Las Virgenes schools must explain budget moves

For the third time since Assembly Bill 1200 passed in 1991, the Las Virgenes Unified School District must file a "qualified" interim budget with state officials explaining why the district might not meet its financial obligations for the next three years.

The bill was enacted to ensure that California school districts are adequately prepared to meet their financial obligations. The economic downturn and the subsequent cuts to education have rocked the financial stability of the district, said Karen Kimmel, chief business official. The bill requires districts to maintain an emergency reserve fund totaling 3 percent of their budget. A qualified interim budget explains why the reserves are being used.

While this year's reserves are more than 6 percent, projections for next year show the levels dropping to 2.30 percent, according to a report by Kimmel. Subsequent years show an even more precipitous drop in general fund revenues. The district will begin to spend more money than it generates in revenue and budget shortfalls will reach 2.3 percent or nearly $1.3 million by 2010-11. The following year, the district will come up short by 7.5 percent or $6.5 million, and if the economy does not improve, the outlook for 2012-13 is dire—the district would be operating at a nearly 13 percent deficit, which translates into a $12-million shortfall.

The dire predictions, however, do not take into account district budget reductions, settlements with the teachers union, and new revenue possibilities such as the federal stimulus package.

Ordinarily, a dip into the reserves is a signal to the state that local school district finances are being mishandled. Critics feel it's the state that's doing the mismanaging.

The California budget is suffering from a $42billion deficit and school districts across the state are shouldering what they say is a disproportionate share of the financial burden. Declining enrollment, which translates into further losses of average daily attendance money, has made matters worse.

Kimmel said the submission of a qualified budget will send a message to the state that "painful decisions" are being made by school districts.

Superintendent Donald Zimring said the Las Virgenes district will be able to improve cash flow by liquidating insurance revenues, a onetime option during the term of the policy. The revenues total about $1 million.

The state is also allowing districts flexibility on how they use certain categorical, or specified, streams of money.

Regarding submission of the qualified budget, "I don't think we really have much choice," board member Gordon Whitehead said.