Budget still haunts school districts

BY NICK DURNHOFFER
DAILY SOUND CORRESPONDENT
According to a Board of Education presentation, the Santa Barbara School Districts incurred $1.15 million in deficit spending last year, resulting in a transfer of monies from the government’s general fund.
Fiscal Services Director Shirley Corpuz said the deficit spending resulted from poor reserve funding estimates made in previous years. She also stated that her team failed to consistently report timely and accurate budget information because her office is severely understaffed.

Ed Diaz, the Santa Barbara School Districts Business Services Assistant Superintendent, said the poor reserve funding was a result of the budget team’s exclusion of open claims in areas such as workers’ compensation and liability.
“In the prior years we were not setting reserves for open claims,” Diaz said. “The account was understated.”
According to Corpuz’ report, the deficits were derived as follows: $25,000 and $125,000 in property and liability for elementary and high schools, respectively; $650,000 total for workers’ compensation; $100,000 total for dental and vision packages; and $250,000 total for retiree benefits.
Corpuz said the group’s budget problems were not necessarily the fault of staff members, but rather the lack thereof.
“The bottom line is we don’t have enough staff to do timely and accurate reporting,” Corpuz said.
However, Board of Education Member Bob Noël said he was displeased with the late budget information and that the Board should reconsider who it pays to conduct its audits and financial reports.
“Why are all these chickens coming home to roost now?” Noël said. Why didn’t we have this last year? .. This money should really go to restoring programs that were cut.”
“I think the public has the right to know. We have certainly heard unsystematically that the office is understaffed, and additions have been made … We have a mess and these are some very, very egregious errors.”
Santa Barbara School Districts Superintendent Dr. Brian Sarvis said the business and fiscal services offices are currently reorganizing their structures and evaluating how to resolve these budgeting issues.
“We will have a new budget manager,” Sarvis said. “We do need more help … We have stayed lean throughout. We have only half the staff that other districts our size have.”
“We are developing a plan right now and frankly it will be costly, but I want it to be well thought through …We’ll be asking for outside analysis … If you don’t think I care about these concerns, you are dead wrong.”
In another report, Diaz said the state was also severely underestimating its revenues, which was contributing to various insufficient school budget plans throughout California.
“The July revenues were $1.2 billion below [state] projections,” Diaz said. “They’re proving to be too optimistic … It could be a chain reaction if revenues come low again this year.
Diaz said he believed the state budget team was not taking into account what he called a “subprime mortgage crisis.”
“They have optimistic assumptions of the subprime mortgage economy,” Diaz said. “12,000 jobs in California were lost and there are more lost everyday … This could trickle down to our state coffers.”
Additionally, Diaz’s report showed the average school district reserve is set at 10 percent, whereas Santa Barbara’s is slightly less than half that number. The report stated the reserve averages were set higher at districts that were smaller, having fast growth, seeing declining enrollment or engaging in legal pursuits. The reserves were set lower at districts that have a consistent ending balance, steady population or covered employee contract obligations.
Board of Education member Kate Parker said she was unsure as to whether or not districts with declining enrollment actually had higher reserve percentages.
“I’d really be curious to see schools with declining enrollment if they are closer to this 10 percent,” Parker said. “It seems unlikely for districts with declining enrollment.”
Noël said Diaz’s report came as a complete surprise to him.
“I find it remarkable about this 10 percent,” Noël said. “This is the first time we have ever talked about that number … I just hope this doesn’t mean that we’re trying to build a case here for other purposes and trying to create a walking reserve … I never heard of anyone aspiring to 10 percent.”