As the Mt. Diablo school district prepares its budget report for December, it expects to take into consideration two possible events that could require cuts — a Clayton Valley High School charter conversion in 2012-13 and state “trigger” cuts due to lower-than-anticipated revenues.
The district has already set aside $330/ADA or $10.7 million in a “State Fiscal Uncertainty” reserve fund for midyear cuts. At the board’s Sept. 27 meeting, CFO Bryan Richards estimated the worst-case $4 billion state budget trigger scenario would be $296/ADA or $9.6 million.
“We are prepared,” he said.
This means that even with the $4 billion trigger, the district would have an extra $1.1 million left over. However, the LAO has projected a much lower trigger of $180 per ADA, which would amount to nearly $5.9 million. With this cut, the district would still have $4.8 million left over in its State Fiscal Uncertainties reserve.
The State Fiscal Uncertainty reserve is part of a $45.5 million ending fund balance that the district had at the end of the 2010-11 year. Richards reported that about $14.7 million of that was set aside for various uses including nearly $6 million in a required reserve for “Economic Uncertainties,” leaving an “undesignated” ending balance of $30.8 million. Richards said this was about $7.6 million more than anticipated.
Yet, district officials say they would need to cut about $1.8 million from other schools across the district if the charter conversion is approved by the county or state boards of education. The district is also pushing the MDEA teachers’ union to agree to seven furlough days this year and next year, including five fewer days of school in both years.
The district has built a savings of about $6 million into its budget for furlough days from all employees, including nearly $4.6 million for teacher furlough days that haven’t yet been negotiated.
Mike Langley, president of the teachers’ union, questions whether the furlough days are necessary at all, given the large ending fund balance. The charter committee, likewise, questions whether the district’s calculations related to costs and expenses for the charter are accurate.
Because of the intense debate surrounding the charter’s financial impact, Walnut Creek City Councilman Kish Rajan — along with Assemblywoman Susan Bonilla and state Sen. Mark DeSaulnier — asked the board on Oct. 25 to seek an independent review of the financial calculations from the Fiscal Crisis and Management Assistance Team (FCMAT). Rajan also suggested that the district convene and independent committee to review the financial data.
That same day (Oct. 25), the district requested a financial review from FCMAT. The independent agency visited the district Nov. 1 and used information available at that time to prepare its report.
However, a lot changed after the FCMAT visit. The next day (Nov. 2), Bill Clark, associate superintendent for business services at the Contra Costa County Office of Education, issued guidance to districts about how to prepare for midyear cuts.
The district asked the charter committee to submit new financial estimates based on this guidance, which the charter submitted on Nov. 4. The board denied the charter petition Nov. 8, based on the charter budget submitted Nov. 4. FCMAT did not review that budget.
Instead, the FCMAT review, based on data obtained Nov. 1, stated that: “Calculations prepared by the district to analyze costs associated with Clayton Valley High School are accurate, reasonable and based on either current year projections or prior year actuals when applicable.”
However, the report went onto state that special education costs had not been adjusted to show the charter’s intention to use the El Dorado County Charter Special Education Local Plan Area (SELPA) or to show revenues the district could receive from the charter for facilities and oversight.
The report concluded: “FCMAT reviewed the district’s cost impact based on a defined set of assumptions. As these assumptions change, so will the costs either positively or negatively, as these findings are based on a particular point in time. The district and the charter organizers have not completed negotiations regarding some major areas such as facility arrangements and serving special education students. In addition, the charter organizers have resubmitted adjusted financial statements since FCMAT’s fieldwork. The financial impact associated with special education and facilities can be substantial. The district is encouraged to clarify these issues with the charter organizers.
The team provided Mount Diablo Unified School District management with suggestions on potential cost impacts associated with the possible conversion. FCMAT verified the source of the data utilized by the district in its calculations but did not perform an in-depth fiscal review or financial audit of Mount Diablo Unified School District, and accordingly, FCMAT does not express any opinion in this regard.”
To try to get a better understanding of how the district’s ending fund balance could possibly soften the need for cuts, I emailed some questions to Lawrence on Wednesday. I also asked him whether he was following up on the idea of convening an independent committee to look at the financials, as well as on Trustee Lynne Dennler’s idea of exploring issues that led to the charter movement.
On Thursday, Nov. 17, I received the following email response from Lawrence:
Q. “I believe you said you would create some sort of independent committee to look at the financial impact of the charter on the district. Have you done that? What is the status of the analysis?
A: I requested that principals attend a meeting next Monday evening along with two parent leaders from their site. The purpose is to review the District’s current budget situation based on the November 2nd letter from the Contra Cost Office of Education providing financial guidance on the 1st interim report, and the possible approval of the charter application at the county or State level. The meeting is from 5-7 p.m. at the Loma Vista center. Debi Deal from FCMAT is also able to attend the meeting. Please feel free to attend.
Q: Lynne Dennler said she thought the district should have a dialogue with the charter committee about its grievances, to try to remedy them and prevent future charter efforts. The day after the meeting, Gary Eberhart told me that he thought this dialogue should begin immediately. Has any dialogue begun between the charter committee and the district regarding grievances that led to the charter?
A: We did have a meeting last spring to learn of the concerns that the charter petitioners have. The District then began working to address those concerns by, among other things, interviewing Clayton Valley staff members to determine what they felt was going well and what needed to be changed. Based on those interviews, we made leadership changes at the school. Though we appreciated the efforts of individual administrators at Clayton Valley, there was consensus that a new leadership team would help move the school forward. Since her arrival, Ms. Brothers has meet with both parents and staff members to identify concerns and address them. We continue to support Ms. Brothers, like our other principals, to meet the needs at their site. If the principal at any site thinks it would be useful to have me attend a site leadership meeting to listen to concerns, I would be happy to do that.
Q. Gary (Eberhart) also said he thought the district would need to identify $1.8 million in cuts in the 2012-13 budget for the first interim report, in case the charter is approved by the county or the State Board of Education. Is this what you are planning?
A: Bryan is at the CASBO (California Association of School Business Officials) conference so I do not have the most updated numbers. The financial impact and how it was arrived at will be presented at the meeting on Monday.
Q. What is your response to some critics, who say the FCMAT disclaimer at the end of its report shows that the agency did not actually verify the numbers provided by the district. Therefore, some people are still skeptical about the district’s estimates of the financial impact of the charter.
A: This is why we are having the meeting on Monday evening because Ms. Deal and Mr. Richards will be there. Between the two of them, we can answer questions about the FCMAT review as well as how the District developed its numbers.”
RESPONSE FROM ME TO SUPERINTENDENT LAWRENCE:
“Thanks very much for this. Is the public invited to the Monday meeting?”
RESPONSE FROM SUPERINTENDENT LAWRENCE:
“The meeting is set up for principals and two parent reps from each school. Given that is 150 people that will fill the room at Loma Vista.”
It was unclear to me whether this meant the public could attend. I followed up with an email to Lawrence on Friday, asking whether a “robocall” had gone out about the meeting and stating that there seemed to be some confusion in the community about whether or not it was a public meeting.
I also contacted Clayton Mayor David Shuey on Friday, who told me that the charter committee had not been invited. After my call, Shuey sent the following email to Lawrence:
“Subject: FCMAT meeting Monday?
Theresa Harrington called and asked me about a meeting that is apparently being held on Monday that will include a presentation and update from FCMAT on the charter school issue. I have seen no notice of such a meeting (looked on your website just now) and only learned from Ms. Harrington that it is apparently Principals of each school and two parent representatives. I asked our group if anyone had gotten notice of this and am currently unaware of such notice. I also have not seen anything come back from any of my kids schools regarding parent participation. So as you can see I am a little confused on this meeting.
Please kindly provide me the time, location and agenda for this meeting so that those of us interested can attend.
David “Shoe” Shuey
Mayor, City of Clayton”
Lawrence copied me on his response to Shuey below:
The meeting is at the Loma Vista Center from 5:00 – 7:00 p.m. We asked each principal to invite two parents because that would be a group of about 150 people. However, as long as there is room in the room we won’t be turning people away.
I also called Rajan to find out if a committee comprised of principals and two parent leaders they chose to invite was the type of “independent” committee he envisioned when he suggested the idea of a charter budget review on Oct. 25.
Rajan said he was aware of the meeting, but wasn’t sure at that moment how the committee was selected. He later followed up with the forwarded email below, which was sent to him, along with representatives for Assemblywoman Susan Bonilla, Sen. Mark DeSaulnier and Rep. George Miller:
“From: STEVEN LAWRENCE
Sent: Monday, November 14, 2011 6:07 PM
To: Kish Rajan; Herbert, Mark; Satinder S. Malhi
Cc: Johnson, Barb
Subject: FW: Budget Meeting e-mail to principals
I wanted to let all of you know that I am following up on the suggestion from Senator DeSaulnier, Assemblywoman Bonilla and Councilman Rajan for a public meeting to review the district budget and loss of funding due to the a conversion charter high school. It would be great if they or their representative could attend the meeting.
From: STEVEN LAWRENCE
Sent: Monday, November 14, 2011 5:59 PM
To: All MDUSD principals
Subject: Budget Meeting e-mail to principals
In order to publicly answer questions about the District’s budget and our calculations around the loss of funding that will result if the County or State approves the Clayton Valley conversion to a charter school, we will hold a public meeting at the Loma Vista Center next Monday, November 21, 2011 from 5 – 7 p.m. I know this is the first Monday of vacation, and I completely understand people may have travel plans or other commitments that will not allow them to attend the meeting. We are holding the meeting on November 21 because Debi Deal, who conducted the FCMAT review, is in the area and able to attend at that time. Please invite two of your parent leaders to attend the meeting. If there are specific questions that you or your parents would like to have answered at the meeting, please forward your input to Rose or me so we include the information in the discussion. If people are unable to attend this meeting we will have follow-up evening meetings to address budget concerns. Again, I am sorry that this meeting is during vacation, but Ms. Deal lives in Southern California and happened to be working with another district in our area on November 21st.
In his email to me, Rajan said (in part): “This was sent to every principal in the district. This is clearly not a ‘hand picked’ group. And there is no effort to exclude or obscure. It appears very consistent with our request for an open transparent meeting on this matter.”
He also asked me if the charter folks were participating and said he hoped they would “participate honestly and not be dismissive of the critical financial facts.”
In addition, Rajan asked how the charter committee felt about the state “triggered” budget cuts and whether they would be insulated from them.
I responded, letting Rajan know that the charter folks were not invited, but that Lawrence told them late Friday they would not be turned away, after Shuey asked to attend. I also said that Lawrence’s decision to allow principals to select two parent leaders could give some the appearance that the committee was “hand-picked”. In addition, I asked whether he thought the meeting should have been publicly noticed, since some people were questioning how open and transparent it really was.
Here is Rajan’s (excerpted) email response:
“I trust the principals to invite responsible parents who have no agenda other than to help the kids at their schools.
I think the charter folks have every opportunity to live up to their statements that they want to know the facts of the financial impact the charter would have on the rest of the district. And given the larger triggered cuts that are looming, I would hope the charter proponents are sensitive to the impact all parents are bracing for.”
To get a better idea of how midyear cuts may affect the district, I emailed some questions to Lawrence on Thursday and received the following response:
Q: “I know that the district set aside $330/ADA in anticipation of the cuts, or $10.7 million. According to Bryan (Richards)’s most recent budget presentation, the district estimated midyear cuts would cost about $296/ADA or about $9.6 million, which leaves a cushion of about $1.1 million. This doesn’t include the extra $7.6 million in the district’s ending fund balance that wasn’t anticipated. Do you agree with this?
A: Bryan is at the CSBO so I can’t run your assumptions by him to validate your numbers. If you review the November 2 letter form CCCOE CBO Bill Clark that is attached to our website the County is recommending that not only do we assume the triggers will be pulled, but we assume they will be on-going, not one time, and we remove any COLA (Cost of Living Adjustment) from our budget for the next two years. Here is the link to the letter http://www.mdusd.org/NewsRoom/Documents/012%202011-12%20First%20Interim%20Guidance.pdf
Q: A recent MDEA (Mt. Diablo Education Association) bargaining update says the district is proposing one furlough day for every $42 in per-student funding from the state, which would equal seven furlough days, if the trigger costs the district $296/ADA, as projected. I understand that MDEA wants to propose a counter-offer. Do you agree with this?
A: I can’t speak for MDEA; please contact them.
Q: Another MDEA bargaining update states that the district is asking teachers to agree to ‘Make no plan dates,’ in anticipation of furlough days. It states that teachers don’t want to agree to this unless the furloughs have actually been negotiated.
A: We have received concerns from teachers, high school parents, and principals that they need to know what definitive dates graduation will be held on. They have to reserve dates at the Concord Pavilion and the Concord Center. Parent groups that sponsor grad night need to enter into contracts with vendors. Elementary and middle school teachers don’t want to have to change their plans and lose fieldtrip deposits as they almost did last year when furlough days were agreed to late in the school year. Therefore, the District recommended dates that would not impact holding graduation during the last week of school on the current district calendar. We also want to make sure that furlough days don’t impact AP Testing and STAR testing.”
I also asked Lawrence for quotes the Times might be able to use in a story about midyear cuts.
Q: “Might you be able to tell me in general how you expect the district to cope (will you rely on the reserve you set aside for midyear cuts)?”
A: We set aside a reserve to address one-time, midyear reductions, not ongoing cuts the County is asking us to assume.”
I also asked for a general quote regarding the state budget’s affect on the district.
A: “Children are being minimized and marginalized by the continual reductions to education funding. We are robbing a generation of children of the rich educational experiences that others received in the past. The Legislature and Governor have to stand up and not let the hemorrhaging continue.”
Langley said the district has consistently underestimated its ending fund balance during the past few years, which has prompted the board to make deep cuts to balance its budget. In June, the board cut the hours and benefits of special education assistants — even after Lawrence and Richards said the additional reduction would not be necessary to certify a “positive” budget.
These cuts are hurting students and teachers, Langley said, because the district has been unable to fill many of these positions. He speculated that the district’s inability to fill the positions could be because the district reduced the hours to three per day and eliminated benefits. This was an outcome that many predicted before the board made the cuts.
Trustee Sherry Whitmarsh pushed for the special education cuts, saying they would be necessary if teachers didn’t agree to furlough days. Now, the district has made so many cuts and has such a large ending fund balance that furloughs may not be necessary this year, Langley said in an email.
“The question parents should be asking is: Why is MDUSD proposing to cut out a week of student instruction when they have a $40 million excess reserve?'” he wrote.
In response, I asked Langley if he thought the public should also question whether the district would need to make cuts if the CVHS charter is approved.
“Anytime the district says it has to make cuts, it should be in context of the amount of reserves,” Langley replied. “Although it is important to project the estimates for future demands on reserves, one must remember that the district reserves have been growing during times when their estimates have seriously underestimated the ending balances. This does not bring into question that spending cuts were needed in the past. It does bring into question the severity of the cuts and the areas that were cut. As long as the philosophy of the governing board and top management is focused on pouring resources, time and money, into narrow data-driven goals and starving the human resources that are critical to the education of our children, the public must question every cut and every expenditure. That question must address the basic need: access to a well rounded education.”
Shuey said the charter committee had submitted new financials to the district Nov. 4, which responded to the County Office of Education guidance related to midyear cuts.
“We are as interested as anyone else to find out the complete factual basis and truth of the (charter’s financial)impact on the district,” he said.
In addition, Shuey said he would like to know why each high school gets a different amount of money per student and why some get less than other schools throughout the district. He said he wants the district to explain the methodology it uses to calculate school funding and he wants to know how MDUSD’s methodology compares to other districts.
“There’s a lot of preliminary factual information that I need to get an understanding,” he said. “I’m hoping the meeting on Monday will start that process.”
Are you satisfied with the composition of the committee and the district’s notification to the community about the meeting?