April 30, 2008 - School District Budget Development
By David Walrath
The Governor’s Budget May Revision will be released on May 14, 2008. While there may be some good news for the current year, the May Revision does not look like it will have a positive surprise for next year’s state General Fund revenues, nor does it look like it will have an excessively negative surprise for next year’s state General Fund revenues. Consequently, SSDA is reiterating its recommendations to small school districts for preparing their 2008-09 budgets. SSDA will provide additional updates after the May Revision is released and after the Budget Subcommittees act on recommendations regarding preparation of the State Budget.
1. Cash Flow. All small districts should review their expenditures to ensure they are maximizing net ending balances in categorical, restricted, and discretionary accounts.
Other than those school districts that were exempt from the advanced apportionment cash flow reduction, most school districts will face a significantly reduced level of state funding on the July 15 advanced apportionment. Specifically, the advanced apportionment will be reduced from the current 6.0% of anticipated 2008-09 state revenue limit funding in July. The new amounts will be 0.9% in July, the August 12% will continue, the September allocation – instead of being 10% of the estimated state funding – will increase to 15.1% to address the funds not provided in July.
The effect will be to significantly reduce funding cash flow for most school districts. Consequently, increasing reserves and net ending balances will allow school districts to borrow from themselves, without having to pay interest, until state funding is provided in September.
2. Cash Flow Changes. The school districts that will be protected from these cash flow changes are districts with 5,000 or fewer units of average daily attendance that receive 39% or more of their total state revenue limit funding from local property taxes. Because these districts are more dependent on July, August, and September state funds (property taxes do not come in until December, and April), these school districts have a special provision in the Education Code to provide them a greater state cash flow in July, August, and September.
3. Avoid Under-Funded Programs. School districts are encouraged to look at their non-mandatory summer school programs to determine whether offering summer school would create net savings or net costs to the school district.
4. Food Service. School districts should be reviewing their school food service charges and the level of transportation fees that can be levied in 2008-09, if any.
5. Increased Revenues. SSDA encourages all member districts to not leave money on the table. Specifically, continue to look at the Microsoft settlement vouchers and whether you are fully using those vouchers; and review E-Rate applications to ensure you are claiming the maximum you are authorized to claim for federal reimbursement.
6. Emergency Repair Program. If you have eligible decile 1-3 schools for the Emergency Repair Program, submit reimbursement claims to the state for your costs of emergency repairs that are eligible for this program.
7. Program Grants. We encourage all member districts to apply for program grants that can be operated within the state funding level and not be subsidized by the district general fund. One example is deferred maintenance excessive hardship grants.
8. Shared Personnel. To the extent possible, consider sharing personnel for services such as purchasing, business operations and other classified or certificated positions.
SSDA is advocating that there be no suspension and that there be full funding of the Proposition 98 guarantee. Consequently, our primary advocacy is full funding with a back-up, if necessary in August, of greater flexibility in the use of existing funds. This includes greater access to categorical net ending balances as well as other restricted account balances.
