The only certainty in school budget is uncertainty
Budgets planned for this year and next in California are in historic territory, not just for financial reasons, but also due to timing, Ramona Unified School District Assistant Superintendent David Ostermann said at the March school board meeting.
California’s 2008-09 budget was adopted three months late, making it the latest on record, said Ostermann, adding that three weeks later Gov. Arnold Schwarzenegger called a special session, because the budget was “already in trouble.” Furthermore, the 2009-10 budget is four months early. Both present difficulties, said Ostermann, although such an approach is necessary in this economy.
New taxes and other revenues have been implemented, including a 1 cent sales tax increase effective April 1, a 0.5 percent rate increase for vehicle license fees, a reduction in dependent credit and an increase in the personal income tax rate. The state may increase borrowing, including $5.9 billion to come from either a revenue anticipation warrant (RAW), the federal stimulus package, or a combination.
The state also intends to borrow $5 billion to securitize growth in lottery revenues, as well as $433 million from special fund loans and transfers, which must be repaid.
Regarding borrowing, Ostermann said, “This one is already in jeopardy, because ... can the state legally borrow? In 2002-03, it went to the voters when Gov. Schwarzenegger was just elected, and the voters [said] ‘You can’t borrow again. You borrowed about $15 billion at that time.’ And so there is some discussion about if this is even legal, or will this have to go to voters, too?”
In addition to the attempt at borrowing, there will be reductions in expenditures, and the district expects to receive less in average daily attendance (ADA) money.
There will be a 19.84 percent cut to most categorical programs, earmarked for particular purposes, with 15.4 percent coming from the 2008-09 budget and 4.5 percent from 2009-10. The programs affected by the reductions are divided into three tiers, with one tier allowing flexibility in spending. That means, said Ostermann, that the schools “have 100 percent ability to flex the programs. So the funds may be transferred from one program to any other educational program purpose.”
The flexibility comes with some restrictions: It is permitted through 2012-13, it must allow for comment at public hearings, and it must be approved by the California Department of Education. Summer school, the main example of a Tier III program in RUSD, is expected to undergo major reductions.
“We plan to run a much smaller summer school this summer,” said Ostermann.
This will result in tighter restrictions over who is eligible for the summer school program.
The district does not have to flex its programs the same way each year, meaning summer school will not necessarily continue to experience such dramatic reductions.
California has the following estimates of what it will receive from the American Recovery and Reinvestment Act, more commonly known as the federal stimulus: $1.1 billion in Title 1, $1.3 billion in Individuals with Disabilities Education Act (IDEA), and $4.9 billion for fiscal stabilization. However, if revenue falls short of projections, there may be a drop in Proposition 98 funding, which has guaranteed schools at least 40 percent of California’s general fund since 1988. The projected shortfall means RUSD cannot count on the money it was expecting from the federal stimulus, and must plan for the worst, said Ostermann.
“The exact amount of the funding we’ll get out of [the stimulus] is unsure of,” he said. “When the money will come in to school districts, we’re not sure, because first...they talk about hanging on to all that until after the May election, just to see what happens with that.”
This results in much uncertainty about RUSD’s budget plans, because no one is sure how much money the district will receive, how it will be required to allocate the money, and what kind of flexibility it will have, said Ostermann. The 2009-10 budget may need to be amended after the May 19 special election, and no one is sure if Sacramento will be able to reopen the budget to change it.