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Copyright 2009 California Association of School Business Officials
2009-20

Let’s be careful out there
April 22, 2009
By Dennis Meyers, CASBO Assistant Executive Director, Advocacy & Policy

We’ve been thinking now for several weeks about when it would be the right time to write what we are about to write, and we feel now is the time.

This NewsBreak is a lot like the 1980s television drama “Hill Street Blues” when at the end of every roll call, veteran cop Sgt. Phil Esterhaus, played by Michael Conrad, would always say, “Let’s be careful out there.”

That is where we are now. The briefing is done. Almost all of the information needed to complete a shift on the streets is in your hands. Still, one last word from the Sergeant which suggests you really are on your own and there is incredible pressure on you to make the right decisions.

It was a good thing that the Legislature and governor produced a budget that covered the remainder of the current year and all of the budget year. For the first time in everyone’s memory, the numbers were known with enough time to give school districts and county offices of education time to make current year adjustments (primarily by spending reserves) and plan ahead into 2009-10. The feedback we received was always the same; that the cuts are going to have to be drastic, but at least the numbers were known ahead of time. At last; certainty.

Well, that lasted about a week. The only thing certain about school finance is the uncertainty.

Now we know that the 2009-10 budget crisis was not solved completely. The Legislative Analyst has said that he projects a deficit of $8 billion and as a result of that deficit, the Proposition 98 guarantee will be $3.6 billion lower than in the adopted budget. We also heard that the May 19 ballot measures are in trouble with voters (all except Proposition 1B) and that if they fail, there will be another $5 billion to $6 billion hole blown in the 2009-10 budget. And we also know that if Proposition 1A fails, the revenues that were enacted with the budget all sunset sooner, which puts the state in the same budget mess it was in a couple of months ago.

And now that the federal stimulus money is on the horizon, we feel we need to express greater caution than ever. We know that the Title I, IDEA and school nutrition money is almost out the door and that the State Fiscal Stabilization Fund money will soon follow. Local “budgeteers” will be under unbelievable pressure to use all of that money to restore cuts and pull back most if not all of the March 15 certificated layoff notices before the May 15 deadline. And guess what, doing so actually is part of the intent of why schools are included in the federal stimulus bill.

However, we cannot communicate any stronger that the worst may not yet be over. Here are our concerns:

• The Legislature hasn’t missed a beat when it comes to lowering the state’s commitment to schools as a result of a decline in the Proposition 98 guarantee. And while we will be fighting any additional cuts to the 2009-10 budget, even our best friends in the Legislature seem to be on autopilot when the guarantee falls. What does an additional $3.6 billion decline translate too? About $600 per ADA and we know of legislators who are thinking that they need to somehow take that amount sooner rather than later.
• If the May 19 election results in failure of all of the propositions, there will be an immediate hole in the state budget of about $6 billion. While that $6 billion hole would have very little effect on the Proposition 98 guarantee, it would create enormous pressure to address the $3.6 billion drop in the guarantee with cuts.
• Also included in the bad things that will happen if the propositions fail will be the temporary revenues that were included in the February budget will become even more temporary and will begin to sunset two years sooner, beginning in 2010-11.
• The economy doesn’t seem to be ready for a comeback just yet. Unemployment is expected to increase and may make it into the high teens.
• The Aug. 15 special certificated layoff provisions have never been used which means two things. First, the Aug. 15 statutes have never been tested in court. Second, the Legislature still has the ability (with the governor concurring) to waive those provisions. For a governing board to count on being able to skirt the tough decisions now thinking they can always come back and adjust in August could end up being nothing more than wishful thinking.
• All of the federal money coming to schools in the next few weeks is ONE-TIME money. It cannot be counted on continuing beyond the existing commitment. Any of the cuts that local governing boards mitigate with federal stimulus money must be looked at as temporary mitigation, especially those concerning employees. Yes, the money can be used to pull back certificated layoff notices and add back classified positions, but that just stalls the inevitable for another year. Yes, that is part of the intent on how the money can be used. Just know that the federal stimulus money is not going to be repeated.

All said, recovery in the economy, the state General Fund, and school funding may be several years in the future. Budget decisions need to be made with that in mind.

Now, let’s be careful out there.

All CASBO NewsBreaks are posted on the CASBO website at www.casbo.org. The legislative status indicated for the bills in this report reflect the location of each of these measures as of the day the report was posted. To get up-to-the-minute status of bills including additional information on bills, bill text, analyses, legislative vote records, and veto messages, log on to the state’s Official Legislative Information website at www.leginfo.ca.gov. For other questions regarding topics covered, you may contact Dennis Meyers, CASBO Assistant Executive Director, Advocacy and Policy, at dmeyers@casbo.org.