It was on Tuesday that D.C. Schools Chancellor Michelle Rhee casually dropped the bomb on D.C. Council members that she planned to pay for a significant portion of large teacher raises, a crucial component of her hard-won tentative agreement with the Washington Teachers’ Union, at least in part with $34 million in surplus funds that no one knew existed. But on Thursday, D.C. CFO Natwar Gandhi dropped a bomb of his own: he told Rhee that the surplus doesn’t, in fact, exist.

In a letter to Rhee today, Gandhi scolded the chancellor not only for being wrong about the surplus, but for going before the Council to discuss it without having run the numbers through his office first.

“I am at a loss to understand why you did not consult with me directly or with any of my DCPS financial staff about the viability of the proposed package prior to your public announcement,” Gandhi said.

So think about this. If Gandhi is right (he says a projected underspending of $34 million in school operations is more than offset by central office overspending) then all the outrage this week over the RIF’d teachers having been fired when there was extra money lying around was technically for naught. Rhee will still have stepped in it, politically speaking, by putting it out there in the first place, but if there is no magic surplus, than the RIF was necessary as far as the budget goes. And the WTU contract might just get back on track.

Let’s suppose all of that is true. Then really, we’re back to where we started: Rhee still needs to explain how she’s going to pay for this contract in the first place.

The full letter from Gandhi is below the jump.