The School District’s Financial Oversight Committee (FOC) Chair Cynthia Torres told the School Board at their annual joint meeting “Our District faces significant financial challenges that the Board has only begun to confront” due to California’s budget crisis.
School Board members have already taken the initial steps to reduce the District budget for the 2009-2010 academic year by $4.5 million but “those reductions are simply not enough.” The District’s Chief Financial Officer, Jan Maez, estimates the District still needs to cut another $2 million for 2009-2020 and another $4 – $5 million in each of the following two years.
Torres noted that her committee is “very concerned about the projected scale and growth of the operating deficit in the [District’s] Unrestricted General Fund. The three year budget projection shows a deficit of about $8.5 million in the next fiscal year alone, and a cumulative total deficit over the three-year projection period of $31.6 million.” If the Board doesn’t take further steps to curtail spending, the deficit will be primarily financed by drawing down the District’s reserve account at a rate of $8- $12 million each year during the projection period.
The FOC Chair stressed that such an approach “is a path to financial insolvency.” If the District becomes vigilant about maintaining its reserves, controlling costs, and aggressively searching for new revenues the District’s financial future can remain fiscally sound.
Torres also pointed out that the approximately $7.5 million the District will receive in one-time federal stimulus dollars have already been ear-marked for special purposes such as Special Education and Title I schools. Therefore, the budget process for the 2010-2011 school year must begin this summer due to the dire nature of the District’s finances. She emphasized that everything must be on the table including further increases in class sizes, administrative changes, school consolidations, and negotiated changes with the District’s bargaining units.
Also mentioned by Torres was the need for the District to revisit its Strategic Plan which was last updated in 2002. This plan will help the District identify its key priorities, and direction and guidance on budgetary priorities.
Torres also proposed several recommendations for the FOC to pursue during the 2009-2010 fiscal year. One suggestion was to refine specific revenue enhancements to help balance the District’s budget. Another was to continue to work on the development of a financial management plan for Special Education and lastly, to assist the Board with the development of a multi-year financial plan.
The FOC is a nine-member committee of professional and community members appointed by the Board to provide the School District’s management with advice and counsel on a variety of financial matters.