With IUSD projecting a shortfall of about $5.3 million for the next fiscal year, the Board of Education voted this week to certify the district’s latest financial report as “qualified,” meaning adjustments will be necessary to present a balanced budget in June.

John Fogarty, assistant superintendent of business services, said school districts are required to base their multi-year projections on the governor’s January budget proposal, which is heavily reliant on a November tax initiative. If that initiative is rejected by voters, public education would be reduced by $4.8 billion, or about $370 per student, according to Governor Jerry Brown’s plan. Including a proposed transportation cut, Irvine would lose approximately $11.5 million.

IUSD has taken proactive steps to blunt the impact of the potential reductions, including the implementation of a budget freeze and the suspension of deferred maintenance contributions. The district was also able to add to its reserves after cuts for the current year came in lower than expected. Using these onetime dollars to backfill the larger structural deficit, IUSD now faces a shortfall of approximately $5.3 million for 2012-13, Fogarty told the board.

California requires every school district to examine and certify its financial condition as “positive,” “qualified” or “negative” in financial reports that are submitted twice during each year. (First Interim Reports are filed in December and Second Interim Reports are submitted in March.) “Positive” is the ideal certification, signaling that a district will be able to meet its financial obligations for the current year and two subsequent years, while “qualified” indicates a district may not be able to meet its obligations without additional action. A district would file a “negative” certification if it was unable to balance its budget.

Fogarty expressed confidence that IUSD will be able to produce a balanced budget by the June 30 deadline after making the necessary reductions and adjustments. At the same time, he said, the state requires all districts to certify their Second Interim Reports based on current projections.

To read a PDF recap of Tuesday’s meeting, click here.

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.

Over the last few years, IUSD has grown accustomed to operating in an environment of fiscal uncertainty, as state lawmakers have often deferred decisions and provided little in the way of concrete information while grappling with California’s budget crisis.

It now appears that uncertainty will continue. This month, Gov. Jerry Brown released his initial budget proposal for the 2012-13 fiscal year, and it seems to have generated more questions than answers.

The key takeaway is that the spending plan, revealed Jan. 5, 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 measure passes, funding for schools would remain flat, according to the governor’s proposal. If the initiative is rejected by voters, K-12 education could be slashed by an additional $4.8 billion.

Either way, school districts are required to submit their budgets by the end of June, and some staffing decisions must be made sooner than that. John Fogarty, IUSD’s assistant superintendent of business services, said Irvine will work to have contingencies in place should the November ballot initiative fail.

Keep in mind that Gov. Brown’s proposal is merely a starting point for budget discussions that could last for months. The next fiscal milestone at the state level is May, when Brown is expected to release a revised spending plan based on the latest economic data.

Meanwhile, representatives from IUSD and other districts are closely scrutinizing details of the governor’s proposal for their own budget deliberations. Education officials hope to learn more at an upcoming budget workshop hosted by experts from School Services of California.

BY SUPERINTENDENT TERRY L. WALKER

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.

The selection of a new president wasn’t the only big news at Tuesday night’s Board of Education meeting.

A representative from the Irvine Company was also on hand to present IUSD with the sixth installment of its pledge of more than $20 million over 10 years for enriched curriculum in art, science and music.

Robin Leftwich, vice president of Community Affairs for the Irvine Company, personally delivered the check for $2.15 million to the board, pushing the company’s cumulative contribution past $12 million. Leftwich pointed out that there are still four more checks to come.

Established in 2006, the Excellence in Education Enrichment Fund generously pays for specialists to work in IUSD’s fourth-, fifth- and sixth-grade classrooms. Students receive two 60-minute science lessons per week taught, two 40-minute music lessons per week and six hourlong art lessons per year, all taught by instructors who are highly qualified under the definition established by the No Child Left Behind Act.

Each year, IUSD also produces a detailed report assessing the value of the enriched curriculum. (You can access a PDF of that report by clicking here.) Leftwich — she’s pictured above, along with Irvine’s four student board members and Superintendent Terry Walker — called the data in this year’s report “stunning,” noting that Irvine students are consistently outperforming their state counterparts on science standards tests and other key indicators.

“Irvine students are far and away performing above county, state and, in many cases, global student populations,” she said.

The IUSD Board of Education’s meeting on Tuesday, Dec. 6 will mark its final regular session of 2011, and there’s no shortage of business on the agenda.

Perhaps most notably, board members are set to elect a new president, as Sue Kuwabara’s one-year term is coming to a close, and they’ll pick assignments and set meeting dates for 2012.

Representatives from the Irvine Company will also be on hand to present the latest installment of a 10-year, $20 million pledge to enrich curriculum in art, science and music. And later in the evening, the board is expected to discuss the budget and certify IUSD’s First Interim Report, which indicates the district’s fiscal health.

School districts are required by the county to examine and certify their finances as “positive,” “qualified” or “negative” twice each year. IUSD staff is recommending a positive certification, which is ideal. (“Qualified” indicates a district may not be able to meet its financial obligations for the current year and the two subsequent years. A negative certification indicates a district will not be able to meet its financial obligations.)

As usual, Tuesday’s Board of Education meeting will be held at 6:30 p.m. at the District Office, which is located at 5050 Barranca Parkway in Irvine. Local cable subscribers may also watch the meeting live on channel 39.

To access a PDF of the agenda, click here.

The latest report from the Legislative Analyst’s Office, issued Nov. 16, indicates California’s struggling economy is likely to trigger automatic cuts to public education that could reduce the school year in some districts. (The Los Angeles Times has the story here.)

In response, IUSD Superintendent Terry Walker issued the following statement:

“At this time we are continuing to closely monitor reports out of Sacramento to determine how legislators intend to deal with lagging revenue.

“Recognizing that the state’s earlier projections were overly optimistic, the Irvine Unified School District was prudent and proactive in its budgeting for 2011-12, and in fact we planned for a mid-year reduction at the state level. As such, we do not currently anticipate the need to shorten this school year, and of course any changes to the academic calendar would be subject to mutual agreement with our employee associations.

“Our district will, however, continue to take a cautious and conservative approach to ensure we remain on solid financial ground as we anticipate more challenges in the years ahead.”

The Irvine Unified School District has selected an experienced and highly regarded finance chief to serve as its next assistant superintendent of business services.

John Fogarty, who currently leads fiscal operations in the Brea Olinda Unified School District, was approved by the IUSD Board of Education on Thursday morning and is expected to begin work in Irvine on Nov. 28. He succeeds Lisa Howell, who recently accepted a similar position at a district closer to her Palm Springs-area home.

“We could not be more pleased to land a school finance expert of the caliber of John Fogarty,” said Terry L. Walker, IUSD’s superintendent of schools. “At this critical point in our state’s history, with a persistent budget crisis that has already stripped billions of dollars from public schools, it is absolutely imperative that we have first-rate leadership and experience to help us weather this storm. John is one of the most respected school administrators in Orange County, and his financial expertise will be a tremendous asset to ensure that our district makes the most of its available resources while pursuing new revenue.”

Fogarty, 45, brings more than 21 years of financial experience that includes accounting, budget preparation and analysis, as well as the development and implementation of internal controls.

He began his career in finance as a cost accountant for the Los Angeles Health Care Department in 1990 before taking on the role of controller and fiscal analyst for Electronic Data Systems in 1995. Four years later, he was hired as manager of District Fiscal Services for the Orange County Department of Education. Fogarty went on to serve as coordinator of District Fiscal Services, administrator of Business Services and director of Business Services with the OCDE before becoming an assistant superintendent with the Brea Olinda Unified School District in February 2008.

“While it’s difficult to say goodbye to so many longtime friends in Brea Olinda, I am very excited to meet with the many stakeholders of the Irvine Unified School District,” he said this week. “Irvine has a reputation for careful, long-range fiscal planning, and that’s a testament to the Board of Education, the staff and the community. I look forward to working with each of these groups to ensure we remain on solid financial footing, regardless of what occurs in Sacramento.”

A resident of Anaheim Hills, Fogarty is married with two children, ages 16 and 19.

The Irvine Public Schools Foundation kicked off its annual campaign this week to raise money for local schools, which stand to receive double the benefit.

That’s because the City of Irvine, through its 2010 Measure R initiative, has pledged to contribute up to $875,200 in a dollar-for-dollar match to help ease the impacts of larger class sizes.

IPSF has already collected more than $300,000 of that total this calendar year, and the foundation is hoping to raise the remaining $500,000 before Dec. 31. Factoring in the city’s match, Irvine schools could receive as much as $1.8 million for class-size support.

IUSD Board of Education President Sue Kuwabara and Superintendent Terry Walker sent an email to the community on Oct. 18 expressing their support for the campaign, noting that the revenue “will make a difference where it matters most – in the classroom.”

“At the elementary level, proceeds from this campaign will pay for qualified instructional assistants, increasing the amount of one‐on‐one interaction,” Kuwabara and Walker wrote. “In our middle and high schools, class‐size support funds will provide additional staffing hours, thereby reducing student‐to‐teacher ratios in critical subjects.”

Here’s the full text:

Dear IUSD parent:

By now, you’re probably all too aware of the impacts of California’s budget crisis, which has forced the Irvine Unified School District to make nearly $40 million worth of reductions. Unfortunately, our state’s economy remains mired in a slump, and more cuts are anticipated.

That’s the bad news.

The good news is that the Irvine Public Schools Foundation is working hard to raise money on our behalf, and the City of Irvine has offered to contribute up to $900,000 in a dollar-for-dollar match with the
foundation. That means if you donate a dollar, the City will kick in an additional dollar, potentially generating as much as $1.8 million.

These funds will make a difference where it matters most – in the classroom. At the elementary level, proceeds from this campaign will pay for qualified instructional assistants, increasing the amount of one‐on‐one interaction. In our middle and high schools, class‐size support funds will provide additional staffing hours, thereby reducing student‐to‐teacher ratios in critical subjects. In addition, IPSF supports music education for students in kindergarten through grade six, as well as grants that enable our teachers and counselors to embrace 21st century learning strategies.

Though any amount is appreciated, IPSF and IUSD are asking you to consider a tax-deductible contribution of $365 – or $1 per day – by the end of the calendar year. We know this is a lot to ask, particularly
during these tough economic times. But this revenue will make an immediate impact in our classrooms.

Keep in mind that IPSF is the only organization with the reach and resources to impact every school – and every child – in our district. If you’ve ever considered making a contribution to preserve excellence in the classroom, or even to help maintain the property values that are linked to our schools’ performance, now is the time.

To make a donation, or to learn more about the partnership between IUSD, IPSF and the City of Irvine, please click here or visit the foundation’s website at www.ipsf.net.

As always, thank you for supporting education in Irvine.

Sue Kuwabara
President, Board of Education

Terry L. Walker
Superintendent of Schools

Gov. Jerry Brown recently pored through scores of legislative bills, offering his signature on some while vetoing others.

One of those that didn’t make the cut was Assembly Bill 165, which would have consolidated existing laws that prohibit schools from charging improper fees for classes or extracurricular activities. The legislation would have also established new complaint and audit procedures.

The bill was drafted in response to a lawsuit filed last year by the American Civil Liberties Union, which alleged that a number of schools were imposing impermissible charges to help pay for programs and services. Though Gov. Brown surprised many with his veto over the weekend, he also asserted that the California Constitution guarantees the right to a free public education.

“Local district compliance with this right is essential, and those who fail should be held accountable,” the governor wrote. “But this bill takes the wrong approach to getting there.”

It remains to be seen if the Legislature will introduce a new bill pertaining to student fees and charges. Either way, IUSD is committed to ensuring its practices align with the California Constitution and case law by emphasizing that requests for donations are strictly voluntary, and that no student will be denied an educational opportunity, regardless of whether a contribution is made. In fact, IUSD began analyzing the issue of student fees before the ACLU filed its suit.

“The right to a free public education is more than just the legal standard in California, it is a moral imperative,” Superintendent Terry L. Walker said. “Though our district will work to preserve valuable enrichment opportunities through local donations, we will also emphasize at every turn that all contributions to our programs are voluntary.”

For more on student fees in IUSD, click here.