Budget Notebook: IUSD is cautiously optimistic as state sets new record for budget tardiness


This week, California made history – and not the good kind.

Our state is now as far as it has ever been into the fiscal year without an approved budget, and it could be days or weeks before a spending plan is agreed upon in Sacramento. Even then, California’s plan may be more smoke and mirrors than actual solutions.

So what does this mean for the Irvine Unified School District? Well, we are continuing to operate based on the governor’s projections from his “May Revise,” and while we cautiously project positive ending balances through 2011-12, we are also grappling with a number of variables.

For example, based on the May Revise, we have already anticipated and budgeted a reduction of 3.85 percent, or approximately $6.5 million. But it’s not yet known whether this cut will apply to districts funded under the “Basic Aid” model, including Irvine. Moreover, IUSD and other Basic Aid districts were told to brace for another reduction of $9.7 million as part of their “Fair Share” agreement with the state, but this cut doesn’t yet appear in any budget language for 2010-11.

This represents a total of $16.2 million that could swing in either direction. That said, even if we are asked to relinquish these funds in the months ahead, it appears we will still be able to make it through this year and next without additional reductions.

The reason is this: Our revenues have come in slightly higher than expected, and, thanks in large part to our employees, our costs have come in lower. In fact, including the 3.85 percent hit and the Fair Share reduction – and factoring in our state-mandated emergency reserves – the Irvine Unified School District is cautiously projecting healthy ending balances of $13 million in 2010-11 and $6.6 million 2011-12, followed by an estimated deficit of $4 million in 2012-13.

Again, these figures will not be real until we have a state budget – and even then there are no guarantees that Sacramento won’t pull the rug out from under us after the November election, which will introduce new lawmakers and a new governor. Based on our recent history, this district’s Business Services team has found it necessary to budget conservatively, and we’ve still been forced to react to bitter surprises in the spring. Nevertheless, our aim is to communicate every step of this process, for better or for worse.

We’ll soon be meeting with our employee associations to discuss our fiscal condition. Meanwhile, there’s another revenue source in play – in the form of federal EduJobs dollars. Back in August, a federal bill was signed into law to preserve jobs, including those of approximately 160,000 teachers. IUSD’s share of this money has been estimated at about $5 million, but there are many rules as to how and when these dollars must be spent. And, once again, our status as a Basic Aid district could impact our allocation. Staff is closely monitoring developments and will be prepared to make recommendations to the Board of Education, which will ultimately decide how to use these funds to the benefit of our students.

One more point worth noting. Last year, our district submitted its First Interim Report to the county with a “qualified” certification, indicating we would not be able to meet our financial obligations without taking corrective action – and we did exactly that. This year, we anticipate filing the same financial report with the ideal “positive” certification, pending another sudden shift at the state level.

That we are in this position is testament to the leadership of our Board of Education, as well as our faculty and staff, which has made incredible sacrifices and held costs in check in the face of dwindling revenue. While it’s not yet time to declare ourselves out of the woods, there is at least reason for cautious optimism heading into October.