The recession hit many industries hard, but it would be difficult to overstate the tumult that hit school financing over the past five years, and the wild ride is not over.
At the Turlock Unified School District, Lori Decker led layman-friendly budget discussions through state funding cuts, midyear cuts, deferred payments, long and longer delays in payments, and one crazy year that had to have two budgets – one if Proposition 30 passed and one if it didn’t.
This year, Decker helped the district convert its financial planning to factor in community priorities and create an open evaluation process to gauge if it is meeting them, all required for 2014-15 under the state’s local control funding rules.
Turlock’s assistant superintendent of financial services retires June 30 after 26 years with the district and prior jobs in public accounting and private industry. She will leave the district in strong financial shape, with a nearly 16 percent reserve projected in 2014-15’s $124 million budget.
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Before Decker hands in her calculator, however, the Bee asked her to give a long view of school finance for a medium-size school district.
Looking back over the past two decades, how has education financing changed overall?
The past year has brought about the most significant change in how school districts are funded, with the new Local Control Funding Formula. This funding model provides for more local decision-making and provides additional funding for students who are low income, English learners and foster youths.
Prior to this, the greatest area of change has been the tremendous increase in the required amount of financial information provided to the board of trustees and public.
To help explain how school financing has changed under the new state formula, could you give some examples of how budgeting was handled under the old system?
The old system was very rigid, and the state allocated set dollar amounts for specific uses such as textbooks, counseling, transportation, and arts and music education. If in one year there was a greater need for textbook money and a lesser need for another category of funds, there was no flexibility to move those funds. The new formula did away with more than 30 “restricted” funding sources that could be spent only in a specific manner. Today, districts are able to make those funding choices at the local level.
During the recession, how much funding was put off indefinitely and will Turlock ever see that money?
Turlock received $75 million less over the five-year recession period than it would have if schools were fully funded. Under the new funding model, Turlock will eventually be brought back to that level of revenue, but the loss of prior year money will likely never be restored.
What did Turlock Unified have to cut as a result?
Every school district had to make painful cuts as a result of the recession. With 80 percent of the budget going to salaries and benefits, we found it necessary to eliminate a number of support positions, such as clerical, custodial, grounds and administrative positions. We had to reduce employee pay and benefits. There were myriad other reductions as well, such as trimming student transportation and supply budgets.
Which was the worst year for schools in the recession and why?
2009-10 was the year of the worst cuts. Turlock Unified made $6.4 million in budget reductions, after reducing $2.9 million the year before.
2010-11 was the most frustrating year due to the very late adoption of the state budget. School districts were told to prepare for more cuts, and Turlock made another $3.9 million in reductions. The state budget was finally passed in October, well into the school year, and those reductions to schools were reversed. Once the school year begins, it’s much more difficult to make staffing changes. It’s somewhat like trying to turn around a cruise ship vs. a power boat.
Will Turlock Unified have more money under the new local control formula?
Yes. The new formula provides additional funding to school districts with English learners, low-income and foster students. The count of such students for funding purposes is “unduplicated,” meaning that students who fall in more than one category are only counted once. Most districts in the Central Valley have a high population of students in those categories, resulting in additional funding compared with districts with low counts. The additional funding is intended to increase and improve the services that school districts provide to those students.
How have the local control rules changed budgeting and community say in spending?
This year, for the first time, the district’s budget is integrated with student performance goals and district accountability. Districts are required to develop Local Control Accountability Plans with parent, staff and community input. The LCAP outlines goals and actions to increase student achievement and actions to increase and improve services for students with needs. The budget for next year was developed in conjunction with the LCAP, and the budget must clearly demonstrate funding to meet LCAP goals and actions. This required the finance staff to work much more closely with other departments and be a part of the LCAP development.
What were some of the changes Turlock community members pressed for, and what do those look like from a finance perspective?
The top three priorities for the Turlock community are student engagement, student achievement and implementation of Common Core state standards. That translates to the budget by allocating funds to assist in those areas, such as technology for student engagement, intervention programs for student achievement, and professional development and materials for teachers to transition and implement the new standards.
What is one key factor you wish the community understood about school finances?
There are two things:
One, that schools are a big business whose revenues are, for the most part, completely dependent on state finances. Turlock Unified has a $135 million budget and employs more than 1,500 people. Schools receive about 40 percent of the state’s budget, so when the state has a good year, so do schools. When the state has to make cuts, schools often take the biggest brunt of those reductions.
Two, that even under the new Local Control Funding Formula, there are many more rules and regulations to follow than there are in private industry. Schools are sometimes slower in making changes due to all those regulations.
What direction do you see school finance moving in the future?
I believe that school finance will continue to move in the direction of providing more information to the public in a transparent manner. The complexity of school finance has made it difficult for regular community members to understand the budget. The LCFF and LCAP are steps in the right direction to get parents and the community involved in decision-making and a part of the educational community.