CSBA has help for districts facing qualified and negative certifications
Archived webcast, resource guide address qualified or negative reports
Published: June 5, 2012
With California’s schools suffering from years of state budget shortfalls—and harder times ahead if Gov. Jerry Brown’s tax initiative fails this fall—CSBA responded with a special webcast June 12: “Qualified and Negative Certification Status: Understanding These Certifications and How to Avoid Them.”
A record-high 188 school districts were found at risk in the California Department of Education’s Second Interim Financial Report, issued May 21. A qualified budget certification means the district likely will fall short in the current budget year or one of the next two; a negative certification means the district will not be able to pay its expenses in at least one of those three years.
In the webcast, CSBA Senior Policy Director Teri Burns joined San Joaquin County Office of Education Deputy Superintendent Jim Thomas and School Services of California Executive Vice President John Gray to review questions board members need to ask and suggest practical steps to take in anticipation of a second round of midyear trigger cuts if voters reject the governor’s revenue initiative on the November ballot.
The one-hour webcast—the first in a planned series—is posted online for viewing anytime; a related resource guide, “Qualified & Negative Budget Certifications,” offering information, tips and communications tools for governance teams, is available to download free of change.
Seek help early, experts advise
“You’re not alone; every district in California is facing funding cuts and deferrals,” Burns told the webcast audience. But she and other speakers encouraged districts to act quickly and involve their communities in the difficult discussions needed to remedy school finances. Parents, district staff and community stakeholders all need to understand the scope of the problems the district faces and the painful cuts that may be required to remain solvent.
The county office of education is your ally in troubled fiscal times, Thomas assured district governance teams. “Consider the county office your new best friend. They want the same thing as you do—[for you] to stay fiscally solvent.”
County officials can come to board meetings to explain the realities of a district’s situation for the public’s benefit, and county offices have resources and services that can help, he explained.
Gray said the Fiscal Crisis Management and Assistance Team, established under Assembly Bill 1200 in 1991, is another great resource for struggling districts.
“If you contact them early, at the first sign of trouble, they can identify areas of concern and help you self-correct so you don’t need the ‘fiscal crisis’ part of their services,” he said.
Defeat of Brown’s revenue proposal would make things worse
Burns, Gray and School Services’ Thomas stressed that school districts will not be out of the woods even if voters approve Gov. Brown’s revenue initiative in November. Funding will remain flat if it passes, while expenses will continue to rise. And if voters reject the governor’s tax plan, districts will lose another $445 per pupil, which would ultimately cost districts more than $1,300 over the next three years, Thomas explained: “One dollar cut in year one becomes $3 in year three of a multiyear projection.”
That means if the tax initiative fails, a district with an average 16 percent reserve will immediately fall into negative certification unless it takes corrective action.
“You need to get started now on this process, and you need to stick together,” Burns told governance teams listening to the webcast. “Take action now – don’t wait.” Then, if the taxes pass, she noted, “it’s easier to add money back into the process than to take it out.”
Loans—a last resort
Board members are urged to do everything in their power to avoid having to resort to a state loan, which would result in their losing their authority in the district. Constituents who think it would be less painful to just take the loan are sadly mistaken, Gray said.
“Don’t go there—your stakeholders are much better served having you in control than the state of California,” Gray explained. Locally elected board members live in the district, he explained, so they’re closer to the students—which may include their own children or grandchildren—and they agonize about decisions that affect students and staff. A state administrator, on the other hand, is primarily concerned with making sure the district can afford to repay the state loan.
CSBA’s two-year Masters in Governance program and two-day Institute for New and First-term Board Members have detailed modules about finances for board members, and the Annual Education Conference and Trade Show, coming to San Francisco Nov. 29-Dec. 1, will also offer multiple opportunities to learn more and share experiences about funding and finance, advocacy and engagement, and related topics.
“Stick with CSBA on this,” Burns said. “We’re your resource.”