School district sends up warning on dwindling cash

By Sondra Murphy

For the first time in it history, Ojai Unified School District has filed a qualified budget report and is projecting that it may not be able to meet its financial obligations in the 2009-2010 and 2010-2011 school years.
In preparing its interim report for the governing board, OUSD assistant superintendent of business and administrative services Dannielle Pusatere has determined that, based on current financial projections from the state of California, the school district may not be able to sustain any more deficits and remain fiscally solvent.
School district administrators are required to submit two reports to the governing board each fiscal year, the first covering the financial and budgetary status of the district for the period ending Oct. 31. Reports are then either certified as positive, qualified or negative. Qualified certifications may pertain to the current year and/or the subsequent two years. In the case of OUSD, its dwindling cash reserves are also impacting the certification status.
“This is the big crisis in Ojai, right here, right now,” said OUSD superintendent Tim Baird during Wednesday’s public forum about the budget. “We qualified because of the magnitude of the state cuts. How can you sustain those reductions and remain solvent? These are some of the things the board is going to have to grapple with. There’s a point where you simply won’t be able to cut anymore. You need someone to clean the classrooms or take phone calls and we’ve been down this road a long time now.”
“It’s a state and national issue of mismanagement, not an Ojai one,” said Pusatere.
About 50 community members and district supporters attended the forum, offering ideas about how to generate revenues for the financially struggling district. The informal setting allowed for dialogue between the public and administrators not possible in the regular school board setting.
Baird gave a short presentation with an overview of how California schools are funded that explained a long history of underfunding. “It’s been an ongoing issue for many years and in Ojai for a long time,” Baird said. Because property taxes fund public schools, more affluent areas were able to offer better academic opportunities for students until laws were passed in the 1970s to try to balance inequities. Later laws that lowered property taxes resulted in fewer revenues for schools, which were never replaced, and schools began to feel the financial strain in the 1980s and 1990s.
The presentation reminded the crowd that schools receive funds based on average daily attendance, a costly and time-consuming process that must be submitted regularly. In Ojai, declining enrollment that began about 10 years ago has further limited its revenues and OUSD has been compensating for that every year since. “One of the reasons Ojai is more vulnerable than other districts is because we’ve been making cuts longer than most other schools,” Baird said. “We provide a stellar education for our students in terms of arts, athletics, performing arts, and so on. We are not a failing district, but we are at risk of losing this. I plead guilty to the fact that we have done a very good job keeping this out of the classrooms, but we need help now.”
Pusatere said that the 2008-2009 fiscal year is most likely to remain balanced if the state does not renege on funding promises, as feared.
“Remember, the state owes you $1.8 million next year,” Baird told the board at Tuesday’s meeting.
“Not to mention $800,000 that they were supposed to give us this year that you’ll never see,” Pusatere tacked on.
The district spent most of last spring whittling at its $25 million budget in order to cut more than $1 million. Now that declining enrollment is impacting other state districts due to lower birth rates and higher housing costs in many California locations, OUSD is competing for relief against educational brethren. Even private schools have reported declines in enrollment.
The board was able to keep all district schools open this year and retain class size reductions in kindergarten through third-grade classrooms, thanks to the Save Ojai Schools campaign efforts of the Ojai Education Foundation and parent organizations last spring. Everything is back on the table for possible cuts for the 2009-2010 school year because of the state budget crisis, including using its mandated 3 percent reserve funds, which would have to be replaced the following year. When the fiscal year’s budget was eventually settled in October, schools received funds that now may be withdrawn in light of the severe situation the state finds itself in. “Any new money we got in October we set aside because it’s likely we’ll have to give that back,” said Baird. “The state has to fix its cash flow problem before we can fix ours.”
“The distressing thing is how hard our staff has worked to try and keep our schools providing a great curriculum,” said Linda Taylor, newly appointed school board president.
“This is how it’s going to affect us, right in the classrooms, and we’ve kept it from the classrooms so far,” said clerk Rikki Horne.
“And this is a game the state is playing to balance their cash,” said member Steve Fields.
With California’s current budget disaster, state lawmakers have hinted at rescinding cost of living increases and categorical funds given in October when they finally haggled through a budget so its public agencies, programs and schools could continue serving the public.
“The big disappointment now is that the parcel tax didn’t pass,” said Baird. “Out of 11,000 votes that were cast, Measure P lost by 77 votes. The way the rules are structured, the minority wins.” A needed two-thirds majority fell less than 1 percent shy of the 66.67 percent margin needed for the measure to have passed. Baird estimated the measure could have generated about $600,000 per year for seven years.
Over the next two years, Pusatere said OUSD expects to need to cut $2.4 million in order to create balanced budgets. Closing schools, cutting arts programs, canceling all sports, eliminating class size reduction, raising class sizes and reducing support staff will not equal that amount. Replacing classified employees with volunteers was brought up as a possible solution to the financial burdens.
Baird said that, like advertisements on school buses, ignoring contracts is illegal and is unlikely to solve the problem anyway. “Last time I checked, none of our employees were overpaid,” he said. “Our staff works very hard for our students and it’s hard to take that away. Teachers and classified employees have been very collaborative in the budget process. Staff always puts the students first.” Salaries and benefits use about 87 percent of OUSD revenues.
The district is in the midst of getting bids for lease development of its downtown district office property. Besides administration, the site houses Chaparral High School and Auditorium, transportation and bus yards and day care facilities. Baird said that about 15 companies have indicated interest and they will know more about those efforts next month when the bidding window closes.
Pusatere said federal sources of OUSD revenues total $1.7 million and lottery funds generate $400,000. Loss of state revenues from sources such as the vehicle license tax, and corporate tax breaks have contributed to the state’s fiscal hardships.
Some community members like Kathy Smith are trying to begin a campaign to encourage voters who supported Measure P to send in an $89 annual donation, the amount per parcel the measure would have allocated to OUSD. Other parents are starting to mobilize fundraising efforts around programs and schools that they have a stake in protecting and thought that they might be able to work with local banks to create a program that may deduct $10 per month from participating customers wanting to donate to OUSD.
Others at the forum raised the possibility of offering community college courses at the high school or finding professional teams that might be interested in using the stadium to help generate revenues. Baird said that some dialogue has been initiated with Ventura College and Santa Barbara City College to bring courses into Ojai, but no agreement has yet been reached.
The possibility of California receiving a federal bailout is circulating among lawmakers and the district hopes that, if it materializes, schools will be one of the beneficiaries, but is not counting on fate when planning its next budgets. Facing possible midyear cuts of more than $1 million would be devastating to OUSD. “Unlike the federal government, unlike California, OUSD has to come up with a balanced budget,” said Baird. “Collectively, state schools are bigger than General Motors. Just in terms of dollar economics, investing in our children, our future, promises bigger dividends than a new car series in 2010.”
Baird acknowledged that in hard financial times, it is challenging to raise support. “Our schools depend a lot on local fund raising and business,” he said. “We’re asking more from people who have less, which is basically what the state is doing to us. Somebody needs to explain to these kids why they don’t deserve the same quality education we got.”
The district is closely watching state school districts, like King City, that filed qualified budgets last year and are now in the middle of state receivership. As part of that process, King City has gotten a local legislator to sponsor a request for an emergency loan. “Schools cannot close,” said Baird. “It is a state mandate that schools must provide free education to students.” He added that with state takeover, the superintendent is normally fired, the school board loses local control and state administrating staff makes all the decisions. “We’ve seen they’re all about the budget and not education,” Baird said.
OUSD encourages the public to continue sending in ideas and has budget information and articles posted on its web site. There is a link people may use to e-mail their ideas to Baird, who said the board will consider all legal suggestions. OUSD’s web site is ojai.k12.ca.us. Baird’s e-mail address is tbaird@ojai.k12.ca.us.
There will be a special budget study session of the OUSD board of education Monday at 4 p.m. in the OUSD office, 414 E. Ojai Ave., Room 1. Public comments will be taken.