The Santa Ana Unified School District will lose $2 million in state funding because it improperly implemented the state's class-size reduction program in the first, second and third grades this school year, according to the preliminary results of an independent audit released Tuesday night.
"It's regrettable," said Supt. Jane Russo. "We will do everything we can to correct it, see where errors occurred and make sure it doesn't happen again."
The district gets $1,024 from the state per year for each first-through-third-grader in a class with an annual average of 20.4 students or fewer per teacher, and $512 for each student who is in such a class for half the school day, which is known as "Option 2."
The district received nearly $16 million in class-size reduction funding for the current school year.
The audit was prompted by a series of articles in The Times that detailed the district's attempt to meet the 20-students-per-teacher cap by moving some students off class rosters even though they remained in the same classrooms.
Eight teachers at Washington Elementary School stepped forward after they were asked to sign attendance rosters that omitted several of their students. Since then, teachers from at least seven other elementary schools have come forward with similar allegations.
District officials said the problems were caused when classrooms didn't shrink as much as expected after the winter holiday. So, in hopes of salvaging some class-size reduction funds, district officials decided in February to add long-term substitute teachers to some classrooms to shrink the classroom density.
If one substitute spent her day split in two oversized classrooms, both classes would have been eligible for the "Option 2" funding.
But this method failed in every single classroom where it was implemented, according to auditor Christy White of public accounting firm Nigro, Nigro & White, because of poor instructions from district administrators, a failure to hire enough substitutes and a lack of classroom space. Additionally, the alteration of rosters was improper and has been corrected, she said.
"Ultimately, it shouldn't have been done, in our opinion," White said.
District officials said they would not have to return any money they received this year but that future state class-size reduction allocations would be reduced by $2 million, a painful cut for a district that has been forced by declining enrollment to trim tens of millions in spending in recent years, including $15 million earlier this year.
Trustees said they rely on staff to manage the day-to-day operations of the district, and questioned why they did not learn of any problems in the class-size reduction program until March.
"It is up to the staff to come to us, to let us know if they can't achieve something, if there is an impediment," said board member Jose Hernandez.
"There are two ways to do things -- the right way and the wrong way," added board president Rob Richardson. District administrators "chose the latter. The board did not know that until the horse left the barn.... There are consequences that have to come with this, and we have to make sure it does not reoccur."
Russo said she had called in the state's Fiscal Crisis and Management Assistance Team to review the administration's handling of the situation, and expected a report to be completed by mid-May.
The final audit report will be finished in early May and a separate review of class-size reduction efforts in the ninth grade will start soon, Russo said.
After the presentation, she reiterated that no teachers would be blamed for publicly revealing the irregularities.
However, relations between Santa Ana Unified teachers and administrators appear to be deteriorating further.
In a heated written exchange earlier this month, Russo accused some teachers' union leaders of behavior that was "subversive," "divisive" and "disingenuous" and of "perpetuating a media feeding frenzy of criticism towards the district," while the union countered that Russo was violating state labor law by attempting to intimidate teachers who speak out.
Attorneys with the California Teachers Assn., the parent group of the Santa Ana teachers' union, are drafting a complaint that Russo violated the state's Educational Employment Relations Act and plan to file it early next week with the Public Employment Relations Board, said David Barton, president of the Santa Ana Educators Assn.
"We won't allow ourselves to be bullied," he said. "We believe that the law is on our side. [Russo] overstepped her authority."
The union's labor-law complaint stems from an April 16 letter Russo sent to Barton, the union's board of directors, district administrators and the district Board of Education.