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Policy director tells school CFOs to hunker down

By Katy Murphy
Tuesday, September 23rd, 2008 at 2:29 pm in finances.

This morning, the governor signed the state budget, breaking the longest stalemate in California’s history. The education budget is essentially flat compared to last year’s, and schools will receive more money than the governor originally proposed.

But it will mean a loss of purchasing power, an analyst from the non-partisan Legislative Analyst’s Office explained last week. And, according to an article written to school CFOs by the policy director for the California Association of School Business Officials, it’s probably about to get worse:

Governor spares K-12 in budget vetoes

By Dennis Meyers, CASBO Assistant Executive Director, Advocacy and Policy

Governor Schwarzenegger signed the budget and its related bills this morning, blue-penciling $510 million in general fund expenditures. K-12 education was spared any deep cuts. The governor’s signature now puts into place everything that is needed to start getting money out the door to cash-strapped school districts, county offices of education, charter schools and community colleges. Of the $510 million in vetoes, here is the impact on education:

  • $6 million from the $120,209,000 allocation to the non-Title I Immediate Intervention Underperforming Schools Program (II/USP). The governor felt that since the program ended in 2004-05, funding should not continue.
  • $1.8 million in federal money that was being targeted to assist LEAs that are not meeting their Title I and III growth targets for English language learners. The governor said he didn’t see any information on what the program was going to achieve.
  • $862,000 from the $11,742,000 allocation for child nutrition programs to help balance the budget.
  • $16,400,000 from the $163,051,000 allocation for Stage 2 child care because of lower caseload expectations.

What is left is level funding year-to-year for categorical programs and a .68 percent COLA for school district revenue limits (1.02 percent for county offices). Categorical funding remained as funded in the conference committee budget which included $277 million for deferred maintenance, among other things.

You can breathe easy for the next few months, but school budget managers must remain vigilant with their cash flow. Schools have been receiving revenue limit money with a full 5.66 percent COLA since July. The next revenue limit payment from the state will correct the “overpayment” all at once. Concerning categorical funding, LEAs will be receiving their September apportionment along with their October apportionment at the end of October. But the worst is yet to come. Remember that about half of your January principle apportionment is going to be deferred until April. Additionally, revenues for this fiscal year are already starting to slip. That means that Proposition 98 may be over-appropriated come January which leaves schools open to midyear reductions. Add to that an even worse 2009-10 fiscal year and it becomes obvious that cash flow is critical.

I hate to be the bearer of bad news, but schools really need to hunker down over the next 24 months, limit your long-term commitments, and protect your cash.

More on that later.

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  • Nextset

    What’s going on doesn’t bode well for the public schools. The US is hyperinflating the dollar very quickly and very deliberately. Tax increases will be limited. We can do the math. School purchasing needs to be made smarter – only some schools will do that, probably not the Urban schools. Urban schools don’t have the fiscal/political staff and skill to do well in such an environment. And most of the budget is payroll. Pay increases cannot possibly keep up with inflation so you will see huge labor strife, job actions, & strikes compared to more stable years.

    Re-engineering the work flow would help but the Urban Public Schools are likely incapable of significant change in the time they have to do it.

    All this means the newer schools and the Charters will have additional advantages they didn’t have in more stable times.

    You will see more change and upheaval in the The sun will always rise in the morning but the Can-do attitude we saw during the upheaval of WWII is nowhere in sight. And whatever is coming will be just as profound. What is not being spoken of is a series of radid cascading failures through the nation, collapse of the auto makers, airlines, banks, retail chains and other large economic systems and industries.

    Who would have thought that failure to intercept and control Saudi-born enemy soldiers – Mohammad Atta’s merry men – would have led to this economic havock with a single enemy strike budgeted at less than a half million dollars?

  • Nextset

    Editing error in paragraph 4 above. “You will see more upheaval and change in the next 12-24 months than the last 10 years.” followed by “the sun…” Sorry!!

  • John

    “The sun will always rise in the morning but the Can-do attitude we saw during the upheaval of WWII is nowhere in sight.” Yes indeed!

    I’m often entertained by the ‘Manhattan Project’ analogies used to underscore the “can do” spirit of Americans, as through present day Americans have anything in common with WWII era Americans. It’s like comparing disciplined athletes with the likes of Homer Simpson. Too many enchiladas at the diversity party and other political self indulgences can sure devastate a nation’s fiscal (etc.) waist line.

    Hey gringo! Shut up and pass the ‘don’t ask, don’t tell’ ADA green sauce!

    Oops! Sorry. Didn’t mean to offend. Please excuse me. Pleeeeeeeeeeease!

  • Nextset

    John: The Can-do attitude of 1939 was not because the US population were magical people. Back then I believe more if not most of the population was rural based rather than city. People at the time understand that you had to work to eat. And working meant following orders – obeying authority.

    Now we probably have more education and urban dwelling, but our people are largely undisciplined, far more self centered and uncohesive. The draft is coming and that will be very interesting. You will know the draft is coming when the policy against gays in the military is recinded. Economic instability of the magnitude we are moving into typically means a war.

    School policy in such an environment will change also. People will want their kids to have a better chance of staying alive in the new reality. Priorities are about to change.

    This bail out nonsense – which isn’t going to “save” the economy at all (not that we shouldn’t do some bail outs) is a really big event. And it will affect public schooling – quickly. Envision $10+ gas.

    Hunkering Down means changing a lot of things. Re-engineering the labor flow as well as purchasing and consumption in school operations. Change is coming – hours and days of operation, class offerings and class size, discontinuation of programs, campuses and relocation of operations… I suspect the teachers are going to be put through a very unpleasant time of wrenching change. And as far as the students go: Triage.

  • John

    Nextset: Your points are well taken. Bottom line: “…our people are largely undisciplined, far more self centered and uncohesive” which sure doesn’t bode well for the tsunami headed our way.