Continued Fiscal Problems and Keeping the District Financially Viable

By Mel Thompson

SMFC District will face severe financial problems over the next few years and we must act responsibly to solve them now.

As the lowest funded District per-child in the county, financial challenges are going to persist, in spite of the recent passage of our parcel tax increase last year.

Between declining enrollment, increased costs due to inflation and now cuts in State-level educational funding we have had to cut over $4 million from our budget in the four years I've been on the Board.

While that may not look like a severe reduction compared to a $70 million budget, in reality it's more like $4 million from the $16 million of the budget that the Board has real control over. The rest of the budget is covered by mandated State and Federal expenditures or contractual labor costs.

The budget process for 2003-4 was particularly difficult due to the State budget and financial crisis. We were faced with the prospect of having to make nearly $4 million in cuts from our budget in that year alone! This would have crippled our ability to educate students in San Mateo and Foster City.

We were able to save almost $900,000 by a severe mid-year budget freeze. Through the hard work of many concerned community members we were able to persuade the voters to pass a $75/parcel tax, which provides almost $2.4 million in revenue to the District for seven years. Though we were able to rescind many of the staff and program cuts that we had authorized, WE STILL HAD TO CUT MORE THAN A MILLION DOLLARS FROM THE 2003-2004 BUDGET in addition to all the cuts from the previous three years!

Passing the parcel tax does not solve our District financial problems. We chose the $75 amount not because it would make us whole, but because this was the tax level that we felt the community was able to support.

In the spring of 2004 we will have to develop a balanced budget. The State will still have an $8 billion projected deficit next year and it will have the added financial burden of paying interest on $10 billion worth of loans for this year's deficit.

Meanwhile we anticipate continuing to lose about 100 students a year from our District, which means our funding will drop by nearly $500,000 each year! At the same time our basic expenses continue to grow at the rate of 2-3% a year due to inflation.

California School Boards Association has warned us that we should not expect a scheduled Cost of Living Increase in our revenues next year, which would be a loss of another $1.3 million.

It is absolutely essential that the District get this under control or we run the real danger of not being financially viable with a 3% mandatory State reserve.

Administration is having actuarial studies done to determine what our un-funded liabilities are and what they are projected to be later. Administration with strong Board support has also identified other changes which may become necessary to achieve a stable fiscal situation and have been discussing them with our employee unions.

I fully support our efforts to achieve financial stability in our district. While we should continue to lobby the State for consistent and equitable funding, and should continue to develop local donor revenue sources; in the short term the only solution is to keep our own expenses conservatively within our projected revenues.

Anything less is a disservice to the community and taxpayers.

MT