With the Hollister School District swimming in red ink and
relying on reserves to balance its budget, County Superintendent of
Schools Tim Foley said that the state taking over the beleaguered
district is a
”
real possibility.
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Hollister – With the Hollister School District swimming in red ink and relying on reserves to balance its budget, County Superintendent of Schools Tim Foley said that the state taking over the beleaguered district is a “real possibility.”
Foley, who would initiate such a procedure, said he needs to see a responsible budget plan from the district to keep that from happening. He does not have a deadline for when he wants to see that budget, but said he would not wait for “disaster to occur.”
“The board has knowingly and intentionally adopted a policy of deficit spending,” Foley said. “And the money is not there.”
Foley said his chief financial officer recently examined the district’s budget and determined that HSD will be forced to spend $1.6 million in reserves for the 2006-2007 school year, leaving only about $300,000 left in board coffers at year’s end. With too little left over to meet state reserve requirements, Foley said he would be forced to give the district a negative certification, which could lead to state intervention.
“The cuts that have been made were too little, too late,” Foley said. “And they (the board) continue to deficit spend.”
The board solved a $1 million deficit this year by dipping into its reserves and narrowly passing a $42 million budget two weeks ago. The 3-2 vote to pass the 2005-2006 budget transferred – on paper – slightly more than $2 million dollars from a reserve fund into next year’s beginning general fund. Interim Business Director Michael Slater presented the budget, pointing out that net expenses will outpace net revenues by $1.1 million next year.
It would be Foley’s decision to initiate AB1200 procedures, which effectively turn the district over to the state and the Fiscal Crisis and Management Assistance Team. Then, the state would run the district, moving the board of trustees into a strictly advisory role, until the district could demonstrate a commitment to fiscal solvency. Such a move would mean drastic cuts for the district which serves 5,900 students and would hurt the entire community, Foley said.
“I recognize the impact this would have on the district and the pain that it will cause for the children, families and teachers,” he said.
Foley said the board could still avoid state intervention, but has not seen a plan for recovery. Possible AB1200 procedures would probably not be initiated this year, but Foley said he was not certain when a state takeover would occur.
“It is understood by all parties that AB1200 is a real possibility,” Foley said.
HSD Superintendent Judith Barranti could not be reached for comment, but Board of Trustees President Margie Barrios said whatever the board does will impact both students and teachers.
“We need to sharpen our pencils and make some serious cuts,” Barrios said. “If we don’t do something now, it will snowball and become much worse.”
Complicating the situation is the fact that the district has not found a replacement for Slater, who retired in June. A hopeful replacement recently withdrew his application for personal reasons, Foley said.
Barrios said the board will do everything possible to avoid state intervention and will try to hire another interim business director. She had hoped Slater would continue on with the district and was disappointed to learn he would not. Barrios predicated the board would have to make about $2 million in cuts over the next year, but did not specify exactly when those cuts would occur.
“This is an immediate situation, we cannot sit back and do nothing,” Barrios said.
Problems for the district started before the sewer moratorium which brought home construction in Hollister to a halt in 2002 and increasing home prices – both of which have resulted in a drop in enrollment, Barrios said. In addition, Barrios said state budget problems have hurt the district. She said the board was not to blame for current fiscal woes.
“We have been a prudent board. We tried to save, we planned ahead and had reserves,” Barrios said. “Budgets are based on assumptions, there are things that are not predictable.”
Recently elected Board of Trustees member Randal Phelps agreed.
“I think we’ve done the best we could in a bad situation,” Phelps said. “It’s easy to stand on high and make judgments, but it’s a lot harder when your down in the earth digging.”
Phelps said he wants to continue with the current budget though the end of the year and hold off on cuts until the 2006-2007 school year, but said he may change his mind.
“We’re cutting through the bone now,” Phelps said. “We’ll have to go back through the budget and look at everything.”
Hollister Elementary School Teachers Association President Jan Grist said she was hopeful state intervention would be avoided. The district recently declared teacher negotiations reached an impasse and Grist believes the district’s financial problems are being exaggerated. She said the budget prepared by Slater was based on the worst case scenario.
“I think everybody is crying ‘Chicken Little, the sky is falling,’ but really it’s all political,” Grist said. “There isn’t a story here, it’s pure conjecture.”
Slater disagreed.
He said the only questionable item in the budget was a prediction based on Gov. Arnold Schwarzenegger’s proposal to shift the state’s contribution to the State Teacher Retirement System to school districts, a move that would cost the district $400,000.
“The rest is budgeted to the dollar. It is so accurate that if anything comes up in will be on the downside,” Slater said. “I know the budget line by line and (the money) is not there.”
Brett Rowland covers education for the Free Lance. He can be reached at 831-637-5566 ext. 330 or [email protected].
