(The Center Square) – Moses Lake School District violated state law in 2024 when it placed two levies on the ballot without proper approval, an audit into its financial problems found.
Voters ultimately rejected both levies in February and April 2024, prompting district officials to identify accounting errors that contributed to a roughly $20 million shortfall. The situation cost more than 250 people their jobs, keeping MLSD afloat financially until voters passed a replacement levy in 2025.
State Auditor Pat McCarthy found that MLSD did not “comply with state budget requirements,” obtain necessary approval from the Office of Superintendent of Public Instruction before placing two levies on the ballot, and “lacked adequate controls” to ensure it was following procurement and spending rules.
“For both years under audit, [MLSD] did not comply with its legally adopted budget, and not by small amounts either,” Jake Santistevan, an audit manager for the Office of the Washington State Auditor, or SAO, told the Moses Lake School Board during a meeting on Thursday. “In 2023, the district exceeded its budget by about $4.5 million and then again, in 2024, the district exceeded by about $4 million.”
From 2022 to 2024, the district’s general fund balance dropped from $22.26 million to $11.76 million.
Santistevan said that SAO advises districts to maintain a sufficient fund balance to finance at least 60 days of operating expenditures. MLSD had 66 days of operating expenses set aside in 2021, falling to 35 days in 2023 and 27 in 2024. Thanks to voters approving a replacement levy, MLSD is back to 64 days.
Some voters wanted MLSD to undergo a forensic audit before passing a new levy, but the board refused, citing the upcoming accountability audit that the state published during Thursday’s special meeting.
SAO says that when MLSD put levies on the ballot in 2024, it didn’t obtain preapproval from the state on its spending plan. Santistevan said that if voters had approved the tax measures, the district would have been at increased risk of including spending items in its plan that potentially violate state law.
“The district paid compensation to more than 40 employees per year for jury duty, totaling about 164 days over those two years. The district also paid compensation for bereavement leave taken for about 300 employees, totaling about 1,800 days,” Assistant Audit Manager Kathleen Lince said. “We found the district did not have adequate review processes in place over jury duty and bereavement leave.”
One former district employee took home an extra $2,000 by exceeding the policy limit for jury duty. In numerous cases, the district also failed to retain documentation for transactions totaling $53,370, and $12,419 worth of those purchases “lacked all supporting documentation,” according to the state audit.
SAO says MLSD grappled with significant turnover in financial and administrative positions, which the district says contributed to various compliance and oversight failures.
Paul Hill, vice chair of the school board, apologized on Thursday for the financial crisis, which began to unfold under his watch in 2021.
“There is not a single board member or administration that was responsible for this that’s still with this district,” Hill said. “I value my relationship with my board. I own my part … it happened on my watch.”
He then read a statement acknowledging that SAO did a “very thorough review,” while confirming that employees responsible for the issues are no longer employed by MLSD. Hill reaffirmed the board’s and district’s commitment to transparency and responsible stewardship of public tax dollars going forward.
The SAO officials and the school board did not discuss how much the audit will cost MLSD, but another audit SAO published last August on MLSD’s use of federal funding could cost the district $4.43 million.
“The public is understandably frustrated,” McCarthy wrote in a statement. “As a former school board member, I want to recognize the important role the public plays in holding the district and elected board members accountable to ensure local public schools … remain operational and financially stable.”
