EL PASO, TEXAS (KFOX14/CBS4) — A newly revealed financial crisis at the El Paso Independent School District has raised questions about oversight and accountability after district officials disclosed a $52 million budget deficit and more than $21 million in spending that was not approved by the school board.
The shortfall was presented during an El Paso ISD board meeting held Tuesday night.
Trustees said the deficit was far larger than what they believed they had adopted in June, when board members thought they were approving a $6 million deficit.
When asked whether there were warning signs before last night’s presentation, multiple trustees said they had not seen any.
Trustee Dr. Jack Loveridge said it was “incredibly shocking.”
Trustee Alex Cuellar said, “No, none.”
Trustee Daniel Call said, “I was absolutely speechless. I was completely stunned by this.”
Julia Spencer reports on Holding EPISD accountable: Trustees respond to district’s multi-million dollar deficit (Credit: KFOX14)
READ MORE: El Paso ISD faces $52 million budget shortfall; layoffs, financial emergency possible
Trustee Mindy Sutton raised concerns about accountability during Tuesday’s meeting, asking, “So what kind of accountability is there? I mean, is there any type of I don’t even know what the question I mean, is there like, is it negligence?”
EPISD Deputy Superintendent and newly appointed interim Chief Financial Officer David Bates responded, “The short answer is yes.”
You can watch the full discussion of the district’s financial situation below starting at the 1:47:59 mark:
District officials said several factors contributed to the deficit, including a drop in enrollment, a drop in attendance, and the approval of more than $21 million in spending that was not approved by the school board.
The unapproved spending includes employee health care costs, additional funding toward teachers, and millions in other spending.
EPISD expenditures without Board approval (Credit: EPISD/Moak Caskey)
Loveridge said the scale of the problem and the lack of board approval for certain expenditures ran counter to district rules.
He cited “that large of a sum had been misbudgeted and that there had been expenditures that had not been approved by the board as well, which is really, really against board policy.”
Trustees said they received quarterly budget reports but indicated the information may not have reflected the district’s true financial position.
Cuellar said trustees were told there would be a deficit, “but nowhere close to this number,” based on presentations “by the finance department” and those “controlling the budget.”
The district said the issue was first discovered in early May, when former Chief Financial Officer Martha Aguirre alerted Superintendent Dr. Brian Lusk and his team about the district’s financial problems.
The district stated Aguirre resigned just days later.
RELATED: El Paso ISD chief financial officer resigns as district faces budget shortfalls
Within the past year Aguirre was serving as the district’s CFO and interim superintendent, two of the most powerful roles within the El Paso school district.
Call said Aguirre’s dual role concentrated authority, saying, “In this school year Martha as you said was the was the CFO and she was the interim superintendent. That gave her a lot of power.”
He also called for changes going forward, saying, “There’s got to be more transparency and never again can we have somebody that’s the CFO and the superintendent be the same person.”
As CFO, Aguirre was responsible for overseeing the district’s budget.
With millions now unaccounted for, trustees pointed to the broader finance operation involved in budget oversight.
Loveridge said the finance and budget teams include “about 16 or 17 staff members,” and said that in compiling the budget adopted in June, oversight would have involved those teams “as well as the former superintendent.”
Call said Aguirre had staff support in the finance department and noted the board has taken steps to investigate.
He said the board authorized the district’s internal auditor, Myra Martinez “to interview everybody that was associated with,” adding he is hopeful “we’ll get to the bottom of exactly what went wrong here.”
Trustees said they are hoping an independent audit will pinpoint what happened and what led up to the financial shortfalls.
You can read the full presentation regarding the district’s financial situation below:
The district also hired a third-party education consultant to help with the financial crisis, below is their brief report:
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