The Colorado Department of Education says the Douglas County School District owes it $4.2 million for 1,100 students that an audit shows attended school part-time, but received full-time state funding.
The CDE's Leanne Emm said such audit findings aren't unusual, but "not to this magnitude. This is unusually large."
The findings do not have any negative effect on the students, including the credits and diplomas they earned. They are linked only to school-funding levels.
The district disagrees with the state's decision, calling the audit findings an unreasonable penalty. The students whose schedules are in question averaged 96.7 percent of the required seat time, according to the district.
DCSD has threatened a lawsuit against the department, though school board President Kevin Larsen is hopeful the issue can be resolved without going that far.
"That is still on the table, but nothing has been filed at this time," Larsen said. "We will reserve all our remedies available legally and hope through some discussion to get this resolved.
"We have addressed the problem. We want any penalties to be proportional and in line. They allow discretion in the law. The reason is to prevent stupid outcomes. From our point of view, this is a stupid outcome. It's disproportionate."
But the state said the law doesn't allow for proportional funding - only part-time or full-time.
The state's findings are tied to individual student schedules during the 2012-13 and 2013-14 academic year. During that time, most Douglas County high schools were on a block schedule - a hotly debated effort to save money and retain classes from which many schools have since withdrawn.
Each student is required to have 360 hours of teacher instruction per semester. The CDE said some DCSD students missed that mark by a few hours, others by more than 200.
"If they had gone through their calculations correctly, they would have identified that problem," said Emm, the CDE's assistant commissioner of school finance. "The district has very adept staff that is very cognizant of the rules and regulations around how to count students and the requirements of scheduled contact time. They provided tools for the principals to utilize to help set their schedules. Some of the schools may have incorrectly utilized those tools."
Emm also noted that CDE Commissioner Robert Hammond reduced the district's liability by $1.1 million, from an original tally of $5.3 million.
Some who opposed the schedule said they warned the district about the schedule's pitfalls before it was put into place. But school leaders said the issue revolves around attendance accounting during the advisement period - not the schedule itself. Advisement is a period during which students can seek out teachers for one-on-one instruction, though not all students use it for that purpose.
The errors CDE noted were at all Douglas County high schools, but most were found at ThunderRidge, Legend and Highlands Ranch.
"It's not that attendance didn't happen," Larsen said. "The heart of the matter here is the state accepting the documentation of the advisement in order to qualify it as instructional time."
A June 23, 2015 letter from Hammond to Superintendent Elizabeth Fagen alleges the district should have been aware of the issue.
"The evidence that we have received indicate the district was aware of the potential shortage in the scheduled time; however did not correct the problem until the 2014-15 school year," wrote Hammond, who is retiring July 1.
Larsen, however, said the district made changes as soon as it discovered there was an issue.
"Once we were made aware in the middle part of the 2013-14 year, it was tightened up and all these things were documented," he said.
In 2012, the district announced it faced an $18.1 million shortfall, and could save $3.6 million by shifting its high school schedules. Most high schools adopted a block schedule - also called 6-of-8 - with all eight sessions offered one day a week, and two four-session days the remainder of the week.
Then-Legend High School Principal Corey Wise, who's now the district's assistant superintendent of secondary education, said the schedule served students well.
"We built and planned for these kids to be fulltime; they were fulltime," he said. "The senior advisement and details of how we needed to run that was the mistake made. But moving to 6-of-8 allowed us to have more opportunities for kids, and provided a more efficient model. Our test scores were up. GPAs were up for the seniors. College admissions were up.
"Where we were deficient in minutes was a technicality, but I think we did better by kids."
Dan McMinimee, the district's assistant superintendent of secondary education at the time, said in January 2012 that as the budget became clearer, school leaders realized the budget cuts they'd made at the high school level hadn't been necessary.
"I didn't have a crystal ball last fall," he said then. "Now we know."
McMinimee is now superintendent of Jeffco Schools.
"I can't speak to whether the cuts were needed or not," Wise said. "But you can run 6-of-8 more efficiently, in terms of cost savings. We mitigated the impact on kids, and I think we did a better job for seniors."
"It's really a dispute of form over substance," he said. "Is the idea of having minutes to have kids prepared to succeed? Or is it to satisfy CDE counting the ticks on a clock?
"We're unafraid to think out-of-the-box about what's good for kids."
Laura Mutton, president of the Strong Schools Coalition, said the current issue is the result of questionable decision making.
"There were two mistakes that were made here: The first that the district took $4.1 million in cuts in 2012, which reduced instructional time for the high schools when they had a $17-million surplus," she said. "The second is after hearing concerns from Strong Schools about the loss of instructional time that was going to occur with this new schedule, it appears they never confirmed (that) with the CDE.
"I would say it's an example of questionable district leadership, and a lack of accountability by the board of education."
If the district has to pay ...
Board president Kevin Larsen said paying the state's $4.2 million will not result in cuts to teaching staff or impact students.
The Colorado Department of Education has offered a 15-year payment plan, or about $280,000 annually.
"That would not rise to the level of cuts that are going to have an impact," Larsen said.