Formula error in Excel file robs Richmond Public Schools of $201m – release

The Virginia State Department of Education acknowledged Tuesday evening that funding for public elementary schools may no longer be assured in less than a month following a “embarrassing human error”. Charles Pyle, spokesman for the Ministry of National Education, announced that an administrative investigation had been opened and that the governor is mobilized to find a quick budgetary solution.

First denied by state services, the case was revealed by the local newspaper Richmond Times-Dispatch, after complaints from head teachers about a growing discrepancy between the budget allocated to them in September and the funds transferred by the finance department.

According to Washington Post, an error in an automated formula in the Excel file provided to schools led to an error totaling $201 million (€184 million). The accountant who certified the accounts misunderstood a directive from the governor, according to which it is necessary to “keep localities apart» the elimination of the State’s share of the sales tax on food products. The convoluted wording led to the addition of the percentage of tax revenue that was allocated to schools, without entering a “-” sign at the beginning of the cell to indicate that this sum should not be totaled.

This duplication led the finance department to reduce the State’s contribution to primary schools by the same amount. The shortfall to date is estimated at $58 million, according to audits by the Associated Press.

The problem solved “very quickly”?

“Unfortunately, due to this issue with the calculator, school divisions that didn’t notice it had to operate with estimates that overestimated the amount of state aid they would receive,” State Department of Finance Director Barry Knight said. He is committed to solving the problem “very quickly” so that the error does not have an impact on the actual funding of the schools.

In response to a question about how to cover such a shortfall in real time, Knight replied: “To tell the truth, I have no idea as I was only informed on Tuesday evening like everyone else. I am not very satisfied with this state of affairs.”

Already in 2008, the British bank Barclay’s had to register a loss of hundreds of millions after a formula error in the Excel file of its purchase contracts, leading to the doubling of its income from contracts with the bank Lehman Brothers.