July 25, 2002

Michael Shockley, the Brandywine School District's former chief financial officer, said he provided the superintendent and the school board with accurate and timely financial information up until the time that illness forced him to leave the district. "There wasn't any flaw in the information I gave them," he said.

"They're trying to make me the fall guy. ... They're trying to shift blame for the shortfall I told them all along was coming," he said. "They're making it sound like I was doing something illegal. If I'm guilty of anything, it was trying to stretch the taxpayers' money as far as I could."

In an interview with Delaforum, Shockley broke four months of silence about his view of the controversy surrounding the premises on which the tax referendum in April was based and the recent setting of the 2002-03 tax rate. In public comments at several board meetings since just before the referendum and in printed material distributed in the district, there have been comments to the effect that William Bentz, hired as interim financial officer, discovered previously unknown fiscal problems with a strong implication that Shockley had been remiss in his duties.

Shockley told Delaforum that "everything was in order" when he left the district on Mar. 5.

"It was a tough decision to go out on [medical] leave. It was on the advice of my doctor," he said. Failing eyesight as the result of diabetes was the reason he asked to be placed on disability status. The move did not come as any surprise, he said, since Superintendent Bruce Harter was aware he had two laser surgery procedures in January and he had taken a week off in February for the stated purpose of deciding what he should do. His disability has since been confirmed by the district's insurance carrier, he said.

Shockley agreed with the conclusion that the critical local operating funds balance is at the crux of Brandywine's fiscal problems. That is the cushion which enables the district to move from one fiscal year into the next without literally running out of money to meet payroll and other obligations.

When the district was considering whether to hold a tax referendum in the spring of 2001, it was obvious that the balance had shrunk to a critical point, he said. But there also was also considerable concern over whether district residents, who were being asked to approve a bond issue and resultant taxes to support it, would also vote additional taxes for operations.

A financial taskforce was attempting to determine which course to take, but the preference among its members as well as the school board favored delay. In essence, Shockley was being asked to provide justification for the more politically desirable option.

"I told them I could probably get them through another [fiscal] year, but I couldn't do any more than that," he said.

That, he said, is what happened.

He said the district operated during the year which ended June 30 under a budget he had drafted which was "more comprehensive than anything they ever had." As the year went along, it was monitored through monthly reports approved by a finance committee of professionally qualified persons, he added.

That process, he said, "showed month-to-month where we stood and, as a percent of budget, where we ought to be," said. The budget and reports were in a form that was "simple enough for everybody to understand."

By January -- when the parameters of the referendum were decided -- the board had been fully informed that what started out as a tight budget already had suffered two major shocks.

The first was a miscalculation by the Data Service Center of projected enrollment for the year. As a result, Brandywine had lost state authorization -- and financing -- for the equivalent of 22 teaching positions instead of the nine and a half it had expected -- and budgeted -- to lose. Then came sharp increases in insurance premiums as a result of the Sept. 11, 2001, World Trade Center and Pentagon attacks. Neither was kept secret from the board or the public, Shockley said.

In February, he said, it was learned that Brandywine had a net loss of students under the state's public school choice system and had lost more students to charter schools than had been expected. Instead of choice netting the district $645,000 in revenue, as had been budgeted, it cost $15,000. Payments to charter schools were $1.3 million, instead of the $950,000 budgeted. Shockley said he left the district as that information was becoming available and does not know whether it was presented to the board or, because it could have been considered an unfavorable reflection on the district as the referendum date was approaching, made public.

Also during the year, he said, interest income was down, netting about $200,000 less than budgeted and the board agreed to pay legal fees amounting to about $80,000 to settle a lawsuit with former business manager Richard Hauge.

"They knew we had those teachers (not supported by the state) being paid entirely by local funds and we had paraprofessionals, aides and others who were locally funded," he said.

Both to offset that and as a matter of good practice, he said he made sure that "we maximized the use of state funds" by assigning high-salary senior teachers to slots supported by such things as state-financed 'academic excellence' units. The source of their pay did not matter to teachers, but it was significant to the district's bottom line, he explained.

That is not 'creative accounting' in the sense the term is used as a disparagement in the context of violating accounting standards but the kind of astute fiscal management which comes with experience, he said.

On the other hand, he noted, an end-of-fiscal-year report presented to the district finance committee and reported by Delaforum, although not presented publicly to the school board at its most recent meeting, appears to show that spending of local money came in slightly below what had been budgeted.

That would indicate that the so-called budget shortfall on which the disappearing balance has been blamed was virtually all attributable to unexpected, and for the most part uncontrolable, declines in revenue, he said. More to the point, it was recognized as it was happening.

"A budget isn't something that's fixed; to do it you have to estimate. I make mistakes, because I'm not perfect -- nobody is. But I've been doing this for 19 years and my numbers have always been pretty accurate," Shockley said.

"All this acting about being surprised is smoke and mirrors. Saying they didn't know what was happening is baloney," he added. "I was telling them for a year and a half. All along, I've offered to give them [information in] any form of report they wanted."

Shockley said the claim that the district had any year-end balance at all was the result of Bentz having 'found' money in a state account that district officials did not realize existed "is complete nonsense." The account, identified by Delaforum, as having been the district's share of proceeds from the sale of buildings in the 1980s, was the same one from which money was drawn to pay for repairs to the roof of the Data Service Center building on Mount Lebanon Road, he said. "With all the fuss about that, the board can't say they didn't know about it," he said. Just in case it had been forgotten, Shockley said he reminded Harter and the board of the fund's existence in a memo late in 1991.

As to an allegation that he recommended a tax rate to finance technology higher than the state permits, Shockley said the memorandum sent to all school districts by the state Department of Education advising them of the limit was circulated months after the rate was set by the school board in July.

Former Brandywine superintendent Joseph DeJohn  hired Shockley in December, 1999, to reform district finances in the wake of a series of state audit reports alleging extensive mismanagement. Shockley said he had not been specifically recruited but had applied for the job because of the professional challenge it presented. After he was hired, there was a general belief that his strong suit was familiarity with state financing, especially as it applied to public education.

"The state finance system is complicated, but if you know what you're doing you can work with it," Shockley said. He came to Brandywine after 12 years in the business office of the New Castle County Vocational-Technical School District and 14 years before that with the state Department of Finance.

He said that, until the past several weeks, he had been praised for his efforts by both Brandywine board members and those who participated with various advisory groups in the district. Throughout his career, his work "has balanced to the penny with the state accounting reports" and has resulted "in nothing but clean audits," he said

"What bothers me is that they are questioning my ability as well as my personal integrity. A lot of things are being said that really hurt," he said. "I came to Brandywine only because I thought I could help the district and that's what I wanted to do. And now this is what I get for it."

2002. All rights reserved.

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