State will hold back school funds

Sisters schools asked the chief of Oregon's schools to reconsider withholding $1.2 million in state school funding from Sisters in the wake of a disallowed homeschooling program.

She reconsidered - and her decision stands.

Oregon State Superintendent of Public Instruction Susan Castillo has reaffirmed her order to withhold $1,208,286.15 in State School Funds (SSF) from the Sisters School District.

Depending upon which withholding plan the school district chooses, the Oregon Department of Education (ODE) could start withholding the funds this month.

Castillo notified Sisters School District Superintendent Elaine Drakulich of her decision to withhold the funds in a 17-page letter dated September 17, 2007, and signed by Ed Dennis, deputy superintendent of public instruction.

"The state superintendent sent an order on reconsideration, which is basically restating their (the ODE's) findings from almost a year ago, October of '06," said advisor to the state superintendent Randy Harnisch, who has left his post with the state superintendent and is now serving as a legal council for the Oregon State School Boards Association.

"The school district asked us to reconsider that order and we have been working with the lawyers in the Department of Justice and just a couple of weeks ago we issued the order on reconsideration which was our formal response to the school district's request," he added.

"Basically, we are standing by the prior decision. Now, we're asking for them (the Sisters School District) to reimburse us (the ODE) State School Fund (SSF) dollars," said Cindy Hunt, ODE legal affairs coordinator, remarking that the school district receives, "...several payments a year from the State School Fund and one option is to deduct from each of those payments."

Members of the Sisters School Board met with their attorneys in closed, executive session on Tuesday, October 9 to discuss Castillo's decision (see related story, page 33).

Last December, Castillo agreed to the Sisters School District's request to reconsider her original order of October 11, 2006, to withhold the funds. (See "Schools win stay on withholding of funds," The Nugget, December 27, 2006, page 3.)

Since then Castillo has entertained arguments from the Sisters School District that the homeschool program it operated at Sonrise Christian School (now Sisters Christian Academy) from 1999-2004 complied with Oregon statutes relating to alternative education programs, that the district accurately counted its Average Daily Membership (ADM) and that the district's Sonrise employees did not violate either the Oregon or the United States Constitutions.

Castillo's reaffirmation of her order to withhold the funds is based on the findings of an investigation conducted by the Oregon Secretary of State's Audits Division that were released on September 15, 2006 (See "State comes down hard on Sisters School District," The Nugget, September 20, 2006, page 1.)

The investigation found that the homeschool program the Sisters School District operated at Sonrise inappropriately counted students in its ADM calculations and recommended that the school district be required to reimburse to the ODE $1.2 million in "improperly" collected ADM payments.

In explaining her reasons for reaffirming her order to withhold the funds from the Sisters School District, Castillo's letter states: "...there are at least two independent reasons why the district's receipt of $1,208,286 in SSF in connection with its 'home-school' program at the Sonrise site was improper and should be recovered by the ODE from the district.

(1) The district's Sonrise site program was neither an alternative education program under ORS 336.615 to 336.665 nor a homeschool tutoring program; and (2) the district's payment of teachers at a Christian school to teach that school's regular educational program under these circumstances violated Article I, section 5, of the Oregon Constitution."

In her letter Castillo outlines her plan to withhold funds from the school district by making 11 reductions in the district's regularly paid apportionments starting this month. "2/12 of the total amount will be deducted in October and 1/12 of the total amount in November and December of calendar year 2007, and 1/12 of the total amount in January, February, March, April, May and June of calendar year 2008, and 2/12 of the total amount deducted in July 2008," Castillo states.

Should the district choose, Castillo also provides the district the option of entering into a written agreement to absorb the correction over a five-year period. In such a case $243,592.01 would be deducted from the district's January 2008 regularly paid apportionment, with $182,016.85 withheld in January 2009, $113,932.02 in January 2010, $249,942.00 in January 2011 and $418,800.67 in January of 2012.

These amounts reflect the total funds the district was overpaid on a year-by-year basis starting in 1999-2000 and continuing through 2003-04.