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Politics & Government

La Mesa-Spring Valley Schools Face Cuts in Busing, Child Development

State may require $2.5 million budget cut, board told, as options range from unlikely "rosy" to nuclear.

Metaphorical images of pulling the trigger and an impending nuclear explosion were evoked Tuesday as members of the heard the school district’s two-year financial forecast.

“I feel bad because it’s a festive time of the year and I’m delivering a report that isn’t so festive,” said David Yoshihara, assistant superintendent for business services.

In a PowerPoint presentation, Yoshihara outlined what state budget cuts might mean at the district level—saying the three hardest-hit areas would be the district’s revenue limit, transportation and child development programs.

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Budget analysis of the district, comprising 21 elementary and middle schools, shows an estimated a $2.5 million reduction in revenue limit—or general purpose funding—totaling roughly $189 per student.

Transportation cuts to the tune of nearly half a million dollars are also projected, equaling about 50 percent of the annual allocation and affecting general and special education students.

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Child development programs, such as preschools and child development centers, would be cut an additional 4 percent after the 11 percent already reduced for the current fiscal year.

“Should that initial cut occur, there’s a possibility that this program will encroach (on the general fund),” Yoshihara said at the district’s Date Avenue headquarters. “We’ve already anticipated and advised child developmental programs to work within the parameters of 15 percent reduction.”

On Nov. 16, the state Legislative Analyst’s Office released its annual fiscal forecast, projecting a revenue shortfall of $3.7 billion less than the budget signed by Gov. Jerry Brown in June.

If supported by Brown’s Department of Finance report expected by the end of next week, the deficit could trigger automatic cuts of $2 billion to K-12 schools, higher education and social services, forcing thousands of organizations to make adjustments to already challenged budgets.

But in spite of the bleak financial forecast, the state-required interim financial report unanimously approved by the board was what Yoshihara called a more “rosy scenario.”

It accounts for no trigger factors, estimates a $1 million budget reduction in the 2013-14 fiscal year and still assumes a state-provided Cost of Living Adjustment (COLA)—regardless of the fact that the state has failed to provide that revenue for the past five years.

“We did not want to include projections or assumptions that have not been enacted into law or that hasn’t actually been approved by the governor and/or Legislature,” Yoshihara said. “At this point in time, when this (report) was produced, we don’t have triggers yet.”

Schools Superintendent Brian Marshall agreed, saying: “We’re submitting to the state ‘rosy’ because that’s what we have to do. We’re telling all the world there’s ‘rosy’―not very likely―there’s maybe ‘probable’ and there’s really bad. And now what we need to do to get ready for really bad.”

While closing a $3.7 million gap in a struggling economy may seem like a long shot, some board members believe Gov. Brown will find a way, even if it’s only to keep up appearances.

According to Marshall, by law the financial trigger must be pulled if the deficit is reported at more than $2 billion—which is why he thinks the DOF report will come back at just a hair under that amount.

“I would expect we maybe see the Department of Finance come out with a deficit of $1.999999 billion to spare K-12 the cuts,” Marshall said. “That doesn’t solve any of the problems, that just kind of solves the cut. But then I might expect to see more deferrals in the future.  … Politically, a deferral is easier than a cut.”

But deferrals bring up another sore spot, as Yoshihara said the district’s internal borrowing capacity continues to diminish.

“The state has deferred deferral,” said Yoshihara, which in turn makes the district more of a credit risk. “You know, at some point you’re borrowing against your borrowing you’re borrowing.”

There are also times when the money simply isn’t there―as was the case a couple of weeks ago when apportionment funds from the county Office of Education weren’t deposited on time. This showed a negative balance of $1.7 million in the district’s closely monitored treasury account.

“It shows how continuously close we are every month with regard to cash,” Yoshihara said of the scare.

Two other interim financial reports were provided to the board for review, offering a more realistic view of the upcoming school years. Dubbed the “Probable Scenario,” the second report still doesn’t take into account any trigger factors, but eliminates the possibility of COLA funding.

“There are no triggers because … there’s a lot of conversation about where the governor will actually pull the triggers for K-12,” Yoshihara said. “There’s a lot of conversation about that.”

This forecast requires a budget reduction of $6.2 million in the 2013-14 school year assuming that all restricted—funds allocated for a specific purpose—and unrestricted revenues are spent, something Marshall said rarely happens.

Yoshihara likened the third scenario to a nuclear explosion, complete with a color background image in the PowerPoint. It takes into account the lack of COLA funding and as well as all possible trigger cuts. This projection forces the district to make a nearly $4 million budget reduction in fiscal year 2012-13 and an additional $9.5 million cut the following year.

“Can this really happen? What I share with the board is we should be careful not to think this can’t, especially because of additional flexibility,” said Yoshihara, referring to patchwork solutions like shortening the school year and suspending textboot funds for other allocations.

“We have learned that the Legislature and the governor have generally given us reductions through the means of additional flexibility.”

With the DOF report due Dec. 16 and Brown’s official financial statement due in January, the board remains in limbo with regard to actual preparation until Jan. 31, when the second interim financial report is due.

The meeting was attended by a handful of people and was the last one led by board President Rick Winet, who hands over the reins to incoming president Bill Baber. Clerk Bob Duff will take over Baber’s position as vice president of the board.

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