Budget Notebook: Lagging state revenue triggers cuts, though they’re less than expected


This week, school districts in California finally got an answer to the question they’ve been grappling with for months: How much money will there be to support students this year?

You may recall that lawmakers in June adopted a state spending plan that included about $4 billion in optimistic revenue assumptions – as well as “trigger” language to reduce spending if those assumptions failed to pan out. Essentially, if revenue fell short by more than $2 billion, the state said it would automatically cut funding for schools and other public services.

And that’s exactly what happened. In a move that many had predicted, the governor pulled the trigger Tuesday on midyear cuts after the Department of Finance released its latest revenue forecast.

There was a significant silver lining, however, in that the reductions were far less than anticipated.

State revenues are projected to fall short by a little more than $2.2 billion, prompting a $248 million cut in home-to-school transportation and an additional reduction that amounts to $13 per student. By comparison, some experts were concerned about a hit as high as $349 per student.

So what does all this mean for IUSD?

Well, any budget conversation should include the caveat that state figures are subject to change. But the two cuts are expected to result in a loss of as much as $1.5 million for Irvine, and while that’s a sizeable amount, it could have been much worse.

The bottom line is our district will have enough revenue to cover costs through 2011-12 – in large part because we took a number of proactive steps to blunt the impact of midyear cuts. Most notably, our district budgeted with the belief that the state’s revenue projections were far too rosy and set aside funds for the inevitable hit.

This cautious and conservative approach has paid off and put us in a better position than most districts. At the same time, California has yet to resolve its larger fiscal imbalance, and additional state cuts will likely be included when the governor releases his 2012-13 budget proposal in January. We may even see more trigger language in future budgets.

Meanwhile, it should also be noted that IUSD continues to operate with a significant structural deficit, meaning we’re spending more dollars than we’re receiving and bridging the gaps with onetime carryover funds. This represents an intentional strategy to weather the storm as long as we can, ensuring current students won’t be denied a quality K-12 education because they happen to grow up in an era of budget cuts. However, onetime funds – similar to dollars in your savings account – only last so long. Barring an imminent economic rebound in California, our district will ultimately have to make the necessary budget adjustments to produce a balanced and sustainable spending plan.

Irvine, of course, has already endured its share of cuts. Over a recent two-year span, we made approximately $38 million worth of onetime and ongoing reductions, resulting in larger class sizes and districtwide furlough days. Looking ahead, our Board of Education and staff will almost certainly need to consider additional reductions, but that’s not the only way to bridge a gap. We are also in the process of exploring ways to generate new revenue for our schools.

On the latter front, our board recently directed members of our district’s Finance Committee to recommend revenue enhancement options that might supplement state funding. A smaller subcommittee researched best practices around the country and ultimately came up with a number of possibilities, including naming rights for facilities, a tax on hotel rooms, mandated tuition for visiting foreign students, a parcel tax, use of district assets, alumni donations and student parking fees.

Again, these are merely options. But the board has directed staff to study the feasibility of each idea and present recommendations at a future meeting. Meanwhile, the Irvine Public Schools Foundation continues to work hard to raise funds for our schools as part of a dollar-for-dollar matching campaign with the City of Irvine. If you’ve ever considered making a donation, or if you’d simply like to learn more about IPSF, I urge you to visit www.ipsf.net.

It’s hard to believe that we are still talking about the current budget crisis after so many years, and I know the Great Recession has taken a personal toll on many of our families. At the same time, we have so much to be grateful for in IUSD.

This year alone, two of our high schools were selected as semifinalists in the prestigious Grammy Signature School program, which annually recognizes campuses that provide exceptional music opportunities. Meanwhile, all five middle schools were lauded by The Orange County Register in its annual breakdown of the county’s best middle schools. And all of our schools continue to move the needle on standards tests, earning our district a cumulative score of 921 on the state’s Academic Performance Index, which measures achievement on a scale of 200 to 1,000. None of
this would be possible without our tremendous partnerships, which put the collective power of “us” in IUSD.

I wish I could tell you today that the state budget crisis was waning, or that our district was immune to the whims of Sacramento politics. I can, however, say with certainty that great things are happening each and every day in our classrooms, and for that we have to thank our committed students, our incredible staff and this exceptional community, which has never wavered from its pursuit of educational excellence.

Our challenges may be great, but our collective resolve to build and sustain world-class schools for the children of Irvine is far greater. As always, I thank you for your support.