Hollister School District still on financial jeopardy list
The Hollister School District is one of 13 in the state in
serious financial jeopardy, appearing on the periodically released
list of districts that will not meet their financial obligations
this fiscal year or next.
”
The emergency confronting California’s schools is widening and
deepening,
”
said state schools chief Tom Torlakson.
”
As disturbing as these numbers are, unless the Legislature moves
to place the governor’s tax-extension plan on the ballot, they are
just the tip of the financial iceberg facing school districts up
and down the state.
”
Hollister School District still on financial jeopardy list
The Hollister School District is one of 13 in the state in serious financial jeopardy, appearing on the periodically released list of districts that will not meet their financial obligations this fiscal year or next.
“The emergency confronting California’s schools is widening and deepening,” said state schools chief Tom Torlakson. “As disturbing as these numbers are, unless the Legislature moves to place the governor’s tax-extension plan on the ballot, they are just the tip of the financial iceberg facing school districts up and down the state.”
Nearly 2 million students – roughly 30 percent of pupils in California – attend a school in a district facing serious financial distress, Torlakson said as he released the results of the financial watch list that shows whether local educational agencies are able to meet their financial obligations.
Hollister and 12 other districts around the state made the negative certification list. Another 97 districts – none of which are in San Benito County – made the “qualified certification” list, which means they may not meet their financial obligations either this year or in the coming two school years.
Districts on the negative certification list may have their county office of education intervene with their finances, according to the state Department of Education. The Hollister School District had a fiscal expert, Maureen Evans, assigned to it last fall and her role has subsequently changed to that of fiscal advisor as the district’s financial condition deteriorated.
“The fiscal advisor is still with us; she comes here every other Tuesday,” said Jack Bachofer, HSD’s chief business official. “We use her to update the accuracy and reasonableness of the assumptions we use for our budget.”
Evans also has “stay and rescind” authority, meaning that if the school board makes a decision that she believes does not positively impact the financial situation of the district, she can either halt the action or have it overturned.
“We still maintain local control,” Bachofer noted. “We don’t have a state-appointed administrator or trustee,” which is what would happen if the district needed a state loan to meet its financial obligations.
“We have no choice but to make the hard decisions that we’re making,” he said. “Despite some people who think that it may be advantageous to have a state takeover, I don’t see it.”
Getting out from state control could be a 20-year process, Bachofer said.
“Part of the problem is that you have to pay off the state loan and pay the state trustee,” he said, “General fund unrestricted money that otherwise would be going to staff would have to be used to pay off debt. Having the fiscal advisor is very helpful. With a state loan comes the ball and chain.”
A growing number of California school districts are facing large budget deficits as schools have received $18 billion less in state funds than anticipated over the past three years.
By comparison, only 22 school districts throughout the state made the roster of the financially troubled in the 2006-07 year. By June of last year, the number grew to 174 districts. So far this year, the state register lists 110 schools.
Schools face an estimated $600 in cuts per students if Jerry Brown’s tax extension plan doesn’t pass and Proposition 98, which mandates minimum state aid to schools, is suspended. News out of Sacramento this week is that Brown couldn’t get enough Republican support to put an extension of existing taxes on the June ballot, meaning they might come back on the November ballot as new taxes – which supporters believe would be harder to get approved.
“This would be devastating to an education system that has already sustained $18 billion in state funding cuts over the last three years – a loss of one-third of the annual budget for schools,” Torlakson said.
The key for school districts that make the early-warning list is to try to get their budgets in order so they can be removed. That requires that they show they have enough money to meet financial obligations for two or three years in their projected budgets. Sixty-four districts managed to right their finances enough to move off the list this year.
However, if a district like Hollister’s can’t pay the bills and maintain state-required reserves for this school year or the next, they move into negative status, which can put them under the control of their county board of education.
A district that has exhausted all options to pay its bills can be issued a state loan. Its board and superintendent are replaced by a state-appointed trustee and the district remains under state control until the loan is paid off, or sometimes longer.
Bachofer said the school district will remain on the negative certification list in a subsequent report due out in June. That does not mean a state takeover is imminent, he emphasized.
“If you can work your way through it, it’s possible to be negative for a period of time,” he said. If you are showing negative one year and make effective changes the next year, you might not (face state intervention). As long as you are moving toward getting the budget situation under control, you can stay on the qualified or negative list for a period of time.”
The only other nearby district on the negative certification list is King City Joint Union High. North Monterey County Unified and Gilroy Unified are both on the qualified certification list.
Bachofer said the Hollister School District has budgeted for the fiscal advisor position for this year and the next two fiscal years.
As the state budget picture comes more into focus, the financial future of local schools is expected to as well.
The Sacramento Bee contributed to this report.
