Students To See Fewer School Days If Economy Falters

The state budget passed Tuesday night could mean seven fewer days of class for students in Carmichael and Fair Oaks.

Just hours before state legislators passed a budget, the Board of Education unanimously approved a budget for the 2011-2012 school year. The school district’s budget was based on the anticipated state budget. Officials at the school district will now analyze the finalized state budget and present an updated budget to the board of education within 45 days.

It was really a practice budget that the school board passed Tuesday night because big changes will likely result from the state budget, said Glynn Thompson, the school district’s new chief financial officer, who previously held the same post in the Elk Grove Unified School District.

San Juan’s budget assumes more than $342 million in expenditures. The district will only generate $336 million in revenue and plans come up with the additional funds by drawing down on its reserves. The 2011-2012 school year budget represents a decrease of more than $6 million from last year’s $349 million.

San Juan Unified’s budget includes cuts of $11.5 million. The school district reduced its budget by eliminating adult education, stopping school bus transportation for most students, and increasing class sizes for kindergarten through third grade from 20 to 31 students. The district was able to save a program for developmentally disabled adults for the upcoming school year with a one-year grant from the Alta Regional Center. 

The state budget passed Tuesday night assumes revenue increases of up to $4 billion in the coming year, Thompson said.

In the worst case, if the state sees a revenue increase of less than $2 billion, students will have seven fewer school days. If revenue increases by $2 billion to $3 billion, the state anticipates $500 million in cuts to education.

Even in the best case – a revenue increase of $3 billion to $4 billion – schools and other services statewide will see an additional $2.8 billion in deferrals to the next year. Deferrals mean the state will not give schools promised revenue until a later date.

Deferrals have become a growing problem for school districts statewide. Several years ago the state deferred funds for usually a month at a time and the deferrals represented a small percent of the total owed, said now retired San Juan Unified CFO Michael Dencavage, who prepared the budget passed Tuesday. This past year the state deferred 29 percent of the district’s budget for nearly an entire fiscal year, creating cash problems.

To meet its obligations, the school district was forced to borrow $39 million from CitiGroup, on which it will pay $84,000 interest when it repays the funds in October. The state does not pay interest on deferrals to school districts, Dencavage said.

The school district plans to prepare a plan for all of the conditions outlined in the state budget, Thompson said.

“The likelihood of midyear cuts exists and we need to be very cautious and start looking at contingency plans sooner rather than later,” Thompson said.

One of the biggest questions is how the state will deal with Proposition 98 funds, which guarantee revenue for education. has promised to be creative with Prop. 98 funds, Thompson said.

“I cannot tell you how much it concerns me when a politician says they have been creative,” Thompson said.

Board member Larry Miles voted for the budget Tuesday after voting against the proposal previously, saying the cuts were too deep. Calling the state budget a “curveball," he said the school district’s budget is appropriate given the degree of uncertainty.