Uncertainty in State Budget leaves ABC’s Budget in flux

By Jerry Bernstein

Criticizing the State Legislature for not facing up to the continuous state budget crisis, ABC Superintendent Gary Smuts told the Board of Education at its Oct. 19 meeting the budget signed by the governor this month is already 10 billion in deficit. The new governor, whoever she or he might be is gong to have to grapple with some very difficult issues. He said some of the budget issues are still very fuzzy. “This is a terrible condition the state is in and terrible fiscal behavior on the part of the leaders of California.”
ABC Chief Financial Officer Toan Nguyen said the budget signed by the governor has gone deeper into deficit and is now out of balance by $12 billion. “The budget defers a lot of problems into future years,” he asserted. He said the budget restores some of the cuts to education that was made in May but defers payment until 2011-13. We may get paid next year. He said ABC would have to deal with a 6.5 million deficit in the current budget.
Nguyen said the District would deal with that by implementing previously passed measures. This includes continuing four furlough days [$2,160,000], transfer from Health Benefits/Workers Compensation funds [655,000], and the Adult Education Fund [$1 million], plus additional flexibility transfers [$1,565,000]. Increase class size K-3 from 22 to 24 [$460,000], reduce administrators by 2.5 positions [$280,000], reduce MOTF staff by three ]$200,000] and reduce classified support staff by three [$180,000] that will leave us ending with a balance budget if the state comes through with the money.
Going into 2011-12 we will have a structural deficit of $10.3 million. He said this would probably change with the coming in of a new governor.
He said new revenues include Education Job Act, $3,877,000 [one time only], ARRA-Final 10 percent, $990,000 [one time only], and Mandated Cost, $650,000 [one time only], leaving a project ending balance June 30,2011 of $10,217,000.
Board President Celia Spitzer asked what does the District do if the state continues to defer payment. “What do we do? We still have to pay our bills. How do we do that? Do we borrow money?”
Nguyen replied, “We would issue Trans [short term, tax exempt securities] the Board previously approved to pay bills and payroll.” He said the county has an emergency fund the District can borrow from. It can also borrow from a fund within the District. He said, “We work closely with the county on cash management.”
Dr. Smuts said both the District and County have to manage cash flow to the rule of auditing practices. “The state has no such obligation. We are constantly on guard to the inconsistencies of the state’s lack of common honest practices.”