Curious about Tahoma School District finances? Here’s an overview of how TSD finances are handled today and changes made after the IRS demanded a substantial fine in 2021, which was reduced to $0 [that’s no fine due, folks], based on information recently obtained from TSD’s superintendent and CFO.
“The best way to escape from a problem is to solve it,”so it’s been said. Mike Hanson, Superintendent, and Bill Hernandez, CPA, Chief Financial Officer, first learned of substantial IRS fines in March 2021, arising from inactions of people no longer working for TSD that occurred before Hanson and Hernandez were employed by Tahoma School District. Immediately, TSD’s lawyer and risk-pool were consulted; an investigation got started; an expert tax attorney was brought in. TSD fully cooperated with the IRS and acted with expertise, professionalism and full transparency. The issue was that the Affordable Care Act requires employers to make certain tax filings with the IRS electronically that were previously paper-only filings with the Social Security Administration. When this change arose, only one person had the electronic codes to do this for TSD and who did not make the filings with the IRS, and internal communication was problematic. Now, there are 4 employees with the codes. The entire Finance Department now has a weekly meeting to discuss all issues within the Department. So does the Human Resources Department. There were no such regular meetings before. Internal communication has vastly improved. By August 2021, all past tax filings were made and/or corrected and the matter was closed with the IRS waiving all interest and penalties. Hanson and Hernandez are confident this problem will not be repeated.
Bill Hernandez, CPA, formerly a Costco.com financial analyst and accountant in KPGM, an international accounting firm, joined TSD in 2020 as its Chief Financial Officer and is a stickler for keeping TSD in compliance with OCBOA accounting standards required by the Office of Superintendent of Public Instruction (OSPI). Under Hernandez’ stewardship and before, TSD earned and kept its excellent AA2 High Grade bond rating. TSD, audited annually by the WA State Auditor’s office, has had no audit findings [that is, a clean audit with no problems] every year since 2016, a rarity among Washington’s school districts. OSPI keeps “Financial Health Indicators” for every school district in Washington. Tahoma has been in 1st place in King County every year since 2015, with a 4.00 (that’s like a perfect A grade) in the last reporting year, 2020-21.
COVID was tough on school districts nationally. The finance team at TSD applied with integrity for COVID funds and kept meticulous records of where all of the COVID money it received ($3.2 million) came from and how it spent $6 million in COVID costs, again resulting in clean “No Findings” from the State Auditor’s audits. TSD kept its finances in good shape during and after COVID. Now enrollments are almost up to pre-COVID levels. COVID-related financial problems suffered by many school districts across the country do not affect TSD.
Hernandez wants voters to have understandable access to the district’s finances, so he posted this on-line. You can access it at sites.google.com/tahomasd.us/budget101/home Do you want to know how the assessed valuation of your house affects your school taxes? He had a video put together that explains this and posted it on-line at https://www.youtube.com/watch?v=TWA-O6lWWV0&t=1338s
Hernandez regularly consults with Board President Pete Miller, CPA, a partner in a large public accounting firm with expertise in financial accounting, forensic accounting, IT security and privacy, and mergers and acquisitions. Hernandez opined that access to Miller’s expertise is invaluable to both him and TSD and contributes to the high level of excellence in TSD’s Financial Department.
Additional financial protections in TSD include: complete separation of decisions in payroll and HR, all TSD expenditures are included in the Consent Agenda of each regular public board meeting, Hernandez regularly conducts his own internal audits, and TSD’s internal controls are continuously evaluated and reassessed.
Hernandez and Hanon both pointed out that TSD is quite frugal with your tax dollars. Total spending per student in TSD is lower than in another other King County school district and 2nd from the bottom state-wide.
In Hernandez’ words: “Each year, the District is audited by the State Auditor’s Office (“SAO”) on the fair presentation of its financial statements, including its internal controls, and accounting principles. The audit process is extensive and typically lasts 3-4 months. In the event SAO were to find a significant deficiency and/or material weakness in the system, the District would be issued an “audit finding.” TSD has not received any audit findings since 2016 and is one of the few in King County that has not received any findings during or since the COVID-19 pandemic. Additionally, as of 20-21 OSPI has given the District a 4.0 Financial Health Indicator grade, the highest score possible. The District follows the Other Comprehensive Basis of Accounting (“OCBOA”) guidelines as established by OSPI via the Accounting Manual for Public School Districts in the State of Washington.”
Jennifer C. Rydberg is a retired attorney, grandmother, and mother of two sons who attended Tahoma schools. She served a term on the Tahoma School District Board of Directors 1991-1995 including 1 year as its President. Active in ScoutingBSA, her husband was a local scoutmaster for 25 years; both received Silver Beaver Awards.
