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Foster: Stegeman's commentary offered all the TUSD drama but only half the story

"The apocalyptic financial forecast posited by my former TUSD Board colleague Mark Stegeman is convoluted at best, and don’t forget, very calculated in time for your three votes on the ballot for TUSD." — TUSD Board President Kristel Foster... Read more»

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6 comments on this story

Oct 12, 2020, 1:38 am
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Kristel Foster’s long reply to my oped recites many accurate facts (and includes some errors), none of which refute any of my points. In some ways her reply confirms the state of denial that often permeates TUSD culture, up to and including the board. Here are brief rejoinders to her points, in roughly the order that she makes them.

* Contrary to Foster’s claim, I mentioned the desegregation litigation and the extent of its impact on the accumulated operating deficit, through the last audited fiscal year.
* I did not deny the assessments of the external auditors. Indeed, I cited those reports specifically as evidence for the budget problem.
* I have no desire to see TUSD in financial peril; my desire is to get people to wake up. Whether I have had any success remains to be seen.
* I agree that the three (not one) internal audit reports are about internal controls, not the overall financial state of the district. That was clear in my oped.
* The new policy JQ does not address most of the problems found in the internal audit reports, but many of those problems are violations of previous longstanding policies. Weak policy compliance is one of TUSD’s general problems, and simply adopting new policies does not fix that.
* Most of the cited problems are unrelated to the practice of giving schools general discretion over how to spend activity funds. (If I ever contributed to blocking any relevant reform of that policy, as Foster claims, then she should date the meeting at which she thinks that happened.)
* The decline in unrestricted cash balances is not about unspent 301 funds. 301 funds are not unrestricted.
* I did advocate spending down the 301 funds, as most districts do, and not hoarding them. These were monies that had to be spent on teacher compensation and were unfortunately held back for years.
* Yes, I was pleased with the Trust Board’s excellent financial performance and advocated for spending the money exclusively on employees’ health benefits. The subsidies to the district’s general fund were, however, mainly used to reduce the district’s contributions to health insurance – not the employees’ contributions. They became, in effect, a subsidy to the district’s general fund, which helped to cover TUSD’s deficit, but it was only a stopgap solution, because the subsidies could not continue forever. The exhaustion of the Trust’s excess reserves, plus the fact that rising health care expenses have now caught up to and exceed the Trust’s revenue, means that there is nothing left to cushion the inevitable increases in employees’ health insurance premiums, as health care costs rise.
* The $4 million subsidy that Foster mentions is for fiscal year 2020-21 only. The total subsidies over five years are $26 million, as stated in my oped.
* The $15 million that she mentions is simply the accumulated size of the subsidies that the Trust Board agreed to provide the district over three years. That is stated directly in the public record; there is nothing “convoluted” about it.
* Yes, there is good news about TUSD, but none of it denies any of the specific serious issues outlined in my oped.

Oct 12, 2020, 8:15 am
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In summary, the original oped raises two separate sets of issues: budget balance; and internal controls.

Concerning budget balance, the point is that TUSD has been on an unsustainable spending trajectory, even before the pandemic and even before the state’s contested withholding of desegregation funds. It has financed that trajectory by spending tens of millions of dollars from cash reserves that will not be replenished.

The two credit downgrades provide external corroboration of that assessment.

A caveat, as I alluded to in the oped, is that we do not yet have audited results since mid-2019 and so do not (as outside observers) know exactly what has happened to the cash balances over the past 5 quarters.

Oct 12, 2020, 1:50 pm
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I mostly agreed with Ms. Foster’s criticism of Dr. Stegemsn’s column until she got to the part about the teachers’ 301 performance money. Her statements are not the truth.

Former Superintendent Sanchez and CFO Soto diverted many millions of the teachers’ 301 performance money to cover their over spending of other funds. They were NOT saving performance money to pay for teachers’ salaries at a later date! The unspent performance money skyrocketed on their watch. They cheated teachers out of the money teachers had earned.

SHAME on you, Ms. Foster! You know what you wrote is not true. Thank goodness, you’ll be off the Board at the end of this year. It was your job to look after the teachers’ money and you did not!

Oct 14, 2020, 7:22 am
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I wouldn’t expect you, of all people, to believe me, Ms. Fox. But, please reach out to Frances, the former TEA president to verify the info I have shared here. If you’d like her contact info, feel free to email me.

Oct 15, 2020, 11:32 am
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This week Fitch Ratings confirmed its negative outlook on TUSD’s institutional debt rating (currently BBB+), citing its “declining enrollment base and weak fiscal management.” Fitch writes that “spending is likely to be well above the district’s revenue trends,” “the district’s previously slim reserve cushion has eroded,” and “its financial operations are at risk to becoming distressed.” These assessments confirm those in my oped.

Oct 15, 2020, 1:24 pm
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Ms. Foster, I doubt that Frances Banales would appreciate your dragging her name into this. Sanchez and Soto’s misappropriation of TUSD teachers’ 301 performance money was an embarrassing fiasco for TEA.

Your claims make you look even worse.. You claim the TEA
president told you about the misappropriation your first year on the Board. That was 2013!

If your story is the truth, it’s really hard to understand why you sat by and allowed more and more 301 performance money to be misappropriated all the way through 2017!

Not only did TUSD teachers make less money thsn they were entitled to, every teacher who retired during that time will be paid less retirement money for the rest of their lives!

(The amount of money teachers earn determines how much both they & TUSD pay towards their retirement!)

Shame on you, Ms. Foster! You’ve never even had the grace to apologize to the teachers and the retires who were cheated..

The total of misappropriated 301 money was huge! It was far more than the TOTAL of all the pay raises teachers got during
Sanchez’s years as superintendent.

None of the facts support your claims. Anyone who wants to can look up the external auditor’s’ report, where year after year it says 301 (Classroom Site Fund) was loaned to cover overspending of other funds!

The AFR (Annual Financial Report) to the state signed annually by you, Sanchez, and Soto, show the unspent 301 performance money skyrocketing during Sanchez’s administration.

Anyone who wants to read about it can look up article after article in The 3 Sonorans or read Tim Steller’s 2017 column. Ms. Soto didn’t tell him the whole truth, but there’s enough truth to show that your story isn’t true.

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Paul Ingram/TucsonSentinel.com

Foster during a 2017 TUSD Governing Board meeting.


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