With budgets, as with the weather, the problem's not just the heat

July 17, 2012

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Seth Rosenblatt

Although not the most familiar refrain to West Coast natives, residents in the rest of the country know that while the summer heat may be tough to take, it’s actually the humidity that truly makes us uncomfortable. Through the last few years of state budget crises, school boards across the state have adopted an analogous mantra: “It’s not just the cuts, it’s the uncertainty.”

Of course, cuts to already underfunded schools are both terrible policy and painful dilemmas for local districts. But school board members who take their responsibility very seriously know that making difficult budget choices is part of the job, and most do everything possible to minimize the negative impact on their students.

But the problem does not end there. If local school boards had some certainty around budget cuts, we would at least know our target. It would be painful, but reasonable minds could find the “least worst” solution. However, our dysfunctional state system for funding education delivers us a one-two punch – we know there will be cuts (we’ve had them for the last four years), but we rarely know the magnitude.

Why? Before last year, it was due to two main reasons: (1) The Legislature rarely finished its budget on time, and (2) even with an established budget, it chronically overestimated the state’s financial health, instituting cuts midyear. This is the “humidity” for a school district – a wet blanket that weighs down its ability to make optimal decisions because it doesn’t even know its target.

This year the Legislature passed its budget on time, largely thanks to Proposition 25, which allows for a simple majority to pass a budget and withholds legislators’ pay if it isn’t on time. Yet despite this on-time budget, we ironically have less certainty than ever. The budget has a contingency in case the governor’s tax measure does not pass in November – the “trigger cuts” to education. Our year will be almost halfway over when we know if these cuts will be triggered, long after our ability to make any substantive changes for the school year. The biggest expense in a school district is people – teachers and other employees. There are very few levers a school district can pull to reduce its expenditures in the middle of a school year, and many districts have already decimated their reserves from the prior four years of cuts.

So, how have school districts planned their 2012-13 budgets with this wet blanket of uncertainty? A survey done by the San Mateo County School Boards Association showed that most of the Revenue Limit districts in the county have adopted a different mantra: “Fool me once, shame on you … fool me twice, shame on me.” In fact, we’ve been fooled multiple times, so many districts have budgeted assuming the tax measure will indeed fail, and have already made cuts locally in anticipation. Some districts also believe that even if the tax measure succeeds, greater cuts will happen than what is currently outlined in the budget because of the state’s track record of overestimating its financial health.

But not all districts have the reserves to take this conservative approach. According the California School Boards Association, almost 20 percent of all school districts in the state have a “qualified” or “negative” certification from their second interim report this past spring, meaning they may not, or cannot, meet their financial obligations through the next three years. These districts will be forced to make massive cuts and/or roll the dice hoping that the tax measure will pass. If it doesn’t, we will see many more districts across the state facing negative certification or the possibility of state takeover. Even within our county (San Mateo), at least one school district has already negotiated its own automatic trigger cuts with its labor groups (including reductions in salaries and a shorter school year) if the state tax measure fails.

In any case, as we enter the summer months, I hope that our state legislators realize that local school board members would say that if they had to turn up the heat on school districts, we would at least prefer that it be a dry heat.

Seth Rosenblatt is the president of the Governing Board of the San Carlos School District. He also serves as the president of the San Mateo County School Boards Association and sits on the executive committee of the Joint Venture Silicon Valley Sustainable Schools Task Force. He has two children in San Carlos public schools. He writes frequently on issues in public education, in regional and national publications as well as on his own blog. In his business career, Seth has more than 20 years of experience in media and technology, including executive positions in both startup companies and large enterprises. Seth currently operates his own consulting firm for technology companies. Seth holds a B.A. in Economics from Dartmouth College and an M.B.A. from Harvard Business School.

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