The Big Question About the Seattle Schools Financial Scandal: Why Was the District Running a Small Business Program?

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The state Auditor's Office released its report this morning on the biggest financial scandal yet to hit Seattle Public Schools. As relayed in a scoop by today's Seattle Times, which obtained an early copy of the audit (see pdf), the report delved into the alleged misuse of $1.8 million by a district program aimed at supporting small businesses. A criminal investigation is now underway.

The audit, building upon a previous finding, reveals lots of juicy details (the district paid $160,000 for classes that were never given, for instance). But a broader question stands out: What was the district doing in the first place running a program unrelated to its mission of teaching kids?

"I've never seen anything like this," says Mindy Chambers, spokesperson for the Auditor's Office, meaning a small-business program run by a school district other than Seattle.

According to the audit, the district created its program in 2006. (It was first named the Historically Underutilized Business Technical Assistance Program, and later renamed the Regional Small Business Development Program.)

That's strange timing, because in 2006 the district was coming off a year of agonizing over a fiscal crisis so severe it had broached, for the first time in decades, the galvanizing subject of closing schools. Yet the district decided it was a good time to put money into a new program that would support businesses rather than schools?

Brita Butler-Wall, who was board president in 2006 and is pictured above, explains that the district was in the process of several multimillion-dollar school renovation projects. "And we would get very few bidders--only huge concerns, and often from out of state."

So, she says, then-board member Mary Bass brought up the idea of trying to involve local firms, particularly those owned by women and minorities. District staff tackled the issue, but told the board that were they having trouble because such firms "might be good plumbers but bad with paperwork," Butler-Wall says. Staff proposed "sitting down with potential applicants and walking them through the process."

Butler-Wall says she doesn't recall ever hearing how much this new program would cost. "It was described to the board as doing some workshops. Apparently it took on a bizarre life of its own."

Indeed. The program spent more than $3 million until it was shut down last September, according to figures supplied SW by the Auditor's Office. And it seems incomprehensible that no one at the district either noticed or cared.

And while the program was shelling out for "training materials" that were prepared by Xerox, and on free food for the entrepreneurs who came to whatever classes did materialize, the district grappled with ongoing financial struggles that not only led to numerous closed schools but, most recently, reduced bus service for students.

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