The California Department of Education on Tuesday announced “since the beginning of this year the number of school districts that may be unable to meet future financial obligations…has increased by 38 percent.” Of the 174 school districts, officially known as local educational agencies, or LEAs, which are on the financial watch list, 11 are in Orange County. But, Los Alamitos Unified is not one of them.
The California Department of Education semiannually prepares Interim Status Reports on the financial status of the state’s 1,077 LEAs. The reports include a certification of whether the LEA is able to meet its financial obligations. The certifications are classified as positive, qualified, or negative. A positive certification is assigned when the district will meet its financial obligations for the current and two subsequent fiscal years. A qualified certification is assigned when the district may not meet its financial obligations for the current or two subsequent fiscal years. A negative certification is assigned when a district will be unable to meet its financial obligations for the remainder of the current year or for the subsequent fiscal year.
The statewide data released on Tuesday, called the second Interim Status Report for the school year ending yesterday, is based on actual financial information through January 31, 2010, and projections through June 30, 2012. The projected information includes an estimate of the district’s budget for the 2010/2011 school year. The Los Alamitos Unified School District Board of Education last week approved the official deficit budget for that year. (see related article below)
As reported in our earlier article, even though the Los Alamitos School District plans to operate the current school year by drawing down reserves, the district’s financial health is good enough to keep it off the state’s financial watch list. Darren Dang, Director of Business Services for Orange County Department of Education, told www.OC180NEWS.com “At second Interim, we had 11 qualified districts out of 27 school districts in orange County.” None of the county’s districts were listed as negative, but 11 qualified out of 27 represents about 41% of all OC districts, verses 16% for all of California.
According to the state’s data, the following Orange County LEAs “may not meet their financial obligations for the current or two subsequent fiscal years”— Anaheim City (Elementary), Buena Park Elementary, Capistrano Unified, Centralia Elementary, Fullerton Elementary, Garden Grove Unified, Huntington Beach City Elementary, La Habra City Elementary, Saddleback Valley Unified, Santa Ana Unified, and Westminster Elementary.
"We are seeing an alarming spike in the number of school districts that are having trouble meeting their financial obligations,” said State Superintendent of Public Instruction Jack O'Connell. “Schools on this list are now forced to make terrible decisions to cut programs and services that students need or face bankruptcy.”
All school districts have been adversely affected by elimination of one time federal stimulus funds. “It’s distributed based on the funding formula,” said Dang. “It’s pretty equitable.” So, the reduction of stimulus funds does not explain why some districts are in financial trouble and others appear to be managing through the cut back in state funding.
According to Dang, the reasons some districts are in trouble vary from district to district. “Some of the larger districts have a little more flexibility, some districts have been making budget cuts throughout the year, so they’ve built up some reserves, others may not have sufficient reserves to weather the storm,” said Dang. “Other districts have had declining enrollment,” which for some districts is a significant factor.
Labor contracts are another reason why some districts are in trouble. “In many of the cases {of qualified status} the districts have not reached agreement with the bargaining units. So a lot of the budget reductions were pending negotiations,” said Dang. “That’s why the districts had to self-qualify.”
In Los Alamitos, the district entered into the current financial storm with substantial financial reserves. Further, the district has been cutting expenses and negotiating with its union since the crisis began during the 2007/2008 school year. Those negotiations produced substantial savings in the current budgets.
Also, Los Alamitos has not had a decline in enrollment, in part because about 20-25% of district students are imports from outside the district’s boundaries. According to data supplied to www.OC180NEWS.com, district enrollment for the school year ended June 30, 2009 was 9,478. The estimate of enrollment for the year ending June 30, 2010 is 9,582, and the district is forecasting enrollment of 9,491 for the 2010/2011 school year.
