W-H is ‘broke,’ official testifies; As district’s debts, problems grow, state considers intervening

By Joshua Benton
Staff Writer

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The Wilmer-Hutchins school district is out of money, according to its chief financial officer, and the Texas Education Agency is considering intervening.

“I talked to my accountant and we’re $100,000 in the hole right now,” the district’s business manager, Phillip Roberson, testified during a hearing Monday regarding a wrongful-termination suit against the district. “We’re pretty much broke right now.”

Meanwhile, a Dallas County grand jury is set to meet today to consider allegations of wrongdoing involving the district and its school board.

And the district’s financial ills could be even worse than they appear, Dr. Roberson said.

“We’ve got quite a few bills piled up,” he said. “I think if we ran them all through, we may be even further behind.”

The financial shortfall is the latest in a series of problems in Wilmer-Hutchins.

This morning, Texas Education Agency officials, including Commissioner Shirley Neeley, are scheduled to discuss possible state involvement in running the troubled district’s affairs. One likely scenario: an informal visit to Wilmer-Hutchins to inspect the district’s financial records.

Assistant District Attorney Pat Batchelor said a Dallas County grand jury will hear testimony today regarding complaints against the school district and trustees. Citing state statutes about the confidential nature of grand jury testimony, Mr. Batchelor said he could not comment in detail about the complaints.

News about the district’s finances came as Dr. Roberson was testifying in a lawsuit filed against the district by employees of its own police department. The employees say they were wrongfully fired in June when the school board voted to dissolve the department. They also say they were fired because they were attempting to expose wrongdoing in the district.

Superintendent Charles Matthews and school board President Luther Edwards declined to comment after the hearing Monday. Both testified in court, but on matters other than the financial state of the district.

Wilmer-Hutchins has a history of poor financial management. The district has had its financial operations taken over by the state several times, most recently in 1998.

“We’ll be meeting to determine what role, if any, we should play in the immediate future,” said Ed Flathouse, TEA’s associate commissioner for finance and compliance.

He said one option will be to send an informal state team to analyze the district’s records.

“It puts a whole new light on it when you call it an ‘investigation,'” Dr. Flathouse said. “This is more of a ‘visit.'”

In audited figures released last week, TEA said Wilmer-Hutchins was one of only 12 districts – of 1,039 statewide – that finished the 2002-03 school year with a negative fund balance.

Earlier optimism

District officials had been optimistic that things might improve this year. Dr. Matthews said last week that financial reporting was his administration’s strong suit, and officials had said they hoped to have a positive fund balance this year.

But in his testimony, Dr. Roberson said the current shortfall would be larger if the district hadn’t taken out a $500,000 short-term loan from a Utah bank this summer.

“If we had to repay the loan we got to help us out, we could be $600,000 in the hole,” he said.

Dr. Flathouse said that the TEA evaluates interventions on a case-by-case basis and that there are no “clear lines” that, when crossed, trigger state action.

But he said running a negative fund balance for two consecutive years “would certainly create more interest in us” intervening.

The spotlight fell on Wilmer-Hutchins on Aug. 11, when district officials said damage from a June storm at the district’s high school was so extensive that the school would not be able to open on time.

Seniors began school last week on a remote campus. The rest of the students began class Monday, a week late. District officials say it will be weeks until the high school is ready for student use.

Current administrators have said their predecessors, led by former Superintendent Harvey Rayson, left the district in poor financial condition. Among other problems, the previous administration overspent its state funding by $1.9 million, forcing the district to cut its budget and repay the TEA.

Dr. Flathouse said districts with no fund balances often seek short-term funding to cover their bills in early fall, before state aid kicks in. The first state payments to districts for the current school year will not be made until the second week in September. He said Wilmer-Hutchins may have to take out some form of loan to pay its bills.

Monday’s hearing

Dr. Roberson’s testimony came during a motion hearing in the police department lawsuit. On July 21, state District Judge Charles Stokes ruled that the fired employees “will probably prevail” and issued a temporary injunction requiring the district to rehire the employees and reassemble the district’s police department.

At Monday’s hearing, the district asked whether it could put up a $4,500 bond to set aside the temporary injunction pending an appeal. Dr. Roberson’s testimony was that the district’s financial resources were such that it could not afford a substantially larger bond. Judge Stokes granted the district’s motion.

The court heard one other motion on the case Monday, denying a plaintiff’s motion to hold Wilmer-Hutchins ISD in contempt of court. Philip Layer, attorney for the police department employees, said the district was attempting to circumvent the judge’s temporary injunction by limiting the duties that the rehired police officers could perform.

For example, they were banned from providing security at board meetings. The district hired off-duty deputies from the Dallas County Sheriff’s Department at added expense. Two deputies were hired for each school board meeting and were paid $35 an hour.

Judge Stokes denied the contempt motion, but not before Mr. Edwards, the board president, said in testimony that he was fearful of district Police Chief Cedric Davis.

“The gentleman carries a gun,” said Mr. Edwards, after saying that Chief Davis’ mother had previously caused a disturbance at a Wilmer-Hutchins school board meeting and that the chief had interfered with efforts to remove her from the meeting room.

Staff writer Robert Tharp contributed to this report.