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Chester Progressive
Chester , California
March 10, 2010     Chester Progressive
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March 10, 2010

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............ J. ..... J.+  .: .+,+. L ..+ ..... + ,JJ+J.++t.:.A. ........ + . .; ...... + t A,,L+..+ + ....... L .. u+ J.+.L ILl .. ,LL+-I +iL.< IIL;|tJP..It..:J.lJJiJltJ.+i.i, ll.,llllli |tlE.LlllmSJ'|',Jlllll.lliJilttmll'+J - . _ -++ Chester Progressive Wednesday, March 10, 2010 15A School district uses 'boy who cried wolf' budgeting Mona Hill Staff Writer rnhill@plu Given the controversy and allegations flying between Indian Valley residents and Plumas Unified School Dis- trict, this reporter consulted an out-of-district expert for an opinion on the district's finances in general the re- serve fund in particular and the future of secondary educa- tion in the district. Our expert is a certified public accountant with a long career in K-14 education finance and currently works at another California school district. School Services of Califor- nia is a well-known employee- owned company that provides "informatiot services, leg- islative or government advo- cacy, financial and business consulting, executive search, or innovative workshops and training that are designed to help in solving problems and improving student performance." The company provides ser- vices related to executive searches, data, software and technology, lobbying, work- shops, and fiscal and manage- ment consultation. Superintendent Glenn Har- ris and Director of Business Yvonne Bales frequently cite SSC's 2009 fiscal review as justification for the district's controversial special reserve fund, targeted for 45 percent by 2012. Budget development School budgeting is a complex moving target. In June, when the budget is due, budgeting is more of a crystal ball process not even the Legislature has decided how much money will be allocated. Budgets are typically developed based on i historical data and trends in : areas such as enrollment and !finance discussions at the state level. By November, vhen school districts prepare their first interim budgets, called Pls, the picture should have re- solved somewhat, and the Pls should be revised to more accurately reflect that picture. Did enrollment go up, stay the same or go down? What did the Legislature finally allocate? How much can a district expect in property taxes or revenue limit funding? The second interim budget, P2, is Cue March 15 of every school year. By that time, districts know how well enrollment projections have held up and whether pro- perty taxes have increased or decreased. In addition, for each ver- sion of a district's budget through the year, the budget should be updated to reflect actual expenses and revenues as new information becomes available. In its report, SSC rated the district's budget monitoring risk as high and noted the district has a "history of having unspent funds and carryovers into the next year." That, said our expert, is likely how PUSD has built its reserve. The SSC auditors recom- mended the district use historical amounts and percentages to determine budgeted expenses. Our expert described the district's historical budget practice as "boy-who-cries- wolf" budgeting paint a bleak picture of high expenses and low revenue resulting in unspent funds at the end of the year that are used to build up reserves not good budgeting practice according to our expert. For example, in its 2009 - 10 P1 report, the district's original budget projected a books and supplies expense of $650,110; actual expenses when the report was pre- pared in November 2009, totaled $369,695, a little more than 50 percent of the budgeted amount. However, year-end total expenses are projected to be $1,003,687, approximately triple the P1 actual expense. There are several examples of this type of anomaly. Our expert wondered what changed so dramatically to warrant such an increase. The state provides stan- dards or norms for calculat- ing those amounts and asks districts to explain variances outside those norms. Several of the district's explanations on the P1 indicate district personnel have a firm grasp on the district's situation -- declining enrollment and lower property tax revenues. However, the actual projec- tions seem to indicate wish- ful thinking on the district's part something Harris disputed. Further, the district's explanations seem to be contradictory. For example, the district used an enroll- ment-to-average-daily-atten- dance ratio to calculate future years' revenue be- cause, "Our small rural county has been in declining enrollment for many years. With the recent closure of the small log division of the local mill, we are projecting an accelerated decline in enroll- ment over the next two years." That did not happen; further on the P1, the rele- vant note reads, "At budget adoption, we had expected a larger decline than we have seen. At time (sic) we are modifying our projections based on first week enroll- ment in our district. With the current state of the economy, uncertainty regarding the remaining mill operations, and other economic factors in our county, it is difficult to project enrollment with any degree of accuracy." So the question is: Can the district actually predict future enrollment? Asked for comment, Harris clarified that the district expected declines, but could not accurately determine when and by what margin they would occur, given the local economic outlook at the time. In addition, the district projected revenues for March of this school year based on, "One of the goals in our strategic plan is to increase ADA. These num- bers reflect our intent to do so." It was unclear to our expert why a strategic plan goal was used to project second interim budget revenues in- stead of reflecting declining enrollment and average daily attendance trends in the dis- trict as reflected in historical data and Bales' own projected enrollment. Special reserve The SSC also recommended the district develop a budget for the forest reserve funding to reflect stakeholder -- students, parents, teachers, administration and the public priorities. Harris has rejected calls by teachers and concerned citizens to utilize any of the reserve funds to meet on- going expense or program improvements. SSC recommended the re- serve level because declining enrollment and decreasing property taxes could cause the district to "fall out of" basic aid. Basic aid means the enroll- ment and attendance figures are+ low enougk+ fm'+4he. county's property tax revenue to meet and exceed the state's funding allocation, known as revenue limit. In other words, PUSD gets more money by being a basic aid district than it would as a revenue limit district. Even given the district's declining enrollment and the county's declines in property tax revenues, our expert did not believe PUSD is in any danger of falling out of basic aid. As long as both fall at approximately the same ratio, PUSD is "way into basic aid" according to our expert. What our expert did say was that typically such a large reserve -- even at its current level -- is used to ease the transition to a smaller district through school closures and reduc- tions in personnel. Harris also said he is not concerned about falling out of basic aid. He said the reserve is protection against the time the Legislature does away with basic aid districts altogether. He explained last year's "fair share" cut was a volun- tary move on the part of basic aid districts to fore- stall complaints of revenue differences from district to district. This year there has been no pretense about a voluntary fair share contribution from basic aid districts; it has become automatic. Harris fears that as the Legislature realizes the amount of property tax revenue represented in basic aid districts, the state will make a money grab. Expert recommendations Our expert had several financial recommendations to make for a district in the same position as PUSD. Close two high schools. Even as a basic aid district, the costs of maintaining four high schools with such low enrollment figures make them unsustainable. Do not hire any more teachers, even to replace those retiring. Given the district's incentive program to encourage teachers to re- tire, additional savings could be achieved by making do with the remaining faculty. Downsize bus service. Transportation is a huge drain on districts statewide. The state does not fund anything close to transporta- tion costs. Bus pass revenues do not bridge the gap. Our expert was also not encouraging about the Indian Valley charter movement's chances for success. Given the state's fiscal crisis, it seems unlikely the state would overturn the district's and the county office of education's almost certain charter denial. The state would look for a new charter school to be viable financially and to fill a need in the county. Given two charter schools already operating in the county and the small numbers of students, chances of a new charter being granted are nearly non- existent. The question of whether or not to close schools is not uniquo to PUSD. Across California and the nation, district boards are currently making very painful de- cisions in the face of public outcry. ].!i+ Lake Almanor Fitness Center QT++ is happy to announcd  i. the start ofballeticlasses  i:: i 0 D, 1,,+,j+,,+,,,j I,+ s " ++ . ..... ,, - Class time options 1-2 or 2:4.-3:45 Tire to bedetermined upon enrollment : Tauot by Amanda Domingues, former Alegate Dance Cnpany - dancer from avis, CA / LAKE ALMANOR WITNLJ CENTER 160 CED/R STREET PO BOX 999 CHESTER/CA 96020 50,258.3900 LAKEALMANORFITN E$$@ YAHOO.COM WWW.LAKE/%LMNOR FITN E'SS.COM Sc Iolarship available This year, Plumas County have given scholarships Bar Association will give since2001. a $1,000 scholarship to To be eligible for the a graduating high school award, the student will senior. Preference will need to write an essay and be given to a student attend- complete an application form NOW IS PROGRESS! I ing a four-year college or byApri116. university. 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