Guest View: SBHS superintendent talks budget, ‘best financial planning’

The 2012-13 San Benito High School District budget, developed and presented for adoption in June 2012, represents the best financial planning for the coming fiscal year.
Based upon the Governor’s original budget proposal and May Revision, plus a thorough analysis by School Services of California (the preeminent school budget consultant in the State), there are a number of factors coming together at the same time to create a “perfect storm”.
On May 29, the State published its list of negative and qualified certifications. A negative certification for a district means that it cannot meet its financial obligations this year, 2011-2012, or next year, 2012-2013. A qualified district is one that may not meet its financial obligations for fiscal year 2011-2012, 2012-2013, or 2013-2014.
There are 188 districts, a record number that have been listed as negative or qualified by the California Department of Education. To give that number some context, there are just over 1,000 districts in the entire state of California. Included in the number of qualified districts are Los Angeles Unified School District and its $6 billion budget and San Diego Unified School District with its $1.1 billion budget.
When the Governor’s budget for 2011-2012 was approved last June, the state legislature assumed that revenue would be $4 billion more than the Legislative Analyst’s Office (LAO) had forecasted. As the current year ends, the LAO was right, and the legislature was wrong. That miscalculation, and a slower than expected recovery, have collided to produce a $16 billion budget deficit that must be resolved in the 2012-2013 state budget approval process. Schools have borne most of the burden of cuts to the state budget since 2008, the beginning of the Great Recession.
This November, the governor, supported by over 800,000 signatures, will let voters decide whether or not to further reduce school funding by the way they cast their votes. Voting to approve an additional one-quarter percent sales tax and an additional one to three percent income tax increase on the state’s highest earners would allow schools’ funding for 2012-2013 to remain flat (It should be noted that flat funding means that schools would continue to receive just over 75% of every dollar needed to educate our children, still a mighty reduction over 2007-2008 which was the last time schools received anything close to full funding.). Another measure on the same ballot this November, authored by Molly Munger, would add additional revenue to schools’ budgets by spreading a tax increase across the spectrum of all taxpayers. To provide additional context, currently the top five performing states, in terms of student performance, invest between $16,000 and $22,000 per student, while the bottom five performing states spend between $6,700 and $8,700 per student. California is among the bottom five states in investing in students’ education and one of the bottom five states in student performance.
Since 2007-2008, San Benito High School District has expended about $25.3 million annually. To maintain flat spending in the face of ever increasing expenses in health care (an average annual rate increase of approximately 9%), normal salary increases (approximately 1.1% annually), and usual cost of living adjustments to other expenses, the District has reduced expenses by over a $1 million. Those adjustments inevitably lead to fewer people serving roughly the same number of students. Nonetheless, all the above pales in comparison to the type of reductions that will be necessary if funding continues to decline. The state budget proposal would allow schools to reduce the number of student days in a school year by 15 days over a two-year span. Schools would have the option to reduce all 15 days in one year, or they could spread them out over this coming year and the following year. This reduction is on top of a 5-day reduction already approved in prior year budgets. Of course, all such reductions are subject to negotiations and collective bargaining agreements at the local level. Such subjects as a shortened work year, program reductions, the amount of work that can be accomplished in constrained financial times, and of course reductions to staffing all will become subjects of discussions beginning this fall. It is very simple. We either need to raise revenue, or we will have to cut expenses at levels heretofore unseen at SBHSD.
There will be those that argue that we have reserves to take us through this time, but the math belies that argument. At two million dollars in annual deficit spending, our general fund will be depleted and negative in two more years. Some of our other funds could be diverted to the general fund until they too are depleted, but we also need to be mindful of promised funds from the State that have been deferred for several months at a time. The State has adopted the Popeye cartoon character, Wimpy, the kindly borrower, approach to funding schools (“I will gladly pay you Tuesday for a hamburger today.”), districts need to have reserves on hand for payroll and other expenses until the State pays what it owes them. Going negative in cash flow requires borrowing funds, and such borrowing also contains unfunded costs in interest payments. Reducing without eliminating the deficit only prolongs the problem and the suffering that goes with it, as more and more cuts to expenses are made. Therefore, the District will need to look directly at the problem and develop solutions. In this environment, it is only prudent to maintain reserves sufficient to cover cash flow needs.
Around the state, people are acting locally to support their schools. Of the 32 bond measures presented in the recent June election, 23 passed. Of the 13 parcel tax measures across the state, 9 passed, and all received over 60% of the popular vote (Parcel taxes require a 2/3 voter approval to pass.).
Our progenitors were strong leaders who showed the ability to adapt and make difficult decisions. It is time to call upon their example and exercise the strength and resolve that will be necessary to weather this latest and most turbulent of storms. With our faith in each other, our resolve that we can make difficult decisions in tough times, and our trust that in working together there is nothing we cannot accomplish. We will survive this economic downturn and move into a new and brighter future together. Haybalers are made of tough stock!
Stanley Rose, III, Ed.D., superintendent