School district cuts spending too close, must file report

For the first time since Assembly Bill 1200 was passed in 1991, the Las Virgenes Unified School District (LVUSD) was required to file an interim budget with state officials explaining why the district was forced to dip into its financial reserves.

The assembly bill was created to ensure that local school districts in California are adequately prepared to meet their financial obligations.

Districts are required to maintain reserves amounting to 3 percent of their budget and if an emergency occurs that warrants using some of those rainy day funds, the school districts must file a “qualified” interim budget that explains the circumstances.

Last year, the California Legislature allowed school districts throughout the state to submit budgets with less than the required 3 percent reserve because of the state’s own budget problems. But school districts were required to return to the standard 3 percent reserves for the 2005/ 2006 school year, which LVUSD had done, but unanticipated costs—mostly in special education—forced the district to draw down its reserves to 2.6 percent. The reserve funds are supposed to be used for unanticipated expenditures, but if the reserves drop below 3 percent at any point during the year, a school district can be penalized. The irony of this upsets many school officials.

LVUSD’s budget ininitially included a $401,000 increase in ‘05-’06 special education funding. Current estimates showed increases of twice that amount, including $323,000 for special education teachers.

“This is not an indictment or blame (on special education). . . “These are the facts,”said Donald Zimring, district deputy superintendent.

Zimring said all special education positions now must be monitored “hour by hour” to determine why the expenditures rose so dramatically.

“We need to have some reserves we can actually use without being penalized,” said Sandra Smyser, district superintendent.

Because of the added expenses, the school district has fallen short of the 3 percent reserve level by $355,000, Zimring said.

Zimring called the budget snafu an “extraordinary situation.”

“The irony of the situation is the district’s current budget is within $61,000 of being a balanced budget—with a qualification—yet previous years have reflected significant deficit spending and maintained a positive certification,” Zimring wrote in the report to the board. He said that in the past, the district has had a $900,000 deficit, but was able to adopt a positive (budget) certification.

Because of the Assembly bill’s phrasing, Zimring called the unusual circumstances in the first interim budget a “perfect storm.”

The new, qualified budget opens the door to more county monitoring of the school district’s finances, but, Zimring said, county officials are not concerned about the fiscal health of Las Virgenes.

“. . .We’ll get through it,” Zimring said.

Other districts

LVUSD faces unique challenges in comparison to other school districts in the region. Zimring said some neighboring districts have not experienced the same level of declining enrollment as LVUSD, while other districts receive higher aid to families with dependent children. Zimring said the statewide average for federal funding is between 7 and 8 percent, versus the 3 percent that Las Virgenes receives.

“Neighboring districts have significantly lower special education costs,” Zimring added. He said the district has “great programs,” which attract parents to the district, but strains the resources.

Future is brighter

School officials say they are optimistic about the future of the district’s finances. Zimring said all indications point to the state’s improving financial health.

After the defeat of Gov. Schwarzenegger’s education initiatives in last month’s election, Zimring believes the stage has been set for “fence mending and likely greater financial support for public schools.”

Next year, said Zimring, the district will restore the 3 percent reserve without having to implement any cuts to programs or staff, but would like to build and maintain a larger reserve to accommodate unexpected events.