State budget crisis results in yet another shortfall

With the Irvine Unified School District facing a projected shortfall of $14.7 million in 2010-11, the Board of Education voted on Nov. 17 to certify the district’s First Interim Report of 2009-10 as “qualified,” meaning adjustments will be necessary to present a balanced budget over the next two years.

Lisa Howell, Assistant Superintendent of Business Services, said the state is facing massive shortfalls through 2010-11, and indeed on Nov. 18 the Legislative Analyst’s Office reported that California’s current deficit is nearly $21 billion. Howell noted that much of this year’s local budget gap was addressed using onetime savings as opposed to ongoing reductions. Moreover, IUSD will not be buoyed by additional federal stimulus funds, which helped spare jobs in the current year.

The Orange County Superintendent of Schools requires each school district to examine and certify its financial condition as “positive,” “qualified” or “negative” twice during each fiscal year. Positive is the ideal certification, while qualified indicates that a district may not be able to meet its financial obligations for the current year and the next two subsequent years without corrective action. A negative certification indicates that a district will not be able to meet its financial obligations over this period.

Tuesday marked the first time that IUSD filed a qualified First Interim Report. Howell noted that other districts were expected to follow suit given the precipitous drop in state revenue. With the budget conversation set to resume at the next Board of Education meeting on Dec. 8, Board members expressed their resolve to close the gap with input from the community. 

The First Interim Report reflects IUSD’s financial health as of Oct. 31 and is due at the Orange County Department of Education no later than Dec. 15. The Second Interim Report, indicating the district’s condition as of Jan. 31, must be submitted to the county by March 15.

To access the budget PowerPoint presentation that was shown at the Nov. 17 Board meeting, click here. To read the latest edition of Budget Notebook, click here.

State finally approves 2009-10 budget

In July 2009, the state Assembly and Senate approved a bundle of bills that collectively constitute a budget for 2009-10, effectively resolving most of the state’s $26 billion deficit. The cuts to education were similar in total dollar amount to the alarming proposal laid out by the governor in May.

As you'll recall, school districts were required to adopt and submit their budgets before July 1.

IUSD's budget for 2009-10, approved by the Board of Education on June 23, outlines $214.1 million worth of expenditures – both restricted and unrestricted – against $201.8 million worth of total revenue. The difference, approximately $12.3 million, will be offset by onetime carryover funds.

IUSD was able to present a balanced budget following three phases of reductions totaling more than 16 million. In addition, the district used nearly $7.8 million in onetime federal stimulus funds to help offset the precipitous drop in state revenue.

California's budget roller coaster: A look back at Spring 2009

In April, the Board approved a first phase of reductions – approximately $9 million in onetime and ongoing adjustments – in an effort to remedy the projected deficit brought on by California’s fiscal crisis. In the weeks and months that followed, however, the state’s tax revenues continued to plummet, a slate of ballot propositions crafted to generate state funding was rejected by voters and California's deficit grew to approximately $24 billion. As a result, IUSD was forced to identify another $2.2 million in reductions. (These cuts, referred to collectively as Phase II, were formally approved on June 23, along with the Phase III reductions.)

More bad news came in June, as pressure began mounting to further reduce the unrestricted budgets for districts funded under the Basic Aid model, including Irvine. Anticipating harsher cuts, a coalition of Basic Aid districts took a proactive approach and submitted their own “Fair Share” proposal. Under this plan, IUSD was compelled to cut an additional $7.1 million – with just days to go before a budget was due.

The list of Phase III reductions approved on June 23 includes changes in class sizes for grades one, two, three and nine; reduced spending on art, music and science; a restructuring of adult education, which is now a fee-based program; and the deferral of textbook adoptions. In addition, some onetime dollars that were set aside to cover retiree benefit liabilities will be used to cover a portion of the shortfall. (To access the complete list of IUSD's phased budget adjustments, click here.)

Embedded in the 2009-10 budget is a 3 percent reserve for economic uncertainties as mandated by the state Education Code. However, the district is unable to project balanced budgets for the two subsequent years and will therefore be required to explore additional expenditure reductions and/or revenue enhancements.

Irvine and other school districts in California are required to submit their annual budgets on or before June 30. While the state also shares this deadline for budget adoption, legislative leaders rarely meet it, forcing local school districts to make important financial decisions based on the governor’s proposals from January and May. Once the state officially adopts its spending plan in the summer or fall, IUSD will have 45 days to make any necessary adjustments.

For more information on the state crisis and its impact on IUSD, please read the latest issue of Budget Notebook.

How to advocate for schools

Write a letter to the Governor insisting he not penalize our students for the state’s budget woes.

Contact your local Assembly member or Senator to urge the protection of education funding.

Write a letter to the editor of your favorite newspaper opposing cuts to education.

• Irvine World News: ddennis@ocregister.com. Letters will be edited for length, grammar and clarity, and those of less than 200 words will be given preference. All letters must include a name, city of residence and a phone number. The number will not be published.

• Orange County Register: letters@ocregister.com or P.O. Box 11626, Santa Ana, CA 92711-1626. Letters will be edited for length, grammar and clarity, and those of about 200 words will be given preference. All letters must include a name and telephone number, which will not be published.
  
  
• Los Angeles Times: ocletters@latimes.com or 202 W. 1st Street Los Angeles, CA 90012. Please do not send group letters or attachments.

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