News

Thursday, January 31, 2008

School Services of California Presentation at Tuesday’s Board Meeting

A message from Eric Smith, Interim Assistant Superintendent of Business Services

At the January 29 board meeting, School Services of California (SSC) gave a presentation on organizational efficiency of the business office and on a multi-year financial forecast for the districts that included the revenue assumptions released with the governor’s 2008-09 budget.

Business Office Review

In the area of business office efficiency, SSC recommended that the district implement the following:

implement an integrated position control system that ties position control (i.e. the hiring of personnel for positions) to budget development and budget monitoring;
improve staff training on automated systems;
implement online requisition to speed up the purchasing process;
attract and retain a well-qualified chief business official.

Multi-Year Financial Projection

SSC was also charged with developing a multi-year financial forecast, using revenue assumptions contained in the governor’s proposed 2008-09 budget, which includes draconian cuts to K-12 education. These assumptions were not available at the time the First Interim Report was prepared. Major hits to the districts’ budget, based on the governor’s proposal, include the following:

revenue limit cut, no COLA and deficit totaling 2.4 percent
K-3 class size reduction, no COLA and 6.5 percent cuts
ninth-grade class size reduction, no COLA and 6.5 percent cuts
increases in projected encroaching programs due to categorical fund cuts

SSC’s multi-year projection also differs from the projection prepared by the district at the First Interim Report in that it does not project a salary increase in fiscal year 2009-10 and contemplates that the cap on health and welfare benefits will be enforced.

Based on SSC’s projection, the district will need to reduce expenditures by more than $4 million during the development of the 2008-08 fiscal year budget. A graphic representation of the multi-year presentation is presented below:

Unrestricted General Fund	2007-08	2008-09	2009-10

Revenues	$93,667,124	$89,640,052	$90,151,774
Expenditures	$81,113,564	$83,345,991	$84,084,583
Excess/Deficiency of Revenues Over Expenditures	$12,553,560	$6,294,061	$6,067,191
Other Sources/Uses *	($12,218,629)	($12,478,180)	($12,681,345)

Net Increase/Decrease in Fund Balance	$334,931	($6,184,119)	($6,614,154)
Total Fund Balance	$5,863,540	($320,579)	($6,934,733)
3% Reserve Requirement	$3,853,372	$3,725,388	$3,755,960
* "Other sources/uses" is mainly the contributions of unrestricted revenues to restricted programs, such as special education, transportation and the routine restricted maintenance account.

It is important to remember that any expenditure reduction made in current year reduces the impact of the ongoing operating deficit in the subsequent to years. To that end, the administration is not only developing a budget plan for next year but is also identifying any cost savings measures that can be implemented in the current year. Even though we are now confronted with challenging times, we will continue to plan, and not panic, as we watch the state’s budgetary process unfold.