Yet another 180-degree twist in the teacher contract saga.

Two days after Chancellor Michelle Rhee told D.C. Council members that she would pay for a groundbreaking teacher contract, in part, with $34 million in surplus funds, Chief Financial Officer Natwar M. Gandhi today posted a letter to Rhee telling her there is in fact no such surplus.

In fact, Gandhi asserts that there not only is no surplus, but Rhee did not consult with the CFO’s office prior to announcing a contract agreement. In other words, Gandhi says that Rhee signed a deal she didn’t know how to pay for.

Writes Gandhi: “[D]espite the fact that my office was neither consulted nor included in the negotiations regarding the WTU, my staff took the initiative and proactively engaged in the process of analyzing potential resources to support the proposed contract, should a final agreement between parties be reached.”

Gandhi goes on to recount how George Dines, the acting DCPS financial officer, e-mailed Rhee a preliminary figure indicating a potential surplus. But that figure was never finalized.

“I was incredulous to learn in your…presentation to the Council on the contract, you asserted that a surplus is available to fun the proposed salary increases based on preliminary information,” Gandhi writes. “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.”

There is a $34 million surplus in school-based underspending, he adds, but it is more than offset by overspending in the central office and other places. An overall surplus, he writes, “does not exist.”

In closing, Gandhi offers support for the agency CFO on whose information Rhee relied.

“I want to reiterate my support for George Dines. I have the highest degree of confidence in his capabilities and appreciate his willingness to step in as Interim CFO at DCPS, especially in this challenging fiscal situation,” Gandhi wrote.

By popping this surplus bubble, Gandhi turns a multifaceted political mess into a much simpler one. Where pressure was coming on two fronts—-to rehire laid-off teachers or to press forward with the contract proposal—-the issue is now simply: Where the contract money at?

Bottom line: Rhee messed with the savviest political player in town by blaming the surplus mess on Gandhi’s shop. Now Dr. No is taking off the gloves. This may get good.