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Friday, Sep. 25, 2009

Modesto school district's budget picture less grim

State cash, stimulus protect jobs at Modesto City Schools

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Red ink remains on the books, but Modesto City Schools officials say their financial outlook is better than they expected when they adopted their budget.

They're closing out their 2008-09 budget with $12 million in cash on hand, $19 million more than they expected as recently as June, when they had anticipated a $7 million deficit.

A boost from federal stimulus money and a more generous infusion of state cash than the district expected bolstered the bottom line.

Those trends mean the district's $253.8 million spending plan — and the jobs of teachers and classified employees — remain safe, at least for another year.

"We got more (state funding) than anticipated in 2008-09, but we're being hit in 2009-10," said Julie Chapin, a director of business services. "We can survive 2009-10 without having immediate cuts, but not 2010-11."

The district intends to extend its hiring and spending freeze this school year. It faces $15 million in future cuts, although district officials hope a conservative approach can reduce that figure by several million dollars.

"We'll be better off in three years, but not now," said Dennis Snelling, another director of business services. He and Chapin cautioned that the numbers are fluid and that budget reports are based on snapshots of one particular day.

Despite the hiring freeze, the district expects to spend $9.1 million more than it takes in this year, a deficit that partly reflects the district's accounting for $14 million in federal stimulus money it received in June.

That money is tallied as revenue for the 2008-09 budget, which ended June 30, but it's intended to be spent for this year's budget.

"(The stimulus money) did its job — it was meant to save jobs in 2009-10," Snelling said.

Like many districts across the county and state, Modesto City Schools' enrollment has declined by thousands of students over several years. That, combined with deep cuts in state funding, is testing finances.

The district's budget was one of five flagged this summer with conditional approval by the Stanislaus County Office of Education, which oversees the districts' finances and has authority to suggest budget-balancing solutions. The other districts designated with conditional approval were Sylvan Union, Keyes, Roberts Ferry and La Grange; Sylvan since has been removed.

Tagging districts with conditional approval is rare in Stanislaus County, where no more than two ever have been on the list at once.

County officials plan to meet in the coming weeks with the remaining districts with conditional approval to review their budgets. If those plans don't show enough progress, county officials can implement their own plans. The documents are then forwarded to the state Department of Education in October for review.

Many figures have changed with the closing of the 2008-09 budget June 30, and Modesto City Schools officials hope the clearer picture allays the concerns of county officials.

Modesto's brighter budget means it will maintain a state-required 3 percent reserve for the next three years, officials said. In June, estimates showed the district slipping below that mark by the 2011-12 school year.

Bee staff writer Michelle Hatfield can be reached at mhatfield@modbee.com or 578-2339.