News

Wednesday, May 27, 2009

Budget update

A message from Deputy Superintendent Eric D. Smith

On May 19, Propositions 1A through 1E were defeated resoundingly at the polls. Only Proposition 1F, which places a freeze on salaries for elected officials during bad budget years, passed. With the measures going down in defeat, the state budget deficit grows from a projected $15.4 billion to $21.3 billion. Before the election, the governor made it clear that if the propositions failed, cuts of unprecedented magnitude would be imposed on all sectors of government and no one would be spared. Now we must deal with this new reality.

Because the May Revise is not scheduled to be released until June 8, 2009, we can only project the level of cuts we are expected to incur on the unrestricted side of the budget. There may be additional cuts to the restricted side of the budget once the final figures from the May Revise are known.

What we do know is that there will be additional reductions to school funding to the tune of $617 million in the current year and $2.6 billion in reductions for the 2009-10 fiscal year. The 2009-10 number is extremely high because it does not include reassignment of $965.6 million in lottery revenue to the Proposition 98 guarantee due to the failure of Proposition C.

At this point, we estimate the loss of unrestricted revenue to be $1,068,949 in the elementary district ($762,371 in fiscal year 2008-09 and $306,578 in fiscal year 2009-10) and $4,129,494 in the secondary district ($2,203,850 in fiscal year 2008-09 and $1,925,644 in fiscal year 2009-10). However, since the deficit factor applied to the revenue limit will substantially decrease the overall revenue limit entitlement, it is anticipated that the elementary district will become “basic aid” in fiscal year 2009-10 by approximately $404,780. The net effect of this change will be that the lion’s share of cuts will have to be made in the secondary district since basic aid status will provide the elementary district with a “soft landing” after the loss of the first $306,578 in fiscal year 2009-10. Irrespective of basic aid status, we should not lose sight of the fact that the elementary district will continue educating the same number of students at a reduced level of funding.

The one-time federal stimulus dollars are supposed to offset cuts for both the revenue limit and categorical programs in fiscal year 2008-09. However, at this time, we only have preliminary estimates of the amounts expected to backfill the loss of revenue limit dollar in the current year. According to the California Department of Education, we will receive $1,231,539 in the elementary district and $2,940,479 in the secondary district for fiscal year 2008-09. It is anticipated that these dollars could be used to “offset” the loss of income in the current year. However, there is a concern (and perhaps a legitimate one) that these amounts could be dramatically reduced if the U.S. Department of Education opines that these dollars must be used to backfill current year cuts for the California State University and University of California systems.

Given the magnitude of the fiscal challenges facing the district, the board will make difficult decisions regarding additional reductions to the 2009-10 budget during board meetings scheduled for June 9 and June 16 of this year. The board must adopt the final budget on June 23, 2009.