As everybody knows or should know, the albatross on the much-delayed compromise state budget which finally passed last month is a $41.6 billion shortfall which, among other things, impacts the budgets/operations of school districts highly dependent on the state for its funding such as Downey Unified (DUSD).For a long time, DUSD had been on tenterhooks about the outcome of the excruciatingly frustrating state budget process which in any case has been historically, deplorably erratic anyway. When it was finally resolved, it came of course at a price. Still, a collective sigh of relief could be heard loud and clear across the state. But at bottom it comes as hardly reassuring to school administrators and budget watchdogs. Consider the state's indicated course(s) of action to address the shortfall: 1) Borrowing $5.4 billion from 'securitized' state lottery receipts (via private investment funds); 2) revenue increases ($12.5 billion), through a personal tax increase of 0.25 of a percentage point, a sales tax increase of one percentage point, an almost doubling of the vehicle tax to 1.15 percent, and a reduction by $210 of the dependent tax credit ; 3) expenditure cuts of $14.9 billion (according to a funding reduction formula under Prop. 98) to the K-14 program; and 4) anticipated federal stimulus funds amounting to about $7.9 billion. As structured, the borrowing aspect especially hinges on a lot of if's. For instance, as asst. superintendent/business services Kevin Condon pointed out, the desired propositions must first be approved by the voters, after which investors must be found willing to finance them. "This is a tall order right there," he said. Thus, if the five propositions, especially the linked Props. 1-A (state's rainy day fund) and I-B (restore mental health/etc. funding), as well as I-C (borrowing from state lottery receipts) were to fail on the special May 19 ballot, the whole budget will fall terribly out of whack yet again, making another restructuring a foregone conclusion. In any case, the prognosis is that, because of the worsening economy, the state may further be bedeviled by an additional gap of $8 billion. The state will address this situation in its May budget revise, after tax receipts will have been tabulated. Anyway, because the district has been frugal and operated on a lean budget these past few years, said Condon, the district has been able to maintain at least a 5 percent reserve (the state mandates 3 percent). "Out of about 300 school districts in the state, DUSD ranks 5th or 6th in lowest administrative expense," he said. Yet, unavoidably, because per pupil revenue base has decreased from $5,800 in '07-'08 to an adjusted $5,580 for '08-'09, the district has had to draw down on its reserves to meet fiscal demands. Further savings have been realized from cutting some support services, as well as a freeze on purchases of equipment, such as trucks, lawn mowers, forklifts, etc., not to mention previous classified staff cuts. Additional cuts apply also to travel, conference/convention attendance, school supplies, and miscellaneous items on departmental budgets. The solid positives for the district, in the meantime, include: 1) no pink slips have been issued (i.e., "We have avoided permanent teacher layoffs"), which cannot be said of other districts; 2) Student enrollment in general has leveled off, instead of declining; and 3) the district was afforded more local control/flexibility regarding certain of its categorical programs (school and library improvements, arts and music, professional development block grants, GATE/Gifted and Talented Education), and teacher credentialing programs can be shifted around. At any rate, the next district budget study session is scheduled for the last week of April, when ideas and suggestions will be solicited from all concerned parties, including members of the community, before a practicable and realistic district budget is prepared. "We're really looking at a three-year budget adjustment process here," Condon said. "I call it our long-range stabilization plan." ********** Published: March 20, 2009 - Volume 7 - Issue 48