Atwater Elementary School District facing grim financial picture

ATWATER -- Tuesday's Atwater Elementary School District (AESD) board meeting foreshadowed tough days ahead for the school district in terms of budget planning.

An early report by the school officials revealed the AESD could face a loss of $6.2 million in funding next year.

This number is 21 percent of the district's unrestricted general fund, said Jan Smith, the district's interim chief business officer.

Last year, the school district also faced financial challenges. The district cut 54 jobs, decreased health care benefit eligibility, eliminated deferred maintenance funding and made cuts to several other areas, including student transportation.

The district's potential loss of funds for the next school year is a combination of factors that includes a negative cost of living adjustment, a decline in revenue limit funding, a reduction in the payment for students' average daily attendance and the schools' own declining enrollment.

Gov. Arnold Schwarzenegger's January budget proposal kept revenue limit funding, a mixture of state and local funds, for state schools at a minimum of $50 billion for next year, the report stated. This number is the same as it was in 2009-2010.

Next year, the school district could have an initial loss of $4.8 million in its revenue limit funding because of an 18.35 percent deficit of these funds.

Gov. Schwarzenegger also applied a negative 0.38 percent cost of living adjustment, or COLA, to schools, which accounts for a projected loss of $99,219 next year for the district, the report said.

Over the next five years, AESD, which currently serves 4,415 students, will see a decline in the amount of money it receives for average daily attendance, a funding formula based on student attendance, Smith said.

The district will receive a $191 cut in the amount of ADA it gets, the report said. The total estimated loss for 2010-2011 is $8.2 million.

Smith said these cuts to the formula are not definite and the reductions could deepen to $250 of average daily attendance. This would result in a $254,000 loss for the school district.

"We need to prepare for that," Smith said. "We need to find a way to cover for that if it happens."

This year, about 164 students left the school district, which means that next year schools will have a possible loss of $543,875 in funds.

A previous year's enrollment numbers determines the average daily attendance figures for the following school year.

Also on Tuesday, the AESD board approved the hiring of Martin Fregoso, the district's new chief business officer.

Fregoso arrives just as more grim financial predications begin to settle in as reality.

The next regularly scheduled school board meeting is March 9.

Reporter Jamie Oppenheim can be reached at (209)385-2407 or joppenheim@mercedsun-star.com.