Modesto area schools will tap into reserves to make ends meet

The state budget just passed may be thick as a physics textbook, but whether it follows the laws of gravity remains to be seen.

Uncertainty was a given for schools. But an uneasy economy means state figures, too, are up in the air. Telling details will be in budget trailer bills yet to be printed, said education analysts.

"The budget development itself was more closed than we've seen, ever. We did not have budget subcommittee reports. We did not have a conference committee to resolve differences," said Robert Miyashiro, vice president of School Services of California Inc., a consulting firm used by many area districts.

He has helped districts anticipate state budget changes since 1981. This year, he said, was "a pretty dark process."

Without having seen the budget trailer bills, what appeared to be in place as of Friday, Miyashiro listed:

• Redevelopment funds likely will continue to go to school districts for facility needs.

• Transitional Kindergarten for youngsters turning 5 in November will be funded.

• Reduced, late and irregular state payments will continue.

• The weighted formula that would have greatly increased funding for most Central Valley districts is off the table.

• Bus funding will remain for one more year.

While an economic stumble could upend state plans, schools already know they face a November showdown. The Stanislaus County Office of Education advised all its districts to make plans with the failure of the tax initiatives in mind, said SCOE head of business services Don Gatti.

Hughson Unified complied, putting a contingency clause into its teachers contract. The deal allows a modest raise that disappears in January should mid-year cuts come to pass.

Hughson Superintendent Brian Beck had harsh words for Sacramento. "We are expected to plan and budget for the next school year without knowing what revenue we will be receiving. Only in education!" Beck said, calling the state's request that districts budget assuming taxes will pass "incredibly fiscally irresponsible."

Shorter school year?

Most districts set aside a block of reserves committed to "economic uncertainty," knowing if the initiatives fail their main revenue source will plummet $441 per child. For Stanislaus County's 100,000-plus students, that adds up to $44.1 million.

The state's contingency plan is a three-week shorter school year. But Waterford Unified Superintendent Don Davis said without a contract override provision, that won't fly.

"While it may seem bold or courageous to allow a reduction of 15 days, it is neither bold nor courageous as it is subject to collective bargaining," Davis said in an e-mail.

"There is not enough time after the election in 2012-13 to negotiate (and go through mediation steps) prior to the end of the year. It is impossible," he wrote.

Several local districts, including Modesto City Schools and Turlock Unified, reached an impasse in the past few weeks with their employee groups, unable to break stalemates over salaries. Unions in both districts point to reserves as money that could help restore salaries.

Modesto Teachers Association President Dana Filippi believes unfilled positions and other savings should add tens of millions to money available for salaries and hard-hit preschool programs.

Modesto Chief Business Official Julie Chapin said some savings will be realized at year's end, but frugality will not reach the levels Filippi sees and much of it must stay within set programs.

"The budget gap in 2012-13 is estimated at $20 million if initiatives pass. If initiatives fail and the $441 (per student) reduction is implemented, the gap would increase by $12.6 million to a total of $32.6," Chapin said.

Miyashiro disagrees entirely with the idea of using reserves to restore pay levels. Reserves are one-time funds meant to resolve unforeseen problems, he said.

"The notion that these reserves are available to put into salary schedules is wrong," Miyashiro said.

Reserves running low

Many districts in this area already plan to pull from reserves to make it through next year. Five Stanislaus County districts, including Modesto, see money running out or below minimum levels within the next two years.

Modesto's budget shows the district reserves running dry midway through 2013-14, in part because teacher salaries revert next summer to pre-recession highs. Unlike the private sector, many school salary concessions were temporary.

Salida Union Elementary also must cut expected expenses. Superintendent Twila Tosh said the district "has pretty much raped and pillaged every operating budget to make ends meet."

Lower salaries, higher class sizes and creative solutions have kept the district afloat despite declining enrollment and earlier mistakes.

"Everyone's working on a shoestring and everybody's tired," Tosh said. Tosh and other administrators say they are most tired of Sacramento's leadership gridlock.

"I understand the plight of the state. I know the numbers. But I feel as though they're holding schools hostage in their political dysfunction. It's all about them. The contest needs to end. That's how I feel about it," Tosh said.

Bee education reporter Nan Austin can be reached at naustin@modbee.com or (209) 578-2339.

These school districts project they will run out of money, or at least fall below mandated reserve limits within the next two years. Dollar figure listed is the district's total annual budget. Calaveras and San Joaquin counties had no districts in financial jeopardy.

• MARIPOSA COUNTY

Mariposa County Unified $18 million

• STANISLAUS COUNTY

Modesto City Schools $264 million

Riverbank Unified $24 million

Salida Union Elementary $21 million

Stanislaus Union Elementary $24 million

Waterford Unified $18 million

• TUOLUMNE COUNTY

Curtis Creek Elementary $4 million

Sonora Union High $12 million

• MERCED COUNTY

Dos Palos Oro Loma Joint Unified $19 million

• CALIFORNIA

188 districts, including Los Angeles Unified ($6 billion budget), out of 1,037 districts in state

Source: California Department of Education