About the Budget

By Eileen L. Robinson

How did we get here and where are we going.

A message from Eileen Robinson, for School Board

How Did We Get Here?

The first thing of note is that the district "self-certified" its budget as negative. This means they have been proactive in trying to get help in maintaining a balanced budget. The talk of bankruptcy and a State take-over must be viewed with caution. Last winter the District said it needed a loan to stave off a state take-over and brought in a financial management team (FCMAT) to independently audit their finances. The FCMAT team determined there was no more than a $6.5 million deficit to address. They determined a loan was not needed by the District at that time. At worst they believed that in June of 2011 the District may have to revisit the need for a loan to deal with its cash flow issues.

There have been additional changes to the budget picture with cost cutting measures taken by employee groups and the potential of additional reductions in funding from the state. Negotiations continue with the employee groups. Federal funding will help for the next couple years with State Fiscal Stimulus Fund and Education Job Fund revenues on their way to the District by or before the election. These funds will total about $260 per student and will bring well over $2.5 in unanticipated revenues into the district this year. While the future financial picture is not clear yet, the District remains negatively certified.

The reserve:

The second bit of information to highlight is the fact that in July 2010 the District had over a $17 million dollar net beginning balance in an $88 million dollar budget because of the influx of one time monies. The State only requires the District to have about a $2.7 million dollar reserve. Good budget management dictates a reserve of between $8 and $10 million dollars. That still leaves approximately $7 million in the beginning fund balance, much of which could be used to get the District through these uncertain times.

I believe the primary problem the District faces is a cash-flow problem. The State has delayed apportionments of education funding to California's schools for the last couple of years. This has meant that during the first half of the school year the District must use reserves while it waits for the funds from the State that are earmarked to pay for those expenses.

Currently the deficit factor for Education funding is over 18%! This means that Chico Unified only receives 82¢ on the dollar of the State funding it is entitled to. They should receive $6000 per student but are receiving under $5000 per student. And at the same time, costs rise for the District just like they do for the families of Chico.

The good news is this loss is not permanent but is a temporary reduction called a base revenue limit "deficit". When the economy improves, the funding will begin to increase to the legally mandated levels, and the deficit will be reduced until it is eliminated. The deficit factor accounts for approximately $13 million in lost revenue.

The District's own structural budget problems are caused not only by insufficient State funding for education, but also by declining enrollment. This has been caused by several factors. First, Chico is an aging population. Young families are not moving here and many are moving away to places where they can afford to buy a home. As a result, enrollment in our schools has been declining since the late 90's. CUSD has lost over 1,000 students. That decline has caused a $5 million dollar loss in State funding.

How Do We Move Forward From Here?

Declining enrollment:

So how should the District address these issues? I'll start with the declining enrollment issue. With declining enrollment the answer is fairly straight-forward. Some reductions in personnel must accompany the decline in students. Chico Unified has not made these staffing adjustments in a timely and efficient manner. If you have the right number of staff for the number of students, you will not have to reduce wages and benefits to cut employee costs.

So my first priority would be to continue the trend of staffing properly so we don't have more teachers and classified employees than we need to service our students at the highest level.

Structural Deficit:

The structural deficit is more problematic, primarily because we can't control, at the District level, what the State provides in education funding. The current structural deficit is estimated at about $6.5 million. It might be more and it will grow if the State continues to cut education funding. So another top priority of mine will be advocating for full Proposition 98 funding of our schools. I will advocate that the State make education its number 1 priority. I will network with other Districts and other community groups to put pressure on our Governor and legislature to take care of our future, the students of this great State and our wonderful community.

In Summary:

With a return to establishing respectful, productive relations with the unions and their members I am hopeful the necessary cuts can be negotiated to not only avoid the worst case scenarios, but return the District to a healthy financial status.

The economy will improve and funding will increase. We simply need to be patient and responsibly manage our budget and programs until the financial picture improves.

Keep the Best, Fix the Rest