Policy 1700 Hearing

[curnowc]

POLICY 1700 APPEAL HEARINGS

Lincoln Center

December 7, 2006

 

The Policy 1700 Appeals Panel met December 7, 2006 at 4:45 p.m. in room 213 at Lincoln Center. Attending were panel members Malcolm Goodrich, Kathy Kelker, Joel Guthals, Dawn Achten, Complainant Jerry Hansen, Superintendent Jack Copps, Business Manager Thomas Harper, District Clerk Leo Hudetz and guest Laura Tode.

 

Trustee Malcolm Goodrich opened the meeting by asking Leo Hudetz about the meeting being posted in its entirety on the web. Leo Hudetz stated the agenda had been posted on the District’s web site. The meeting packet, which contained the complaints, in its entirety was available for review and could be picked up in Leo Hudetz’s office. Malcolm Goodrich asked if there was anything in our policy that was violated in posting the notice of the meeting. Leo Hudetz said that there was not. Malcolm ruled in favor of the posting process that was used.

 

Malcolm Goodrich gave Jerry Hansen the opportunity to present his argument. Jerry Hansen was advised that only elementary trustees would vote on elementary complaints and high school trustees would vote on high school complaints.

 

Elementary/High School Hearing #1

 

Jerry Hansen read a prepared statement on proper use of weatherization and deferred maintenance money in the elementary and high schools. (A copy of the summary complaint is attached.) Mr. Hansen stated that “the board chose to illegally transfer” $798,000 of general fund expenditures to the weatherization and deferred maintenance funds. He stated that by illegally misappropriating these funds the trustees acted irresponsibly and illegally. Within the prepared statement Malcolm Goodrich asked that a letter from Governor Schweitzer be entered into record. Thomas Harper reviewed the letter on behalf of the district.

 

Malcolm Goodrich asked Jerry Hansen if he believed that there had been an actual physical transfer of money from the miscellaneous fund into the general fund. Jerry Hansen replied “no.” Jerry Hansen went on to say that by transferring expenditures and relieving the general fund of $798,000 worth of expenditures and putting those into the miscellaneous fund it is in effect subsidizing the general fund with $798,000 from the deferred maintenance fund.

 

Trustee Goodrich asked if under Jerry Hansen’s definition of deferred maintenance would the work need to be completed by a third party. Jerry Hansen answered “absolutely not”. He stated that he has no objections to using personnel for deferred maintenance as long as there is about the same amount of money in the general fund for routine maintenance. He went on to say that the 13 people that have been district employees for a long time will still be district employees after three years. So therefore, Jerry Hansen thinks that the district is using the $798,000 that was intended for deferred maintenance to supplement the general fund.

Kathy Kelker asked Mr. Hansen if he was aware when the Board was making these decisions that there was a lengthy discussion of laying off all of those employees because of the inability to pay their salaries out of the general fund. Mr. Hansen replied, “then lay them off.” Trustee Kelker replied that her question to Mr. Hansen was he aware of the discussion. Mr. Hansen replied “no I was not”.

 

Malcolm Goodrich asked Mr. Hansen about using the word illegally several times and asked if he was using that word in the sense of criminal conduct. Mr. Hansen told Trustee Goodrich that he was challenged at a Board meeting if the Board was doing anything illegal, Mr. Hansen said that it is not criminal it is civil.

 

Joel Guthals stated that the money in question was allocated by the state legislature for weatherization and deferred maintenance. The legislature said that it had to go into the miscellaneous fund. Mr. Hansen agreed. Mr. Guthals asked when the money came to the school district from the State of Montana what fund did it go into? Mr. Hansen said that it was deposited into deferred maintenance and weatherization fund which is part of funds 115 and 215, miscellaneous funds. Joel Guthals asked if it was correct that when the money came from the state of Montana it went to the very fund that the State of Montana Legislature directed the funds to go into. Mr. Hansen replied “that is correct”. Mr. Guthals said that this is specifically what the Legislation required and Mr. Hansen agreed. Trustee Guthals asked what did the Legislation require as far as the spending of the money? Mr. Hansen responded, “it must be spent on weatherization and deferred maintenance.” Mr. Guthals stated that the school board directed that the money be utilized to pay for weatherization and deferred maintenance to be performed by the staff of the school district. Mr. Guthals asked if this was correct, and Mr. Hansen replied “yes”. Mr. Guthals stated that in fact Mr. Hansen had just acknowledged the exact directives of the State Legislature had been followed and the money that came from the state, went to the proper fund and will be expended from the proper fund for the proper purpose. Mr. Hansen did not agree with this statement, however, Mr. Guthals stated that he had just agreed to that.

 

Thomas Harper reaffirmed the district’s position. Mr. Harper stated that the district talked to legal counsel and OPI and firmly believed that the district acted properly in releasing the funds. Thomas Harper confirmed that the money received from the state did go into funds 115 and 215. Malcolm Goodrich asked Thomas Harper if any of the money was ever physically transferred into a general fund or any other fund. Mr. Harper replied “no”. Therefore, Mr. Goodrich stated that all the money would be spent out of the miscellaneous funds for weatherization or deferred maintenance, Mr. Harper replied “correct”. Mr. Hansen asked Thomas Harper if there was any written correspondence from OPI that this met with their approval. Mr. Harper stated that in the final analysis this was an administration and Board decision.

 

Jack Copps stated that there is one point missing. OPI and the Board of Public Education do have the authority to develop administrative rules of Montana if they want to be very specific and in fact narrow the intent of the statute and they have not at this point done this regarding the weatherization and deferred maintenance funds. This would suggest that they gave the school districts broad authority in terms of using those resources. It is also a fact that, as Trustee Kelker mentioned, if we would have selected the other option and had simply laid off all of our crafts people, all of the work that they would now be doing would in fact be deferred maintenance at this point. We would simply just be adding to the deferred maintenance list. So either option was not a good option. Trustee Goodrich asked Jack Copps to clarify the fact that when he looks at the statute he does not see a definition of the term deferred maintenance or the term weatherization. Jack Copps agreed. Malcolm Goodrich said that the only requirement was to deposit the funds in miscellaneous funds for the purpose of spending on these undefined terms. Jack Copps agreed.

 

Kathy Kelker moved and Dawn Achten seconded that the panel affirm the original decision made by the board to use weatherization and deferred maintenance funds as indicated in the elementary budget that was passed by the board and the panel affirm the Superintendent’s decision.

 

Those voting in favor were Kathy Kelker, Dawn Achten and Malcolm Goodrich. Motion passed unanimously.

 

Joel Guthals moved and Kathy Kelker seconded that the panel affirm the decision made by the board to use weatherization and deferred maintenance funds as indicated in the high school budget that was passed by the board and the panel affirm the Superintendent’s decision.

 

Those voting in favor were Joel Guthals, Kathy Kelker and Malcolm Goodrich. Motion passed unanimously.

 

Elementary Hearing #2

 

Jerry Hansen read a prepared statement titled “Bus Drop Off” (A copy of the summary complaint is attached). As part of his statement, he said it is illegal to use transportation fund monies for the capital project of building a bus turnaround. He said the trustees have engaged in extortion by assessing the taxpayers for an illegal use of transportation fund monies. He defined the word extortion. He said the bus drop off at Boulder Elementary should be “forever known as extortion lane”. He said trustees consider themselves above the law and this must change.

 

Kathy Kelker asked Mr. Hansen if he was aware that in Montana code 20-10-143, item E which states that transportation funds may be used for any other amount necessary to finance the administration, operation, or maintenance of the transportation program of the district, as determined by the trustees. Kathy Kelker stated that she interprets that item as giving trustees a great deal of leeway in how transportation monies are spent. Trustee Kelker asked Mr. Hansen what his interpretation was of item E. Mr. Hansen said that his interpretation was that the transportation fund should fund everything that happens from the time a student steps on the bus until the time the student steps off the bus. Anything before or after the time they enter the bus should not be included in the transportation fund monies. Mr. Hansen said that he was basically opposed to all bus drop-off areas in the district but the others were approved by the voters. His main concern is that this is a non-voted levy. Kathy Kelker asked Mr. Hansen if he found the language specifically getting on the bus and getting off the bus in the statute. Mr. Hansen replied “no”.

 

Trustee Kelker also stated that she understood Mr. Hansen believes that the funding in the transportation fund which is a separate fund should only be spent on an annual basis.

Kathy Kelker asked Mr. Hansen what part of the statute he based this on. Mr. Hansen’s reply was that he based it on the meaning of administration, operation and maintenance. Administration and operations are annual costs. He said that there is one capital improvement that is not in the statute but it is in OPI’s rules and regulations which states you can build a bus warehouse for a repair facility and that is a capital project that’s properly approved to maintain the busses. He said it would be included in operations through the depreciation of that facility. He said the bus drop area is not to maintain busses, it won’t be depreciated but it is going to be depreciated when you get to the overall comparison of the school district. For the record Kathy Kelker stated that she interprets parts of the statute differently.

 

Joel Guthals gave his interpretation of statute 20-10-143. Joel stated that we have to be very careful about reading the statutes The operative sentence of sub paragraph (1) is “The trustees of a district furnishing transportation to pupils who are residents of the district shall provide a transportation fund budget that is adequate to finance the district’s transportation contractual obligations and any other transportation expenditures necessary for the conduct of its transportation program.” This is the operative section of the statute. The remainder of sub section (1) is what we call examples of how the money can be spent, therefore, it says the transportation fund budget may include and then gives some subsections, but that is not mandatory. Joel did point out that if you look at sub-section (b) you will find reference to capital expenditure items in the amount necessary for the purchase of school busses which are capital items. So we can see that the intention of the legislature was to allow school boards to utilize these funds for capital items.

 

Thomas Harper reaffirmed the district’s position. Mr. Harper stated that the district talked to legal counsel and OPI and he firmly believes that the district acted properly in using transportation funds. Part of Mr. Hansen’s complaint stated that the district had budgeted more money than what was actually needed to construct the drop-off. In response Mr. Harper stated that at the time the budget was approved, the District relied on engineering estimates of the cost. Mr. Harper said the excess funds not needed will stay in the transportation fund until the end of the year. At year end the funds may be moved to the reserves allowing the mill levy to go down. This will be a board decision. Mr. Hansen asked if OPI approved the use of funds as stated in a motion made by the Board of Trustees at their August 21, 2006 board meeting. Kathy Kelker said that on the advise of staff and with the understanding it had been reviewed by OPI the Board made its decision

 

Jack Copps stated that the statute does say that the trustees have the authority to authorize any expenditure on the the conduct of its program and Mr. Hansen needs to understand that the transportation program includes safe boarding and safe unboarding of students and Montana Statute does include safety.

 

Kathy Kelker made a motion and was seconded by Dawn Achten to affirm the superintendent’s decision and affirm the original decision by the school board allowing them to use elementary transportation funds to construct the bus access at Boulder Elementary School. Those voting in favor were Kathy Kelker, Dawn Achten and Malcolm Goodrich. Motion passed unanimously.

 

Mr. Hansen told the committee that the reason they got a “little bit of vinegar” was because the school district kicked him off the Business Committee and Budgeting For Results Committee. Jack Copps responded that at least now they knew why there were at the meeting. Mr. Copps asked Mr. Hansen if the reason he used the word extortion was because of him being removed from the Business Committee? Mr. Hansen told Mr. Copps that he defined the word extortion.

 

Meeting was adjourned at 5:45 p.m.

 

_____________________________

Malcolm Goodrich, Chair

 

_____________________________

Cindy Curnow, Recorder

 

 

 

 

 

Summary of 1700 Policy Complaint