Southside district takes hit with financial rating

Third grade students from Southside school follow their leader as they walk from one exhibit to another during the Farm Day at Bolado Park.

Southside School District was the only public education group in San Benito County that scored a “qualified” rating on a second interim budget report, according to records obtained by the Free Lance.
The score means the district may not meet financial obligations in the current fiscal year or two subsequent ones.
Southside is projected to be deficient spending in the 2016-17 and 2017-18 school years, according to the report. The San Benito County Office of Education will work with the district to reduce deficit expenditures, according to the same document.
Reports were due to the county office by March 15. The Aromas-San Juan Unified School District, which was the only district to receive a “qualified” rating in the first interim report but now has a “positive” review in the latest one, will be giving a voluntary third interim report at their board meeting at 6 p.m. May 24 at Aromas School.
Aromas-San Juan was one of just 16 districts in the state to receive the “qualified” rating on the first interim report, according to the California Department of Education’s website. The same statewide numbers have not been released for the second interim report.
Districts can score a certification of “positive,” “qualified” or “negative” on interim reports for the 2015-16 fiscal year. The reports project how much money the district will receive and spend, said Shannon Hansen, the assistant superintendent of business services for the San Benito County Office of Education.
Southside’s contributions to its cafeteria fund and migrant education were projected to increase, which would require additional contributions from the general fund, Hansen explained. The budget difficulties stemmed from the migrant program, which has been “underfunded for years”, and the cafeteria program, where the district makes its own meals on campus, according to an email from Eric Johnson, the superintendent of the Southside School District.
“We have addressed both of these issues in the 2016-17 budget,” he wrote in the email. “This, coupled with static growth, has caused us to realign our priorities/necessities and budget.”
It is not unusual for a district to earn a “qualified” score, only to rank better in the next review. Aromas-San Juan did this, bringing home a “positive” report in the second interim of this fiscal year.
“It’s common because they can identify areas that they are going to reduce services and/or staff in order to be fiscally solvent,” Hansen said.
While districts typically give two interim reports each fiscal year, Aromas-San Juan will offer a third next week.
“We’ve chosen to do it voluntarily because we view it as an opportunity to build a better budget for 2016-17,” said Ruben Zepeda, the superintendent of the Aromas-San Juan Unified School District.
Discrepancies between records at the district, the County Treasurer’s Office and the County Office of Education led the district to conclude it had more money to spend than it did. The district, which has a budget of a little more than $12 million, received an initial audit showing the district was due about $1.3 million, Zepeda explained.
About $1.2 million was put into the district’s general fund in June, but by July there were questions as to whether that transfer was appropriate, Zepeda said. The district worked with the county of education and eventually came to the understanding that the appropriate reconciliation had been $411,000, meaning about $800,000 had to be cut to balance the budget, he said.
“But we had built into our budget that $1.3 million,” Zepeda said.
The San Benito High School District worked through a similar issue this year, finally approving an annual audit in April that reconciled discrepancies for $1.2 million in property tax funds between books maintained by the County Treasurer’s Office and the County Office of Education.
Since the Aromas-San Juan Unified School District expected a larger budget, it had approved professional development for teachers, after-school tutoring and afternoon library hours, Zepeda explained.
“Many of those were literally just cut in order to make up for that $800,000,” he said.

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