The school district in order to answer questions from district personnel about the budget and budget process has put together a Frequency Asked Question (FAQ) sheet. They put one together prior to Wednesday’s meeting and now will put one together based on the questions received at Wednesday’s meeting.
Here’s the original FAQ that was emailed to all district personnel.
1. What is required of the district in terms of a budget process?
The district is required to submit a multi-year budget that shows fiscal projections over a three year period. The Second Interim Budget due by March 15th must include projections in the current 2008-09 year and the next two years 2009-10 and 2010-11. By June 30th the district must submit an “Adopted Budget” for 2009-10 that includes a multi-year projection for 2009-10, 2010-11 and 2011-12. These budgets must show fiscal solvency over these time periods.
2. What does a “qualified” budget mean?
A “qualified” budget means that the district cannot provide a fiscally solvent budget plan in the second or third year of the budget. The district is required to develop a fiscal plan of action to address the budget shortfalls. Depending upon the size of the shortfall and the district’s ability to address the issue, the County Office of Education can require outside interventions to move the district toward fiscal solvency. This means persons outside the district can become involved or even direct budget decisions and timelines.
3. What would a “negative qualification” mean to the district?
A “negative” budget means that the district cannot show a fiscally solvent budget plan in the current year of the budget or is at risk of running out of cash due to the budget shortfalls. This “negative” status occurs at any time including the current year if/when reserves no longer meet contractual commitments. The district is required to develop a fiscal plan of action to address the budget shortfalls. The County Office of Education would require outside interventions immediately to move the district toward fiscal solvency.
4. Why are cuts to school districts budgets so difficult compared to private sector?
1. Districts’ have little or no control over funding levels. For example, right now we are being required to meet statutory deadlines even thought the legislature has not me theirs.
2. A portion of the district’s dollars (15%) are “categorically” attached to specific programs and services. Right now, it is unclear what state categorical dollars are “flexible” and can be used to address the budget deficit.
3. Employee compensation accounts for over 85% of the operating budget and the majority of the employees work under employee collective bargaining associations. Compensation accounts for 90% of the unrestricted budget.
4. Over 10% of our funds are programs protected by parcel tax measures. This means these programs or services will not be eliminated.
5. Approximately how many jobs would be saved with a rollback?
A 2.5% rollback would save approximately 20 jobs. A 4% rollback (i.e. back 18 months) would prevent layoff notices from being administered this year.
6. How does our situation compare with the state and the nation?
Our situation is in line with a deep economic downturn affecting the country. The California unemployment rate is at an all time high and could climb above 10% in the coming months. There have been thousands of corporate layoffs over the last few weeks. Some major corporations are trimming up to 10% of their employees. The State of California is currently putting workers on furlough with potential layoff for state employees that could reach 10,000 workers.
7. How would a more favorable than expected state budget affect our decisions?
If the approved State budget gives the district flexibility, fewer reductions would be needed and any layoff notices administered could begin to be rescinded.
8. How would a rollback affect retirement?
This question would have to answered on a case by case basis. A STRS employee with fewer than 25 years of service, absent any negotiated agreement to mitigate the reduction, would be adversely affected.
9. What impact would categorical “flexibility” have on the budget shortfall?
A large portion of State education funding is allocated to districts for specific programs (Categoricals). DJUSD receives state funding of $7m for these programs. Categorical flexibility means that instead of using the money in specific categories (e.g. CSR, textbooks) we would be able to use the money as part of the general fund. This would allow our district to make local decisions how to use these funds to cover our state revenue reductions. Even if we were allowed the most flexibility that anyone has suggested it would only cover $2 million of the total $5 million deficit over the next three years.
11. Are we using the reserve?
At this point we are using all the reserves we are allowed to use.
12. What relationship does the stadium have to the general fund or the budget shortfall?
It has no relationship. This is an example of how complex school funding came be. In the middle of devastating general fund losses, we have redevelopment funds that cannot be used to help us with our educational funding. There are monetary advantages and safety consideration that make moving forward with a project at this time a reasonable thing to do. Even so, the direction of the Board was simply to move forward with planning. No money has been expended, borrowed, or promised beyond the redevelopment funds that could only have been used on such a project. In the event a facility load is used to finance the project, the funding stream to pay the debt would come from secured property taxes earmarked for facilities only.