LAO survey documents LEAs’ fiscal caution amid uncertainty
Analysis from CSBA’s Governmental Relations Department
Published: May 9, 2012
The results of a recent survey by the Legislative Analyst’s Office confirm what CSBA has heard anecdotally from school board members and administrators from around the state: Local educational agencies are not counting on additional revenues from any ballot initiatives expected to go before voters in November.
The “Update on School District Finance in California,” released May 2, was the LAO’s third annual survey asking LEAs about their available fiscal resources and budgeting practices. Nearly 90 percent of the 467 respondents indicated their initial 2012-13 budgets do not rely on projected revenues Gov. Jerry Brown built into his own state budget proposal based on the November ballot initiative he is pursuing. Should the revenue increases be approved by voters, 36 percent of respondents indicated their budgets would include automatic restorations; 33 percent indicated they intend to develop a plan after November, and 20 percent expect to have the revenues to spend in the following school year, 2013-14.
“The report gives us good information, but there are no surprises in it,” CSBA Assistant Executive Director for Governmental Relations Dennis Meyers said. “The fact that LEAs are waiting to spend the ‘new money’ shouldn’t be news at all. It’s the only way they can ensure their solvency in best- and worst case scenarios.
“Governing boards have to take a wait-and-see stance on the 2012-13 budget because of the uncertain revenues. If the governor’s initiative doesn’t pass, districts and county offices will be burning through their reserves to keep the doors open.”
‘Hearing tornado sirens, hoping nothing touches down’
The results also show that LEAs have been making steadily increasing reductions to programs and services, primarily through reductions in staff and salaries at all levels, except for some additional reliance on part-time classified employees. This has resulted in higher class sizes and a shorter school year, with nearly 40 percent of LEAs reducing the number of instructional year by at least one day and up to five; none has so far taken advantage of the authority to reduce the school year by six to 12 days—not counting reductions in staff development days.
Ninety percent of respondents have also relied heavily on the categorical flexibility provided since 2009 to redirect “any educational purpose” resources totaling $4.7 billion from roughly 40 Tier III categorical programs, such as the instructional materials block grant, professional development programs and Targeted Instruction Improvement Grants.
“Flexibility has been most helpful in getting LEAs through their budget struggles,” Meyers observed. “The LAO report shows how important flexibility has been, and how much more is needed to weather the approaching storm. This next budget, with the possibility of a new midyear cuts, is like hearing the tornado sirens going off and hoping nothing touches down.”
Other selected findings: Regional occupational centers/programs and community day schools have had their funding redirected at much lower rates than other programs, such as high school class size reduction and adult education; budget reductions are becoming increasingly difficult to manage due to the prolonged duration of budget reductions, the loss of federal economic recovery funds, and the exhaustion of most one-time solutions.
‘New revenues’?
The LAO survey also asked how LEAs would like any new revenues to be directed. Responses overwhelmingly called for restoring funding to revenue limits and curtailing the deferral of state appropriations owed to schools. Gov. Brown’s original 2012-13 budget proposal would have paid down $1.7 billion in deferrals, a figure that may or may not be reduced in the governor’s May revision—expected to be released May 14—to his original spending plan.
“Until we see the May revision, we need to all acknowledge that there really isn’t any ‘new money’ for schools in the governor’s budget. So far the proposal is to spend almost all of the new money on a partial pay-down of those deferrals. That could be a good thing, but it will not result in new money at the local level.”
CSBA’s previous updates on the 2012-13 state budget are collected here.