Riverside Press-Enetrprise: Inland School Districts in Financial Jeopardy

EDUCATION: Many Inland districts in financial jeopardy

By DAYNA STRAEHLEY
The Press-Enterprise

 10:00 PM PDT on Sunday, June 26, 2011

Ten of the 23 school districts in Riverside County and 11 of the 33 districts in San Bernardino County may not be able to pay their bills in the next couple of years, according to a recent state report.

Statewide, 143 districts are in financial jeopardy, with 13 unable to pay their bills this year or next, and 130 -- including the Inland districts -- unsure how they will meet financial obligations by fiscal 2012-13, California Superintendent of Public Instruction Tom Torlakson said in this month's report.

County offices can step in and help any of those 130 districts figure out how to cut their budgets. Those unable to pay their bills may have their county assume all financial decisions.
Riverside Unified School District is the largest Inland district on that state list.

Deputy Superintendent Mike Fine said Riverside balanced its budget partly with one-time money, including federal stimulus funds, for fiscal 2010-11 and 2011-12. That money won't be available for fiscal 2012-13, and the district already is spending its reserve funds to make up for the previous loss of $100 million in state education funding.

School districts have lost about 20 percent of their state funding over the past three years, said

Christine McGrew, chief communications officer for the San Bernardino County superintendent of schools.

"Certainly for many of these districts ... it's because of the statewide budget cuts," she said.

To cut spending, Riverside and most Inland districts have laid off some teachers, encouraged others to retire early and negotiated unpaid furlough days for those remaining. Administrators and support staff are also taking furlough days and their numbers were reduced through early retirements, or layoffs for support staff.

McGrew said districts have rising costs, including those for health and welfare benefits, at the same time as reduced revenue. State deferrals, in which money budgeted for one year isn't received by districts until the next fiscal year, create cash-flow problems, pushing more of them into financial trouble. Some districts also must find money to pay interest on millions of dollars they borrowed to cover those deferrals, she said.

The list has grown with the state budget crisis. The total number of districts and county offices in financial trouble rose from 24 in 2006-07 to 143 for 2010-11.

Torlakson released a list of school districts statewide that either will not or may not be able to pay their bills for the current year or the next two. The list is based on budget calculations through last January.

"These numbers underscore how urgently school districts across California need a balanced state budget in place that provides a full year of stable funding for education," Torlakson said.

"After three successive years of unprecedented and harmful cuts, students, teachers, parents and administrators need certainty now to prepare for the new school year," the state superintendent said.

When school districts adopt or revise their budgets, they budget for the current year and the next two years.

The California Department of Education semiannually receives interim status reports on the finances of the state's 1,032 school districts, county offices of education and joint powers agencies.
County offices review budget reports and forward them to the state.

The certifications are classified as positive, qualified or negative. A positive certification is assigned when the district will meet its financial obligations for the current and two subsequent fiscal years.

A qualified certification is when a district may not be able to meet financial obligations in the next three years. The county office may assist a district with a qualified certification to find ways to further reduce spending. All of the Inland districts on the list were given qualified certifications.
A negative certification is assigned when a district will be unable to meet its financial obligations for the current year or subsequent fiscal year. The county office of education can intervene in such a district's finances. Statewide, 13 districts have negative certifications.