Small Town News

PUSD projects deficit spending -- still wants to build larger reserve

---

At the regular Plumas County Office of Education meeting March 9, Director of Business Yvonne Bales presented the second interim financial report for the county office of education. She reported an 18.6 percent reduction in revenue, despite a 4.25 COLA adjustment.

Bales said the state is only funding about 80 percent of allocations.

The reduction is a result of a change in base year determination for ROP, also known as career tech programs, to 2007 -- 2008 levels.

The 2007 -- 2008 school year will be the base year for the next three years at 267 average daily attendance. Regardless of actual ADA, the county will receive funding based on the 2007 -- 2008 ADA.

Although Bales said revenues had increased by $28,300, expenses also increased $58,270.

The projected fund balance for the first interim budget was $4. For the second interim budget, it had decreased to a negative $31,287.

Bales said the biggest drain on the county side is the County Community School Program. The current year contribution, a stated term for unfunded expense, is projected to be more than $65,000 in unrestricted funds.

In addition, the governor proposes a 12 percent cut to administration that includes such expenses as the superintendent's office, instructional media, technology, data processing, libraries, facilities and maintenance. The exact amount of the cut is still unknown.

The outlook is equally grim. State payments for Quality Education Investment Act funds for low-performing schools are coming directly from Tier III funds -- more than $3,000 to date.

Moreover, although the state has promised a dollar-for-dollar increase to State Fiscal Stabilization Funds, that money is yet to materialize.

Known impacts on the current year's budget include $190,000 annually in lost revenue; a 34 percent deferral of 2010 - 2011 Tier III funding for career-tech programs -- even though current Tier III funding is inadequate to meet current staffing levels.

For the second interim report, Bales expected PCOE to move into deficit spending this year. However, the budget was submitted with a positive certification because cash flow remains positive on the year.

Indian Valley trustee Jonathan Kusel asked Bales about significant adjustments between budgeted and actual expenses to date and projected year-end totals.

As an example, he directed Bales to the line item for services and other expenditures. The board-approved operating budget allocated $460,052.54; the actual amount expended, as of the second interim reporting period, was $180,102.58. With only three and a half months remaining in the current fiscal year, the year-end total is projected to be $467,032.54, or $6,980 over budget.

Bales said she could not explain the difference without going back into the detail for that line item and that she would report back.

Superintendent Glenn Harris interjected that the Legislature recently passed authorization for the state to extend payment deferrals, as well as increase the amount of those deferrals. He said it was also possible the state would decide to further extend deferral on payments of money already owed.

As the Plumas Unified School District meeting moved to its conclusion March 9, Bales moved briskly through a PowerPoint presentation of the district's second interim budget.

Bales reported a statutory COLA of 4.25 percent; a revenue limit deficit of 18.36 percent, (Bales did not explain the relevance of this to PUSD, which is a basic aid district); and projected second period average daily attendance at 2,044.

In addition, the district's share of timber yield tax is down $190,275 to $12,400 because of a statewide downturn from $7 million to $1 million.

Together with property tax revenue declines, local tax revenue is down $227,500. Adding in a charter supplement reduction of $69,000 for non-resident student payments from their home districts, reduced charter payments in lieu of property taxes at $36,600 and a projected decrease in interest earnings of $25,000 results in an estimated decline in unrestricted revenues of $256,750 -- despite a $100,000 increase in state and local revenue.

Bales projected a year-end fund balance of $4,470, rather than the $247,520 estimated in the first interim budget.

As with the county office of education, state payments for low-performing schools under QEIA are coming directly from Tier III funding

-- estimated at $100,000 to date -- and the promised increase in fiscal stabilization funds has not materialized for the district either.

The state is also planning to continue "Fair Share" cuts to basic aid districts, such as PUSD, as long as revenue limit districts continue to be underfunded.

With the estimated $500,000

$700,000 administrative cut proposed by the governor, the estimated shortfall is $1.5 million annually through 2015 - 2016, according to Bales' calculations.

Bales said the district's fund balance remains positive in the current year, as does cash flow. The district self-certified the budget a positive financial condition based on those factors and discussion with the California Department of Education.

During her budget explanation, Bales took a considerable amount of time to discuss the district's controversial reserve. (See the By the Numbers chart accompanying this article.)

Presently, Bales anticipates an estimated unrestricted fund balance of $6.96 million. From that amount, $822,952 will be set aside as the required statutory 3 percent reserve.

Prepaid expenses and stores -- line items for benefits, propane, etc. -- estimated at $2 - $2.5 million will also come out of the $6.96 million, an amount not reflected in Bales' original chart, reducing the fund to approximately $3.9 million.

As a result, Bales' projected actual total unrestricted reserve is overstated by about $3 million, but still some $7.79 million or 42 percent of the district's annual unrestricted revenue.

Bales repeated, at length, her multi-year projections through 2012 - 2013, indicating deficit spending through that year even if nothing else changes.

She continued with additional slides detailing known personnel costs -- increases in salaries, an additional $5,000 each year, and benefits, $100 annually for $26,700 ongoing.

Bales appeared to be most concerned about the district's failure to meet its strategic plan goal of a special reserve fund goal of 45 percent -- with only a 30 percent reserve.

She also took the opportunity to tell the board she could not recommend any salary increases at this time, based on impacts to the general fund reserve.

She concluded with the statement that two separate auditors, as well as School Services of California, had approved the 45 percent goal.



Copyright 2010 The Chester Progressive, Chester, California. All Rights Reserved. This content, including derivations, may not be stored or distributed in any manner, disseminated, published, broadcast, rewritten or reproduced without express, written consent from SmallTownPapers, Inc.

© 2010 The Chester Progressive Chester, California. All Rights Reserved. This content, including derivations, may not be stored or distributed in any manner, disseminated, published, broadcast, rewritten or reproduced without express, written consent from DAS.

More from The Chester Progressive