School district reserve fund subject of discussion
Plumas Unified School District’s reserve fund was the subject of discussion, yet again, at the October school board meeting.
That reserve, or “rainy day” fund, is vital to the schools, given their complex finances and dependence on the vagaries of the California state budget. The size of the reserve, which this district’s board has set at 45 percent at the recommendation of district administration, is debatable, however.
When asked why she thinks the public has reacted negatively to the reserve, Business Director Yvonne Bales said, “They see money sitting there going unused.” Many parents and teachers have said they’d like to see some of that reserve be used for students in school now, rather than have current programs cut to save for what might happen later on.
The district argues that it’s their job to plan for the future as much as it is to provide for today.
The school administration’s basic assertion is that large, one-time funds like the Forest Reserve, American Recovery and Reinvestment, and State Fiscal Stabilization funds are disappearing.
District officials also look at shrinking tax dollars — down this year by $2.5 million according to Bales. They believe that in the not too distant future, the district will return to revenue limit status instead of basic aid status.
Briefly defined, our taxes give us $4 million more than the state calculates we need to survive. That amount decreases as tax assessments dwindle. Four million dollars has been reduced to $1.5 million this year.
District officials anticipate it will be gone in a few years, if the economy doesn’t pick up.
In fact, this coming year, Bales projects a deficit budget. “That deficit spending means digging into reserves,” she said.
Staffing and facilities are the two areas that are the biggest drain on the budget and for which the reserve will be most necessary.
When asked at what point the district would decide to cut staffing or buildings, Bales said, “It’s up to the board. If we bring in a multi-year projection that says we’re eating up too much reserve . . ..” She added that the administration team would bring recommendations to the board, and that it would be a “joint effort . . . then somebody would say, cut programs and other expenses.”
But, Bales maintained that she’s most concerned with the switch she and superintendent, Glenn Harris, believe is likely from state aid to revenue limit. Revenue limit status funds at $1.00 per ADA (average daily attendance). And, the district’s student population is decreasing, as well.
Bales went on to say that the large reserve is a “protection for our employees,” because “when 80–85 percent of the budget is for staffing, that’s where 80–85 percent of the cuts will come. We don’t want to do that.”
Instead, the reserve would allow them to fill in while normal attrition takes place. At the same time, they could “slowly and strategically reduce staffing.”
This year, after intense pressure from parents and teachers, PUSD added ten sections to schools throughout the district. The added staffing cost for the year was $600,000.
Because they’ve made these “programming choices” this year, staffing has increased resulting in deficit spending. The district received a one-time payment of $470,000 in federal jobs dollars that paid for this year, but they won’t see that money again, said Bales.
As for facilities, she said, “We have an obligation to keep the buildings safe for our kids.” The district has ten buildings that house students, “and they’re old.”
According to Bales, $500,000 is needed for immediate work on buildings, and the deferred maintenance fund only has a total of $800,000 in it. The reserve, then, will inevitably need to be used to maintain aging facilities.
Superintendent Harris has formed a Facilities Advisory Committee to take a strategic look at the district’s buildings. While skeptics have suggested that this is the beginning of the process to close Greenville schools, Bales said, “I’ll tell you up front, it is not a committee for closing schools.”
When contacted, Harris offered a careful explanation, but didn’t avoid the possibility of closing schools in the future. “Local Education Agencies across the state continue to absorb cuts to their state revenues and the negative effects of declining enrollment,” he said. “During these turbulent times, a district’s avoidance of the difficult facility decisions can be costly and imprudent.”
Harris added that facilities decisions must support the needs of the “educational program” for the whole district. If dollars and student numbers are shrinking, facilities must reflect that. “By creating a facilities advisory committee now, we are providing the framework . . . for our district to seek ways to ratchet down our expenditures over time.”