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High school district to make more cuts; unions asked to support furlough days or salary reductions

The Fallbrook Union High School District (FUHSD) board of trustees and a large group of high school teachers were informed about Governor Arnold Schwarzenegger’s initial budget proposal for the 2010-2011 academic year and its possible effects on the FUHSD budget for 2010-2011. FUHSD Superintendent Dale Mitchell elaborated upon the effects of the budget proposal for the Fallbrook District at the February 8 board of trustee meeting.

Schwarzenegger presented his proposal at the state’s 2010-2011 Budget Workshop on Jan. 13, and let state school officials know that the plan is still subject to changes in the legislative budget adoption process along with changing economic circumstances at both the state and federal levels.

Assistant Superintendent Chester Gannett reviewed the material and presented an analysis of the governor’s budget proposals for the current and next two fiscal years to the FUHSD board at the February 1 board of trustee meeting, giving relieving information for the current year, but distressing predictions for the 2010-2011 year.

“The economic crisis is not over in California,” said Gannett, who stated that the state’s unemployment is still very high, income and sales taxes are lagging, tourism is down and property taxes have continued to spiral downward. And while last year FUHSD received federal funds to help with its budget, it was a one-time deal. The governor informed school officials that the federal funds were only to be given once.

Gannett projected that without budget reductions, FUHSD will have a budget shortfall of $1,822,675 for the 2010-2011 year.

According to Gannett, the state’s economic status has severely impacted Proposition 98 and California’s economic budget.

“While we receive flat funding under Proposition 98 in 2010-2011, the state is targeting $1.5 billion in cuts at district administration,” said Gannett, who clarified that the term “district administration” could be any expenses made away from the classroom, such as custodial services and supplies.

A negative cost-of-living adjustment (COLA) was issued for the 2010-2011 year, producing no new funding for the school district.

“This is very unusual,” said Gannett. “Even if the COLA can’t be afforded, it is usually calculated to two or three percent. The recession is so deep, the factors used to calculate the COLA made it go down by .38 percent.”

Schwarzenegger’s presentation stated that Proposition 98 is still owed major sums – $11.2 million is owed from past deficits, and more than one million dollars from unfunded mandates – that are not planned on being collected this year.

While no more cuts will be made to the current year revenue limit, cash is still a problem, said Gannett, who said the low levels of funding will require more staffing reductions and render collective bargaining with the various labor unions within FUHSD difficult.

FUHSD is also receiving less funding per every student’s average daily attendance (ADA) than it should be. According to the report, an average school district should be receiving $6,387 per ADA. However, districts will only receive $5,014 per ADA.

“This year, we had a $1,500 shortfall,” said Gannett. “However, we had financial aid to help offset the gap. In the 2010-2011 year, we will have a huge difference in price, but still have to run our schools.”

The state is contemplating various ways to solve its $19.9 billion budget gap, but individual school districts must wait to see what is decided by legislatures before they can take action.

“We don’t have choices, and by law we must have a budget in place by June 30,” said Gannett. “We are limited by what we can do to raise funds to operate our schools.”

Mitchell followed Gannett’s presentation with a suggested initial restructuring and expenditure of reductions for FUHSD’s upcoming school year.

According to Mitchell’s presentation, there are three common themes impacting budget development: “First the 2010-2011 school year is the second consecutive year of declining enrollment. Second, the state’s economic crisis is not over. Third, the American Recovery and Reinvestment Act (ARRA) federal monies, the bulk of which will have been spent during the current school year, will need to be fully spent by September 2011.”

The actual impact of declining enrollment is greater than it may appear on the surface, Mitchell said. To illustrate, the district will receive 150 less ADA times the revenue limit of $7,000, meaning the district will receive $945,000 less monies next year, solely due to declining enrollment.

If the average teacher’s compensation was determined to be $85,000 and the student teacher ratio is 27:1, this is a reduction of approximately five full time positions or a total of $425,000. Subtract the teacher savings from the total loss of revenue, and a shortfall of $510,000 remains and must be addressed.

If the district considered a reduction of six full time teaching positions, it would allow the district’s student/teacher ratio in 2010-2011 to be comparable to that in 2008-2009.

The teachers present at the meeting voiced their concerns over the potential loss of five teachers because of budget reductions, stating that class sizes would grow, college requirements would be more difficult for students to meet, and that less opportunities would be afforded to students.

Another strategy presented to the district would be to “spend down” reserves. The district continues to build its budget with a three percent reserve.

According to the presentation, “this safety net enables the district to address unanticipated substantial reductions in income and/or increases in expenditures.”

Mitchell recommended that the district maintain the commitment to the reserve due to continuing economic uncertainty.

“Each year, the challenge for implementing restructuring/expenditure reductions is more difficult. This is because more palatable solutions were previously implemented,” said Mitchell in his presentation.

With the budget assumptions and reductions recommended by Mitchell, general fund reserves will be reduced from $2.2 million to $1.15 million.

Restructuring/expenditure reductions of central administration – expenditures not related to teachers and principals – continues to be part of the overall solution for the District.

The FUHSD board of trustees will be asked to make decisions regarding the reductions at its March 2 meeting.

“It is anticipated that not everyone will be happy with the proposed reductions,” said Mitchell. Alternatives up for consideration are (1) an across-the-board salary reduction or (2) an across-the-board reduction in workdays. Mitchell would revise his reductions if the teachers association and classified union both agreed to either action.

If approved, a salary reduction of one percent would save the district $192,724; a reduction of two percent would save $385,448; and a reduction of three percent would save $578,172. One furlough day would save the district $86,726; two days would save $173,345; and three days would save $260,177.

“It will be the board’s decision when it comes to the adjustments [Mitchell] has proposed,” said Gannett.

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