The interim budget report presented at last week’s meeting of the Santa Monica-Malibu Unified District School Board seems to indicate budget trouble ahead.
With $62.9 million in revenues and an anticipated $65.7 million in expenses, the local school district will show a net loss of $2.8 million at the end of fiscal year 2001/2002. The general fund will drop from $8.5 million to $5.7 million.
The district will be okay for this year. Next year is another matter.
Per projections, the FY 2002/2003 profit-and-loss statement will show a loss of $4.5 million. To enable the district to maintain the 3 percent reserve fund required by the county, $2.3 million will have to be cut.
The net loss figure for FY 2003/2004 will rise to $5.6 million. Per the financial statements, the entire general fund budget would need to be cut to enable the district to maintain the 3 percent reserve. And even if the entire reserve fund were to be expended, the school district will still be well into the red.
“I am acutely aware that this is not a positive fiscal picture for the next two years out,” said Superintendent John Deasy.
He promised curriculum at the schools would not be cut.
“If we do not want programs reduced, we could increase revenues.”
The board will also be losing an unspecified amount of FEMA money. Jean Gebman chairs the oversight committee for Proposition X, the $42-million school construction bond measure passed a few years ago
“Where [the FEMA loss] will become germane is the Malibu High School project,” Gebman later told the Gazette.
“In order to accept the bid for the Malibu High School work,” he said, certain assumptions were made about where the money to pay off Proposition X would come from. If FEMA falls through, it will come out of the General Fund.
Another unanticipated little wrinkle was an extra $500,000 worth of Workers Compensation expense-for retroactive adjustment.
“We were expecting [a premium of] $300,000,” presenter Beth Connors said. “Unfortunately, it came in at $792,000. We were quite astounded.”
Gebman described the Workers Comp issue as too many good years followed by one humongous bad one.
“And now they’re saying ‘oops, you’re not getting a rebate,’ and the expense is more than we were planning.
“But that’s not as serious as the budget disconnect the school board faces over the long run,” he said.
The district can count on continuing support from its constituent cities. Santa Monica contributes $3 million in unrestricted funds and an additional $500,000 for a joint-use agreement. Malibu contributes $35,000. Santa Monica College pays $800,000 per annum for the lease of the Madison campus.
“But there are a couple of areas where we’ve got expenses rising,” said Gebman. “And this year, the state is not in a position where the state is going to be able to do as much.”
The real problem the school district faces is salaries, Gebman said.
“I hate to say it-but the teachers’ got real good [12 percent] raises a year and a half ago,” he said. “If you go for four years without raising salaries, you’re going to have a strike.”
This is compounded by the school’s battle to reduce class size.
“We don’t have an adequate number of teachers, and we need to raise salaries to attract more qualified teachers,” said Gebman. “[Deasy’s] going to earn his pay.”
One solution being looked at is a parcel tax and/or a construction bond measure on the November ballot. But, Gebman cautioned, the city can handle only so many bond measures. District voters have already passed one major bond issue this year-Santa Monica College’s $160 million Measure U, which was passed earlier this month.
What is needed, he said, is more collaboration. “It’s going to take a combination of actions by the voters by the college, by the Legislature and by the City Council over a period of time.”
Repeated phone calls to school board officials had not been returned when this article was posted.