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District ready to weather budget cuts
Analyst says Glendale Unified is ‘better positioned than most’ to cope with upcoming crisis.
By Angela Hokanson
GLENDALE — Sound financial planning has put the Glendale Unified School District in a better position than many districts in California to endure state budget cuts projected for next year and beyond, an outside consultant told the school board on Tuesday night.
John Gray, vice president of School Services of California Inc., which works with school districts on issues like budgetary planning, gave a presentation on the school district’s long-range financial plan at Tuesday’s meeting.
He explained how Gov. Arnold Schwarzenegger’s proposed cuts of more than $4 billion from public education statewide next year could affect Glendale Unified.
Cuts of that magnitude could mean that Glendale Unified would need to cut more than $8 million from its 2008-09 budget to cope with the loss in state funds.
Glendale Unified is facing many of the same negative external factors that other districts across the state are facing, including low levels of per-pupil state funding, declining student enrollment and a state budget crisis, Gray said.
“And yet you are better positioned than most districts to weather the storm,” Gray said.
The school district has carved out a more secure financial position for itself over the long term by taking steps like negotiating reasonable contract agreements with employees, reducing costs as enrollment declines and beefing up its reserves by instituting a hiring freeze, Gray said.
If the governor’s budget were to go into effect as proposed, Glendale Unified would receive 2.4% less next year in state “revenue limit” funding — the largest pot of state funding school districts receive — than it did in the current year.
During most years in the last decade, the state has increased this pot of money to keep up with inflation.
“The governor’s proposal is to not give you that increase, but also to cut you from the prior year,” Gray said.
Gray commended the school district on taking steps to save money this year and build its ending fund balance so that it has more money to work with next year.
“This district’s doing a lot of proactive things to build that balance,” he said.
School Services of California projects that Glendale Unified will end this school year with an ending fund balance of about $22 million.
The effects of the state’s proposed budget can be seen in how that ending fund balance is projected to fall in subsequent years.
In 2008-09, the ending fund balance is estimated to be about $19 million, according to School Services. In 2009-10, the ending fund balance is projected to drop to about $13 million.
The real problems for Glendale Unified could arise in 2010-2011, when the school district’s reserves could drop to $6.4 million if state cuts to education go through, Gray said.
Holding reserves of less than $7 million would put the school district’s reserves below the state-required level of 3% of expenditures, according to documents prepared by School Services of California.
Board President Joylene Wagner asked Gray to elaborate on what could happen to the school district if it allowed its reserves to dip below the 3% mark.
The result could be less local control of the school district, as the Los Angeles County Office of Education could step in to make financial decisions for the school district.
“Outsiders will have a say in what happens in this district, at least financially,” Gray said.
Still, Glendale Unified is in a much better position than some other districts that may find themselves dipping below reserves next year, he said.
“Your behaviors, your actions in the past, have ensured that you’re in better position than most districts in the state,” he said.
Later in the meeting, board Vice President Mary Boger pointed out that a 3% reserve would not be sustainable for the school district, even in the short term.
“It’s just so vital that we maintain as great an ending balance as we are able,” Boger said.
The governor is expected to announce his revised budget proposal for 2008-09 in mid-May.
ANGELA HOKANSON covers education. She may be reached at (818) 637-3238 or by e-mail at angelahokanson@latimes.com.
John Gray, vice president of School Services of California Inc., which works with school districts on issues like budgetary planning, gave a presentation on the school district’s long-range financial plan at Tuesday’s meeting.
He explained how Gov. Arnold Schwarzenegger’s proposed cuts of more than $4 billion from public education statewide next year could affect Glendale Unified.
Cuts of that magnitude could mean that Glendale Unified would need to cut more than $8 million from its 2008-09 budget to cope with the loss in state funds.
Glendale Unified is facing many of the same negative external factors that other districts across the state are facing, including low levels of per-pupil state funding, declining student enrollment and a state budget crisis, Gray said.
“And yet you are better positioned than most districts to weather the storm,” Gray said.
The school district has carved out a more secure financial position for itself over the long term by taking steps like negotiating reasonable contract agreements with employees, reducing costs as enrollment declines and beefing up its reserves by instituting a hiring freeze, Gray said.
If the governor’s budget were to go into effect as proposed, Glendale Unified would receive 2.4% less next year in state “revenue limit” funding — the largest pot of state funding school districts receive — than it did in the current year.
During most years in the last decade, the state has increased this pot of money to keep up with inflation.
“The governor’s proposal is to not give you that increase, but also to cut you from the prior year,” Gray said.
Gray commended the school district on taking steps to save money this year and build its ending fund balance so that it has more money to work with next year.
“This district’s doing a lot of proactive things to build that balance,” he said.
School Services of California projects that Glendale Unified will end this school year with an ending fund balance of about $22 million.
The effects of the state’s proposed budget can be seen in how that ending fund balance is projected to fall in subsequent years.
In 2008-09, the ending fund balance is estimated to be about $19 million, according to School Services. In 2009-10, the ending fund balance is projected to drop to about $13 million.
The real problems for Glendale Unified could arise in 2010-2011, when the school district’s reserves could drop to $6.4 million if state cuts to education go through, Gray said.
Holding reserves of less than $7 million would put the school district’s reserves below the state-required level of 3% of expenditures, according to documents prepared by School Services of California.
Board President Joylene Wagner asked Gray to elaborate on what could happen to the school district if it allowed its reserves to dip below the 3% mark.
The result could be less local control of the school district, as the Los Angeles County Office of Education could step in to make financial decisions for the school district.
“Outsiders will have a say in what happens in this district, at least financially,” Gray said.
Still, Glendale Unified is in a much better position than some other districts that may find themselves dipping below reserves next year, he said.
“Your behaviors, your actions in the past, have ensured that you’re in better position than most districts in the state,” he said.
Later in the meeting, board Vice President Mary Boger pointed out that a 3% reserve would not be sustainable for the school district, even in the short term.
“It’s just so vital that we maintain as great an ending balance as we are able,” Boger said.
The governor is expected to announce his revised budget proposal for 2008-09 in mid-May.
ANGELA HOKANSON covers education. She may be reached at (818) 637-3238 or by e-mail at angelahokanson@latimes.com.
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