Grossmont Union High School District Faces Deficits ‘Beyond Our Ability’

Despite millions in reserve, the won’t be able to absorb the deficits it faces if the state makes midyear cuts.

“It’s not going to get us all the way through next year, I don’t think, under any scenario,” said Scott Patterson, the district’s deputy superintendent for business services. “After this, deficits will be beyond our ability to do without significant negotiations with our bargaining partners.”

At Thursday night's school board meeting in El Cajon, Patterson explained how the district might be affected if state budget cuts are “triggered” in the middle of the fiscal year.

The district, which already anticipated a $7.3 million deficit for the 2011-12 school year, would have to make up as much as $4.7 million if the trigger is pulled, according to district staff.

“I don’t know for sure it’s going to be pulled, but I think the financials are trending in that direction,” Patterson said.

The district anticipates a $10 million deficit for the 2012-13 school year and a $12.5 million deficit for the 2013-14 school year. If the trigger is pulled and the state does not provide Cost of Living Adjustments, the deficit could rise to $17.9 million in 2012-13 and $23.2 million in 2013-14.

While the district’s could be used to offset the current year’s deficit, Patterson noted there isn’t enough in reserves to cover the deficits the district faces the next two years.

“A big chunk of that $16 million will be consumed this year, which leaves us with deficits in some range to deal with over these next two years,” Patterson said. “In other words, I don’t think whether the trigger is pulled or not we’re going to be back here recommending making cuts midyear.”

The director of the state Department of Finance is to determine by Dec. 15 if the trigger is pulled and to what extent—based on the better of two forecasts from the state’s Legislative Analyst's Office and Department of Finance.

The Legislative Analyst’s Office projected a revenue shortfall of $3.7 billion in its annual fiscal forecast released Nov. 16. The Department of Finance is expected to release its report within the next week.

If state revenues are projected to fall short of estimates by $1 billion, the deficit could trigger automatic cuts to higher education and social services. K-12 would endure budget cuts from the state if the shortfall is $2 billion or more.

Patterson said the state-required interim financial report that board members unanimously approved Thursday night is “the best-case scenario” since is doesn’t account for trigger factors and assumes state-funded COLAs.

Even under this scenario, Patterson said, deficits projected for 2012-13 and 2013-14 are beyond the ability of the district to absorb with reserves or through budget reductions available without negotiations with employee groups.

Therefore, he recommended board members approve the interim report with a qualified certification, rather than a positive or negative certification. A qualified certification means the district may not meet its financial obligations for the current year as well as the next two years. District reports filed with qualified or negative certifications are forwarded to the State Department of Education for further review.

“I think it’s the best option to qualify our certification this time,” Patterson said. “This will be a significant event for this district. We’ll be under increased scrutiny by the county Office of Education and we’ll have to work our way through these deficits.”

In other action, the board re-elected its officers. Robert Shield, Dick Hoy and Priscilla Schreiber will remain as board president, vice president and clerk, respectively.