Budget Notebook: Uncertainty at the state level means IUSD must plan for the worst


BY ASSISTANT SUPERINTENDENT JOHN FOGARTY

More details have come out about the governor’s budget proposal, and unfortunately they’re not in our favor.

As previously mentioned, Gov. Jerry Brown’s spending plan for 2012-13 is heavily reliant on a November ballot initiative that would temporarily raise taxes for high-income earners and increase the sales tax by a half-cent through 2016. If the initiative passes, education spending would essentially remain flat. If it fails to win voter approval, so-called “trigger” language would slash funding for K-12 schools by $4.8 billion.

The latter figure would result in an ongoing cut of about $370 per student, or approximately $10.4 million for IUSD alone. Coupled with a proposed elimination of home-to-school and special education transportation funding, our district could see a loss of about $11.5 million for the fiscal year that begins July 1.

Again, the governor’s January proposal is merely a starting point for ongoing discussions, and these figures are based on the assumption that the ballot measure will be rejected by voters. But all school districts in California must submit their spending plans by June 30 and make staffing decisions much sooner. As such, we must develop our budgets with worst-case scenarios in mind.

IUSD has grown accustomed to planning for the worst, and we have remained on strong financial ground relative to other districts thanks in large part to the sacrifices made by our employees, who have endured furlough days and program cuts, as well as the leadership of our Board of Education.

In anticipation of midyear cuts for the current year, our district set aside funds to ensure stability and continuity throughout 2011-12. Fortunately, those midyear cuts came in much lower than originally feared, leaving us with about $15 million in reserves. That may sound like a lot of money – and it is. But based on the latest revenue and expenditure forecasts, we’re projecting a deficit of $13.5 million for 2012-13. And that doesn’t factor in the potentially devastating cuts mentioned above.

Add the two together and the shortfall for 2012-13 grows to about $25 million. Factoring in our $15 million in reserves, the net challenge for 2012-13 becomes approximately $10 million.

Recognizing that any savings generated in the current year can be used to mitigate next year’s shortfall, our district has once again implemented a budget freeze for the remainder of the school year. Only expenditures that support the health and safety of children, are required or mandatory for programs, or support our mission-critical professional development initiatives will be approved.

This is not a step we take lightly, as we know it will have a significant impact on our schools’ day-to-day operations. At the same time, this strategy has proven to be highly effective by netting millions of dollars’ worth of onetime savings in previous years. The bottom line is this: The more we save this year, the less we’ll have to cut to balance the budget for 2012-13.

I don’t have to tell you that these are incredibly challenging times, exacerbated by the uncertainties at the state level. As discussions continue in Sacramento, new developments are likely to unfold that may alter our projections, for better or worse. It is our intent to communicate with you every step of the way as we pursue a number of proactive steps that will keep our district on solid financial ground.

As always, thank you for your patience and support.