School officials explain budget issues

BY ERIC LINDBERG
DAILY SOUND STAFF WRITER

Extra money uncovered during the Santa Barbara School Districts’ annual fiscal year analysis is due to overestimated expenses earlier this year, and will help replenish reserve coffers, school officials said.
Ed Diaz, assistant superintendent of business services, told the Daily Sound that after an extensive budget review, it appears that districts staff overbudgeted for expenditures in March, producing what he terms an “artificial windfall” among community members who are concerned that the districts laid off teachers while unaware of a budget surplus.

“As a result of a more thorough and in-depth account analysis we discovered a lot of expenditures that had been overencumbered,” Diaz said. “To complicate that, we then asked the board to make budget cuts. ... I think everything will be explained on August 14.”
On that date, he will deliver to the school board a preliminary summary of budget reviews conducted by the County Education Office and a private fiscal consultant. He emphasized that his office is not conducting an internal investigation or any sort of special process.
“We’re not doing anything other than going through our fiscal year closing,” Diaz said.
Due to the hiring and contracting process with teachers, he explained that it is tricky to estimate expenditures early in the year.
“You can imagine how difficult it can be in March when you are hiring your teachers to try to predict what your funding will be in September,” Diaz said.
He added that for the past few years, the school districts have struggled to meet the mandated reserve amount of 3 percent of the total budget. With these funds, they will meet that figure, placing $3.7 million in their reserve fund.
Thursday, Superintendent Brian Sarvis released a statement explaining the status of the budget, saying that district officials planned for a large surplus to meet reserve requirements and negotiated salary increases over the next three years.
“The state budget also has a major impact on our current budget,” Sarvis said in the statement. “To date, the state has not finalized its budget. When the districts’ 2006-07 ending balance is finalized, the board may be able to reconsider the designations of available funds.”
Last month, Sarvis announced about $5 million in budget cuts, which included increased class sizes and the loss of 40 temporary teaching positions. He emphasized that the districts rescinded all but 11 layoff notices for probationary and permanent teachers, and agreed to a 3-year contract that will improve teacher salaries.
School officials are also in the process of hiring a new director of fiscal services, and declined to comment on the reasons behind the resignation of Robert Wolfe, the former director of fiscal services.