District shares blame in $7 million property tax bill error
By Marsha Sutton
After hearing from staff how the district was not blameless in the property tax bill error discovered last October, the San Dieguito Union High School District’s Board of Trustees voted 4-1 at the May 1 board meeting to pay $80,000 to the county of San Diego for partial reimbursement of expenses associated with correcting the mistake.
Eric Dill, SDUHSD’s associate superintendent of business services, said he has met regularly for the past six months with Treasurer/Tax Collector Dan McAllister, the county’s chief administrative officer, the county auditor/controller, and other county staff, to sort out how to fix the problem.
After the dust settled, costs for the fix were tallied up, and the county reported a final figure of about $183,000. Dill said the county asked the district to pay half.
“The compromise that we struck with them was that we would cover the costs of the printing and the mailing, but all of their system-related costs – they had to contract out for that stuff – we would want them to cover that,” Dill said in an interview April 30. “In the end what we agreed on was a flat $80,000.”
San Dieguito’s $449 million general obligation bond, which passed by a narrow margin last fall, called for a maximum tax of $25 per $100,000 in property value. But the original tax bill issued by McAllister’s office assessed $37.50 per $100,000.
The error on the original property tax bill, mailed last fall, was first discovered and reported by this newspaper on Oct. 24.
After alerting the district to the mistake, I spoke with Tracy Sandoval, auditor/controller for the county whose department is separate from McAllister’s. She initially blamed the school district for the error, and the next day the school district fired back, blaming the county.
Today, both the county and the school district accept some blame for what happened.
“We’ve done a really good job of not pointing fingers at each other since that first day,” Dill said. “We all have a little bit of this so we’re accepting joint responsibility.”
After those first few days when both agencies were trying to understand how an unprecedented and potentially far-reaching mistake like this could have happened, the finger-pointing ended and all parties agreed to sit down together and sort out the problems and identify both short- and long-term solutions.
McAllister worked to bring the county and school district together to find a way to resolve the problem quickly. “I think we wrapped it up pretty fast, relative to [what] could have happened,” he said.
The itemized statement from the county to the district showed a total cost of $183,372. The district’s flat fee of $80,000 was for $35,600 for printing and postage for letters mailed to property owners that explained the error, $7,400 to process refunds to taxpayers who had already paid the full amount based on the incorrect tax bills, and $38,100 for printing and postage of new and corrected tax bills.
The county agreed to pay the remaining amount – about $103,000 – primarily to outside vendors for software programming and information technology.
“We all recognized that it was a shared responsibility issue, and we think it’s fair and reasonable for everybody to share some of the costs,” McAllister said.
McAllister said the school district preferred to pay for the tangible costs – postage, printing and mailing. Paying those concrete bills, he said, was something “they can get their arms around.” The IT costs tend to be a little more esoteric and harder to understand, he said.
He would have preferred a 50-50 split, “but we’re okay with what happened,” he said.
Dill said the county, to save printing costs, wanted property owners to pay the incorrect amount and receive a refund later for the overpayment. Had everyone paid the incorrect tax rate in full, the amount of money to be refunded would have been about $7 million.
But SDUHSD pushed to have new bills that reflected the correct amount printed and mailed to property owners before the due date. “We were somewhat insistent upon correcting the bills,” Dill said.
“Ultimately, we were able to engineer a solution where revised tax statements were put out to all 75,000 people who received incorrect statements, before the deadline,” Dill said at the May 1 school board meeting where the item was discussed. “That came at a great cost for the county of San Diego, to print, mail, process, and also program their systems.”
Because SDUHSD made the county scramble, Dill said the district felt an obligation to pay those costs.
“A large portion of the impetus that the county had to put those revised statements out was really our insistence that this be made right before the initial tax statement was due so that nobody would have to overpay,” he said.
Dill said the $80,000 is not coming out of the district’s general fund or from Proposition AA funding. Instead, the money is being taken from the district’s self-insurance fund which he said is set up to pay unintended, unexpected losses.
“We’re essentially covering most of the hard costs which are the printing and mailing of the notices,” Dill said. “And that,” he said, “is that.”
McAllister said all expenses are in and there are no additional costs. “It’s done, finished. We’ve moved on,” he said.
In the published May 1 agenda, this $80,000 payment was listed on the fourth page of the district’s list of purchase orders in the business report section, part of the Consent calendar. The payment to the county was the 198th purchase order out of 210.
Items on the Consent agenda consist of routine non-controversial business that require no discussion and are approved as a whole in one board vote. The payment was pulled off the Consent calendar for public discussion at the start of the meeting, and a 20-minute open discussion ensued.
Two speakers questioned why this item was initially placed on the Consent agenda and criticized the district for a lack of transparency.
Del Mar resident Doug Perkins addressed the board, saying the matter “certainly can’t be classified as routine business.”
He said the payment deserves a clear and public explanation from the board and “requires more transparency and accountability.” It should not have been “buried” with other items that are routine, he said.
“I don’t think it is fair to the public,” Perkins said. “Who made the determination that this is a routine matter of business?”
The answer was never provided, although Dill did say that it ended up on the purchase order list along with all the other invoices because the county “invoiced us for that share and we’re paying the invoice.”
John Salazar, the lone SDUHSD board member who opposed approval of the payment, questioned Dill critically, saying, “I’m really kind of shocked about the whole thing.” He asked Dill how SDUHSD went from doing nothing wrong to taking blame.
“I don’t believe I ever said we did nothing wrong,” Dill said. “I did say that we transmitted the correct information [in response to] a comment that said we transmitted incorrect information. My point all along is that the county had the same information we had.”
“We’re not responsible for sending out tax bills,” Salazar said. “They do property taxes for the entire county. I just don’t see that we should be responsible for this. I feel like it’s a double hit on the taxpayers in our district.”
“I do see your point,” Dill said. “But this was an extraordinary event.”
Salazar asked Dill what assurance the district has that the county won’t come back and ask for more money.
“It has been expressed to us that this is it,” Dill said. The error was fixed so there is no further liability, he said.
In other district news, Laurie Brady, principal of Carmel Valley Middle School, resigned her position effective June 30 and is being reassigned this fall to a classroom teaching position. The same for Kyle Ruggles, principal of La Costa Canyon High School, and Molly Ravenscroft, assistant principal of Oak Crest Middle School in Encinitas.
Torrey Pines High School is losing the full-time services of six certificated employees for the 2014-2015 school year. English teacher Angelina Allen has requested a 20-percent leave of absence, English teacher L. Marie Black a 60-percent leave, math teacher Abigail Brown-McLellan a 20-percent leave, physics teacher David Fleischman a 20-percent leave, counselor Jayme Cambra a 20-percent leave, and counselor Brennan Dean a 40-percent leave.
Lastly, Del Mar Union School District board president Doug Rafner was named in San Dieguito’s Purchase Order list to receive $14,000 for a mediation settlement. Citing privacy rights, SDUHSD staff would not discuss, and Rafner did not respond to an inquiry.
Marsha Sutton can be reached at SuttComm@san.rr.com.