugget that it has taken the secretary of state much longer than expected to provide the Sisters School District with the work papers that explain how the $1.2 million figure was reached.

While the district has been waiting for this paperwork, the clock has been ticking for the district to file an appeal. Harnisch explained that because of this, the Oregon Department of Education (ODE) felt it would be appropriate for the school district to file a request for reconsideration and a stay.

"And they did," Harnisch said, "and we (the ODE) granted that, which basically kind of stopped our process - put it on hold for a period of time."

Harnisch said, "We felt that the school district did need to have a period of time to look at all of that information - really to do the job that they need to do for the district."

In her December 8 letter, Castillo directs the district "to provide me with any additional information or arguments that the district considers to be relevant to my reconsideration of the October 11, 2006 order within 21 days of the district's receipt of the Secretary of State's materials."

Harnisch explained that the 21-day provision was included because the secretary of state has been releasing materials to the district in batches rather than all at once. The ODE wants the school district and its attorneys to review the information as soon as it is received and submit anything they find that could impact the state superintendent's discussions on reconsidering her order.

"So if the second batch comes in January 1, we won't be looking for the district's response on that batch until the 21st of January," Harnisch said.

Harnisch noted that in general a 60day deadline has been granted to have everything wrapped up. However, he added, "if we get to 60 days and we find that there is quite a tangle of information and we need some additional time, I think the superintendent's letter said that it's at least 60 days or however much time I (the superintendent) need to do this reconsideration."

"If we're going to take the step of asking a district to repay us what is a sizable chunk of money, we want to be sure we're asking for the right amount," Harnisch said.

The opportunity to conduct its own due diligence is important to the Sisters School District. Some time ago Bryant pointed out that the district has an obligation to tell its taxpayers and employees "this is what we think we do or do not owe."

School officials are hoping that their review will find evidence that the secretary of state's auditors drew some wrong conclusions or made some mistakes about the homeschool program housed at Sonrise.