Davis Schools Remain in Cash Flow Crisis

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Superintendent Winfred Roberson would not commit to supporting Richard Harris’ radical and stunning proposal, which coupled with his surprise announcement not to run has turned the school district calculations on their head.

But the Superintendent did say that he “admires the proposal” and is impressed that Mr. Harris cares enough to stop attempting to fix the schools’ fiscal policies through piecemeal.  Mr. Harris recognizes the truth that Davis cannot wait for the state to fix its fiscal problems.

“It’s scary,” Superintendent Roberson told the Vanguard.  “I stay up at night worrying about it.”

Superintendent Roberson may not be ready to back the proposal just yet, though he said if the board of trustees say to go forward they will get full backing from the district staff, and he understands where the urgency is coming from.

Last month the teachers refused to accept concessions, leading to the district laying off 50 employees along with another $700,000 in cuts away from the classroom in order to close a stubborn $3.5 million structural deficit.

The teachers believed somehow that the district has money that they have not tapped into.  When the Vanguard met with DTA President Gail Mitchell last month, she argued that the deferrals were worse last year and better this year.

That the district is sitting on untapped fund balances.  And that if the governor’s tax initiative passes that the district will be all right.

They believe that the district has been overly conservative with its budgeting, making more drastic cuts than needed, with the projections not being borne out.

The projections in the past, they showed the Vanguard with graphics, were way off.  They argue that there is no need for cuts at this time, which was in mid-May.

However, since that point things have gotten worse, much worse.

For one thing, a Field Poll released last week showed the governor’s tax proposal only has 52% support at this point.  And while it holds an overall lead, experts are concerned about the bare majority that supports the measure before the anti-tax forces have waged their campaign.

Moreover, there is growing concern with the governor’s poll numbers  which have significantly eroded.  The Field Poll, released last Friday, showed just a 43% approval rating for the governor versus a 40% disapproval.

As Gail Mitchell noted a month ago, it would be exceedingly bad news if the governor’s tax initiative does not pass.  Under those circumstances, “all bets are off,” she said and there would be drastic mid-year cuts.

However, Superintendent Roberson said that the teacher’s association is looking at the fiscal situation incorrectly.  He said they looked at the closing number of the 2010/11 year and saw a fund balance of $11.5 million.  However, he said that is akin to looking at your January bank statement and attempting to use that to plan for the year.

There is a difference between the fund balance which supplies programs over the course of a year and the cash balance.

The district is suffering now from a cash flow crisis.

As we have previously explained, the state is consistently behind on its cash payments to the district.  Cash is what is used to make payroll, make purchases, and run the day-to-day operations of the school district.

Because the state is in fiscal crisis they are deferring on those payments, which means the district has to borrow money short-term to make payrolls and function, and then pay that back when they receive their money from the state.

Right now, the district is in trouble.  The current fund balance is $9.6 million, which is roughly $2 million less than last year at this time.

More alarming, the cash balance is between $3 and $4 million.

In order to borrow the money needed to fund the district, they need 25% of what they are borrowing, or roughly $4 million in the bank, otherwise they lack the ability to borrow money and, absent that ability, they cannot run the district.2012_VCW_Fundraising_webad

The district’s situation is bad and was made worse by the unwillingness of the teachers to agree to concessions.  The classified employees, mainly the support staff through their union, CSEA (California School Employees Association), agreed to concessions, but DTA (Davis Teachers Association) did not.

The result is that the district had to lay off teachers in addition to other cuts.

Superintendent Roberson noted that all neighboring associations agreed to contingency language, except for the Davis Teachers Association.

“Our plan to prevent DJUSD from running out of cash in 2012-13 began with a $3.5 million spending reduction plan which includes $675K in program, operational and materials cuts and $2.8 million in personnel reductions,” Superintendent Roberson wrote in a statement.

“Even after making these drastic cuts, DJUSD is still at financial risk.  We face losing another $3.5 million of state funding if the Governor’s proposed November taxes do not pass.  Additionally, we must prepare for another $3.2 million of lost revenue when Measure A goes away in June 2013,” he continued.

As we noted previously, since 2007, the district has passed four separate parcel tax measures.

The problem is that the fiscal downturn has continued, despite indications at several different times that conditions would begin to improve.

It is under these conditions that we must understand the drastic nature of Richard Harris’ proposal that would fund an addition $640 per parcel per year.

That money would make up for the loss of measure dollars that go off the books next June.  It would enable the district to potentially re-hire or hire new teachers to edge the student-teacher ratio back down.

The school board will meet on June 21 to discuss this proposal.  There is little doubt that this will be a tough sell to the community, but it’s important to understand where this is coming from and the crisis that the district is facing as its cash dwindles.

—David M. Greenwald reporting

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About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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30 thoughts on “Davis Schools Remain in Cash Flow Crisis”

  1. JustSaying

    “That the district is sitting on untapped fund balances.  And that if the governor’s tax initiative passes that they district will be alright.”

    Huh? Maybe so, but does Gail Mitchell have any specifics?

  2. Frankly

    The solution is simple to understand, if politically difficult to implement.

    [b]Short-Term[/b]

    – Significantly cut state and local public-sector pay, employee pension benefits and health care contributions to a level equal to the private sector. The savings will more than cover the school funding shortfall.

    [b]Long-Term[/b]

    – Implement significant education reform; exploiting technology – especially in the higher grades – to reduce the number of school employees, thus reducing costs and freeing funds that can be directed at the arts, sports and the lower grades.

    [b]What NOT to do[/b]

    Supplemental parcel taxes are absolutely NOT the way to go… it makes winners and losers out of rich and poor communities. It broadens the education outcomes gap… setting more and more kids up for a life of low prosperity and misery.

    Tax increases will never fly. Voters are tapped out. They have lost about 40% of their overall asset wealth. They have to work more years to fund their retirement. They have to spend more on their kids’ education. They are spending more for health care. They are spending more for energy.

    The wealthy alone do not control enough wealth that could be taxed to fix the gap between spending and revenue. Also, increasing taxes on wealth impacts the investment of capital to business… which impacts the number of new jobs being created. Increasing taxes in this area of hyper global competition is a non-starter. It will just increase the economic spiral downward.

    It is time to pull our collective heads out of the sand folks. The public-sector gravy days are long gone. The only thing left to do is to turn back the clock to sustainable pay and benefit levels for our valued government employees. To get there with anything close to the required level of urgency, the public employee unions must go.

  3. JustSaying

    JS: “But, now we find out that, instead, they asked just for what they thought they could get away with based on what their polls revealed voters probably would tolerate.”

    David: “Now we find that out? NO. We knew that from the start. I reported it in every article on Measure C, that we were not covering the full $10 million, we were going to be $3.5 million short. We did not just find this out.”

    JS: “You must know we’re talking about two different things. You, that the amount they picked for the measure was less than the total shortfall. And, me, the reason they selected the amount they did. RIGHT!? (Not that lots of folks don’t know that people pay pollsters to figure out how to run a political campaign.)

    David: “We’re really not. The practical portion of getting a parcel tax passed was always a critical part of the equation how much.”

    You must know that you’ve again switched to something else to about which I was not commenting. I was pointing out that the board made a conscious decision to go for an amount less than the need and that voters didn’t know that it was based on a “what’s the maximum” they could get two-thirds to support.

    If Harris proceeds with his “stunning,” “dramatic,” “surprise” and “radical” plan to have a $1,000 parcel tax vote, the reasons for the most recent measure being inadequate will have to be explained. Some will see the “go for as much as the pollsters say” past choice in a cynical light.

    First, you pointed out that every Vanguard story noted that the parcel tax only was a partial fix. Now, you point out that that the board had to make a judgment that was a “critical part of the equation” of how much to ask for in a single measure. Both things are true, but really miss my point.

    In fact, your newer comment provides yet more support for Harris to give up this dramatic quest. By ignoring this “critical” consideration and by doing it so soon after we just passed a parcel tax, he puts the school board in an awkward situation. And, what does he care, nothing lost to him, he’s gone.

  4. JustSaying

    “…based on a ‘what’s the maximum’ they could get two-thirds to support.”

    “…based on a “what’s the maximum” polling suggested they could get two-thirds to support.”

  5. DT Businessman

    Jeff, under no circumstances am I going to allow the success of my business and my employees’ jobs to be dependent upon the State getting its act together. My employees and I have, and will continue to do what is within our own means to adapt to market conditions. I would urge the DJUSD and the community to do the same. We can only hope that the State will get its act together, but we could all be toast if we wait around passively for that day to come.

    -Michael Bisch, Davis Commercial Properties

  6. Frankly

    Michael – I agree what that perspective. Unfortunately the State (and city) not getting its act together will likely have some impact on the success of our business. School funding problems, higher property tax bills, high real estate prices and low real estate supplies, inadequate retail services… all of these things impact my ability to attract highly qualified talent for a local business I am trying to grow.

    But, I get your point… we need to make sure our business strategies do not rely on our broken systems of governance. Unfortunately for me, my business strategies might require consideration for relocating… and taking with me 15-20 good paying local jobs.

  7. DT Businessman

    My point though, is just as we strive to succeed in our businesses independent of whatever the State does or doesn’t do, so too must the DJUSD and the community. We cannot allow the success of our schools to be held hostage to inaction at the State level. Failure is not an option, period.

    -Michael Bisch, Davis Commercial Properties

  8. David M. Greenwald

    JS: I really do not know what you are driving at other than perhaps extending the argument that Harris shouldn’t do this because it might somehow harm the school board to ask for a lot of money that they need.

  9. Frankly

    Ok, I understand now. This is a dilemma for me though. If all the affluent school districts cover more of their own K-12 education nut, this then becomes the new normal and the poor districts are screwed. Then we end up with a new Supreme Court case for greater redistribution of these supplemental taxes. I see it in a never-ending loop of fiscal dysfunction caused by an isolationist approach. I feel the same draw to protect our own, but there are two questions I ask:

    1.Does this fix our problem without causing harm to others?
    2.Is the solution sustainable?

    I think it is clear that the answer to both of these questions is no.

    Part of the American problem is that we don’t want to take our medicine to ensure our long-term health. We are all about short-term feel-good relief… instant gratification. We also tend to be tribal to a degree… concerning ourselves with ourself, our own family, our own community… before we consider othes. We might be able to build a moat of Davis school funding that protects for our tribe… at least for a while. Meanwhile the city and state debt keeps growing and our school funding problems become even more difficult to solve long-term.

    The way I look at it… we are fully leveraged many times over. We have no more trick cards to play. All that is left is the pain of significant financial restructure. If we do it right, it will get worse before it gets better… but it will get sustainably better. But, if we try to keep propping up this broken system it will just doom future generations to even greater fiscal problems… it will cause them much more pain than we would feel today.

    The situation is a crisis. The solutions should require a tremendous sense of urgency. We might be able to hold off the inevitable day of reckoning for a few more years, but math is math and the slope of the graph of spending growth is still much steeper than the slope of revenue.

  10. wdf1

    JB: [i]Ok, I understand now. This is a dilemma for me though. If all the affluent school districts cover more of their own K-12 education nut, this then becomes the new normal and the poor districts are screwed. Then we end up with a new Supreme Court case for greater redistribution of these supplemental taxes.[/i]

    Then I trust that you will be supporting the governor’s state tax proposal instead.

    [i]Unfortunately for me, my business strategies might require consideration for relocating… and taking with me 15-20 good paying local jobs.[/i]

    And move to a community with a lower tax burden and worse public schools? Maybe that would appeal to employees who aren’t raising kids.

    By supporting good local schools, we attract a talent pool where other business might like to locate.

  11. medwoman

    Jeff

    “The way I look at it… we are fully leveraged many times over. We have no more trick cards to play. All that is left is the pain of significant financial restructure. If we do it right, it will get worse before it gets better… but it will get sustainably better. But, if we try to keep propping up this broken system it will just doom future generations to even greater fiscal problems… it will cause them much more pain than we would feel today. “

    It is fascinating for me to hear you make this kind of statement and admission of “crisis” with regard to our schools, when this is exactly how I feel about the state of medical care delivery in this country. I do not believe
    in the concept of “creative destruction” which you and Rich have written about, but if I did, the medical care process would be my first idea of where to start.

    As for the “broken”nature of the schools, I would, again point to the DaVinic Academy as a local bright spot.
    I am sure that this is not the only charter school that is making a huge difference for those kids who do not do well in the traditional, sit still and listen type of learning environment. There are definitely programs worth supporting, but some of the support does need to come in the form of money. It is not constructive to fall back on the tired old comment ” through money at the status quo”. I am quite sure that no one supports that approach. And yet it is trotted out over and over again as a reason to not support public education.

  12. Frankly

    [i]”Then I trust that you will be supporting the governor’s state tax proposal instead.”[/i]

    wdf1, is that a sustainable solution? I don’t think so. I won’t be voting for Brown’s tax increase. The ONLY thing it will accomplish is giving CA the distinction of being the highest taxed state and cementing its dubious honor of being the worst state to do business in.

    [i]”And move to a community with a lower tax burden and worse public schools? Maybe that would appeal to employees who aren’t raising kids.”[/i]

    Frankly, in my industry, having a large percentage of employees with young kids is an operational problem because few of them want to work full time, and those that do have the normal scheduling challenges of modern sleep-deprived helicopter parents.

    However, it does not matter anyway, because the cost of housing here in Davis is such that they can live elsewhere and pay for private school and still have money in their pocket.

    But I certainly admit that Davis schools have been an attractant to families moving here from out of the area. It is kinda’ weird don’t you think, to make such a big deal about this attribute of attraction, but then fight all the others like affordable housing, retail services, jobs, etc.? Reminds me of a peacock… strutting around looking beautiful, but otherwise a pretty useless bird.

  13. JustSaying

    [quote]“JS: I really do not know what you are driving at other than perhaps extending the argument that Harris shouldn’t do this because it might somehow harm the school board to ask for a lot of money that they need.”[/quote]Whew! Yes, going too often too soon to the same voters with different stories just might run into opposition that’ll cause a measure failure and longer-term bad feelings against the school district.

    You say, “a lot of money that they [u]need[/u]” when there’s already cases being made that the district might “want” it, but that it doesn’t really [u]need[/u] it because of Gail Mitchell’s mysterious “untapped balances” or because they should be making cuts instead of asking for more money. Or, that they should live within the budget like all the other school districts do since the court decision.

    The single-mindedness with which Harris is taking this on is admirable in some ways, but it also could stir up unnecessary antagonism that others will have to deal with after he’s gone.

  14. wdf1

    JB: [i]wdf1, is that a sustainable solution? I don’t think so. I won’t be voting for Brown’s tax increase. The ONLY thing it will accomplish is giving CA the distinction of being the highest taxed state and cementing its dubious honor of being the worst state to do business in.[/i]

    State taxes would be about where they were a couple of years ago, before the short term taxes all expired (1/2 cent sales tax, VLF, income tax rates). It hasn’t kept Google, Facebook, Apple, Pixar, Twitter, Intel, Hewlett Packard, eBay, Safeway, Lucasfilms, Wells Fargo, Oracle, etc. from doing their thing. I’d say it depends on what you get with your taxes. Right now we are on a downward spiral toward having the lowest spending per child in the nation for education.

    Economic growth is not sustainable when the state doesn’t invest adequately in education.

    So you’re against raising state taxes for education, you’re against communities helping themselves to fix that funding when the state has failed them, you want all kids to have a good education, I’m sure you’d like to see quality trained educators, but you don’t have a clear blueprint for how to get there and pay for it. Clear as mud.

  15. wdf1

    DMG/Vanguard: [i]When the Vanguard met with DTA President Gail Mitchell last month, she argued that the deferrals were worse last year and better this year.[/i]

    I would like to hear the explanation of how deferrals were worse last year than this year. I haven’t heard any explanation for why things got better, according to her.

  16. Frankly

    wdf1: We have been through this all before. There is no useful correlation between the amount spent per student, and the measurable quality of outcomes. When we start seeing education reform that commits a much higher percentage of the dollars directly to the students to improve test scores and dropout rates… instead of the money going to the adult jobs program that education is today, I will vote to tax myself more. If you want more from me, then you have to do more to earn it.

    Sure some companies will stay in CA despite another tax increase and an unresolved hostile business climate. But many will leave. It is not the ones that will stay that are our concern, it is the ones that will leave. It is also the potential new business that will chose to locate elsewhere that we should be concerned about.

    Note that I have a son struggling to get classes at the Jr. College. I am not happy about the service cuts. But, I would rather he live with us longer and take longer to complete his education than to throw more money at a system that refuses to innovate and reform to a more efficient and technologically advanced service delivery model. I am thinking of my grandkids at this point. Let’s do the RIGHT thing, not just the easy thing or the thing that puts another Band Aid on the gaping wound.

  17. hpierce

    wdf… you seem to be fine with the folks who provide the water you drink, the facilities that you use to flush away your waste, the roads you drive/bicycle on, that make sure your property does not flood, take serious reductions of staff, concessions of wages/benefits, with a meager continuation of a $49/yr assessment on parcels.
    Yet you seem to espouse a ~ $600 increase in parcel taxes to make sure no teacher is laid off, no concessions are made on teachers’ compensation, and perhaps augment one or more of the former. Not buying.

  18. hpierce

    David… cute… you and others (wdf) seem to espouse major cuts for City (and other public) employees. But not teachers. With an affirma5tion of the parks assessment, the next day, parks employees get layoff notices. The proposal by Harris is to significantly increase parcel taxes, with no concessions by teachers. I’m not buying the logic that the average (or below average) teacher should be immune to what is apparently happening to other public employees.

  19. David M. Greenwald

    I don’t think that’s accurate. I ave called for teacher on cessions. I will also remind you they took fifty layoffs and this is not their first round of layoffs. Just because I am not rejecting this proposal outright does not meani will support ultimately.

  20. DT Businessman

    Stop. Freeze frame. Everybody is making good points, but you’re all focusing on only one aspect of the challenge. We need to get a handle on the challenge in its entirety, develop a strategy, and then execute. The solution might be cuts, revenue increases, new educational delivery methods, or any combination thereof. Most of what I’m reading are distractions and aren’t getting us anywhere.

    One thing is certain, passively waiting around for the State to get it’s shit together is not an option. We would be foolish to pin the wellbeing of the community on a State solution. I’m also fairly certain that part of the solution is going to be a partnership between the local business community and the school district.

    -Michael Bisch, Davis Commercial Properties

  21. wdf1

    JB: [i] There is no useful correlation between the amount spent per student, and the measurable quality of outcomes.[/i]

    Right. Then reduce spending to zero, because it doesn’t matter. Yours is a specious argument.

    You will trot out the Washington, D.C. example, and I respond with New Jersey, Connecticut and Massachusetts, which all fund at a higher rate, are strong union states, and have better test scores, and then mention a bunch of Southern states which fund at a lower rate and which are weak union states and have scores that suck. And then you will fall silent.

    [i]Note that I have a son struggling to get classes at the Jr. College. I am not happy about the service cuts.[/i]

    A lot of parents do not realize that community colleges today are not like community colleges of the past. It is a “you snooze, you lose” world now. Ten years ago you could walk onto a campus on the first day of class and get into almost all your classes. Now you have to register in advance at the first chance. If a student has not yet registered for fall courses, almost all have already filled up.

    Students can still in fact get into more classes than they realize. For a number of instructors, it is just playing a game of attrition. If you’re not on the roster, show up to class the first day, tell the instructor you want to get in, and remain a normal diligent student until enough other students drop. Then you get added. Most wait-listed students seem to give up within the first week.

  22. DT Businessman

    wdf1, the current JC experience you describe matches my JC experience in the early ’80s. It sounds like we’ve come full circle.

    -Michael Bisch, Davis Commercial Properties

  23. Frankly

    wdf1: [i]”Right. Then reduce spending to zero, because it doesn’t matter. Yours is a specious argument. [/i]

    [img]http://www.cscdc.org/miscjeff/scrool.jpg[/img]

    Doesn’t appear specious to me.

    Also…

    [img]http://www.cscdc.org/miscjeff/SpendPerStudent.jpg[/img]

    Doesn’t look specious either.

    Here is what really sucks…

    [img]http://www.cscdc.org/miscjeff/HSGraduationRates.jpg[/img]

    If I didn’t know any better, I might accuse the education system as being racist. The left uses prison statistics by race to “prove” that the justice system is racially-biased. Then why not use the high school dropout rates to prove that the education system is racially-biased? The left protects the education status quo, and the right demands drastic reform. Who REALLY cares about racial inequity in this country wdf1?

  24. 91 Octane

    To call Harris Bold or Gutsy, takes Chutzpah. Harris won’t deal with political fallout from his own proposal, the rest of the board is going to take those bullets. Harris’s behavior is weasel-like/cowardice.

  25. David M. Greenwald

    “Harris won’t deal with political fallout from his own proposal”

    He’s chosen not to run again in order to try to help the district, that sounds like a sacrifice to me.

    “the rest of the board is going to take those bullets”

    That’s their decision, they have no obligation to support the measure. I have talked to three of his colleagues and some staff, no one has said a single negative thing about Richard Harris. I think you are reaching here.

    “Harris’s behavior is weasel-like/cowardice. “

    This is inappropriate on this board.

  26. wdf1

    JB: [i]There is no useful correlation between the amount spent per student, and the measurable quality of outcomes.[/i]

    If that’s the case, then do you argue that we could cut the spending to zero? After all it doesn’t matter how much you spend, according to you.

    In the U.S., there are 50+ different education systems with different long term funding trends and standards. By aggregating the entire U.S. education statistics, you don’t see how different strategies worked or didn’t. We don’t have a single coherent national school system.

    But some things that have affected increased spending are generally increasing rates of childhood poverty from a low in the late 60’s (it costs more to educate lower income students), the obligation of public schools to serve all students with disabilities, and increasing required standards to become a teacher.

    JB: [i]The left protects the education status quo, and the right demands drastic reform. Who REALLY cares about racial inequity in this country wdf1?[/i]

    We’ve been through this. I don’t see evidence that the broad reforms proposed by many conservatives, notably voucher/choice schemes, improve the educational performance of low SES (low income & lower educational level of parents) students. More than anything it yields greater segregation by class, with insufficient resources reaching lower SES students.

    What I do think helps a lot is after school resources, such as what the Bridge Foundation homework clubs provide. Students involved in this program do not typically have the home resources to support doing homework or supporting their school curricula.

  27. wdf1

    I’m for this in concept. I’d like to read the details.

    [url-http://www.artsed411.org/blog/2012/06/dan_hunters_creativity_index_california]Dan Hunter’s Creativity Index in California[/url]

  28. 91 Octane


    vanguard: :
    “Harris won’t deal with political fallout from his own proposal”
    He’s chosen not to run again in order to try to help the district, that sounds like a sacrifice to me.”

    wow, are you really that naive? Did it ever occur to you he wants out for selfish reasons?

    “the rest of the board is going to take those bullets”

    That’s their decision, they have no obligation to support the measure. I have talked to three of his colleagues and some staff, no one has said a single negative thing about Richard Harris. I think you are reaching here.

    lol – of course they didn’t say anything negative.

    vanguard: “This is inappropriate on this board.”

    I’m describing his behavior. It is what it is.

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