School district needs loan from county agencies to meet
financial obligations
Even as Aromas-San Juan Unified School District Officials are
floating an $18.8 million bond, Measure V, the schools are in
jeopardy of a state takeover if they can’t meet summer operating
expenses.
School district needs loan from county agencies to meet financial obligations
Even as Aromas-San Juan Unified School District Officials are floating an $18.8 million bond, Measure V, the schools are in jeopardy of a state takeover if they can’t meet summer operating expenses.
District officials will need a loan from the San Benito County Office of Education or the San Benito County Board of Supervisors to avoid the takeover, said Tim Foley, county superintendent of schools.
“We don’t know what that will be,” said Foley, referring to the loan amount. “It will not be a tremendous amount.”
In December 2007, the district was given a negative certification, according to documents from the Fiscal Crisis and Management Assistance Team (FCMAT), a team created by state officials to deal with school districts in financial crisis.
Negative certification means that district officials could not meet its financial obligations for two consecutive years.
Foley appointed a financial advisor to the district. The advisor must approve any spending that is not contractual or mandated by law.
Foley also contracted with FCMAT for a fiscal review. (See Box.)
In the course of reporting the story, Jacquelyn Muñoz, superintendent of the Aromas San Juan Unified School District would not meet or answer questions in person or by phone with Pinnacle staff. She requested that three questions be submitted by e-mail and said she would start a back and forth dialogue that way. Her answers to questions about the district looking for a private investor, dropping API scores and the reason the bond measure is needed to remove friable abestos came in past deadline.
Though Tim Foley states that the district needs to find other sources of funding, most likely from the county Office of Education or the County Board of Supervisors, Muñoz wrote in her e-mail “The district has not looked for a private investor to balance its budget…”
In addition, Muñoz maintained that the $18.8 million bond is necessary and that part of the bond money if passed, would be used to remove asbestos at San Juan School. Though opponents of the bond say the dangerous abestos at San Juan School has already been removed, Muñoz wrote that further removal is needed because the tile flooring needs to be replaced soon. The remaining abestos is in the tile adhesive and does not pose a risk until the tiles are removed, when an abestos expert will need to do the removal.
In February, district officials projected a shortfall by June 30 of $600,000.
The district’s financial problems stem from overspending, the governor’s proposed budget cuts to education and decreasing enrollment in the district, according to district and county administrators.
Most of a school district’s expenses, about 87 percent, are salaries and benefits.
Foley said the Aromas-San Juan School district has enough money to make payroll through June.
To prove that district officials can repay a possible loan within one year, they must cut $1.2 million from next year’s projected budget, or 10 percent, Foley said. According to a FCMAT report, budget projections for the 2008-09 year are $11.8 million. The school bond, Measure V, would be for capital improvement projects and not to meet payroll or general operating expenses.
If Aromas officials cannot borrow money from local officials, they would need a loan from the state. A state loan is also known as a takeover.
In the event of a takeover, a state administrator would make all of the district’s financial and educational decisions, Foley said. The administrator could not break contractual agreements.
“It takes years for the [school] board to regain control of all of the functions that they’ve had,” Foley said. “I’m counting on everyone involved to do what is necessary to make a situation like that not occur.”
Thirteen teachers were given pink slips for next year, said Wayne Funk, president of the Aromas-San Juan Teachers Association. In addition some classified employees were laid off, for a savings of nearly $800,000.
With the end of the financial year looming on June 30, district officials need to reduce next year’s budget by another $400,000.
Teacher salaries are the only other place to cut, Foley said.
“$400,000 is a big chunk and things have already been cut,” Foley said, “So, I hope they play ball.”
District officials want the teachers’ union to agree to a 4.1 percent pay cut and a cap on benefits, Funk said.
“We are at impasse,” Funk said. “The teachers did not create this problem and it is unfair for them to expect us to fix it.”
Teacher salaries and benefits at Aromas-San Juan are below the state average for unified school districts and they suggested a zero-percent pay increase for 2008-09.
Instead of cutting teacher salaries, district officials could cut transportation, Foley said. Busing is not mandated by law.
“That would be a very harsh measure to eliminate transportation for those students,” Foley said, of what he referred to as a sprawling district. “Particularly the elementary school.”
The next scheduled negotiation between representatives from the teachers association and the school district is June 4, Funk said.
At the K-8 sites, the physical education position has been cut so classroom teachers will be teaching gym, art and music, Funk said.
“There are a lot of teachers who don’t feel comfortable teaching gym,” Funk said.
School board members approved a cost of living allowance (COLA) for classified employees, a category that includes secretaries and other support staff, at the same meeting that they approved the 2007-2008 budget.
“To approve the COLA at the same time as they approved the budget strongly suggests that they did not fully consider the impact of the COLA,” Foley said.
The district’s business manager, Lupe Navarro, is responsible for preparing and signing off that the budget is sound, Foley said. One problem identified in the FCMAT report was that Navarro did not sign the budget.
“I’m looking at that as an oversight because that all happened at the last board meeting of the year,” Foley said.
At a special school board meeting in January to discuss a new bond, some attendees were angry that the district’s financial instability was not on the board’s agenda.
“They are talking about a new bond when the information was not evident, not made available, and of course people will be disturbed by that,” Foley said. “Since that time, the district has gone out of its way to bring transparency to the process.”
Concerns about the district
Foley notified the Aromas San Juan Unified School District of his concerns in late December 2007, according to the Fiscal Crisis and Management Assistance Team report.
They included the following issues:
1. The current fiscal crisis and lack of ability to continue as a “ongoing concern”
2. Insufficient cash flow to meet payroll
3. Deficit spending
4. Program overruns
5. Unaffordable labor contract settlements
6. Insufficient reserves
Long-term debt (Certificate of Participation)
