Accelify Blog

Many Sacramento-Area School Districts Face Money Woes (CA)

June 30, 2010

Nearly every Sacramento County school district and some in Placer, El Dorado and Yuba counties are in financial trouble, state officials announced Tuesday.

They join a growing number of school districts in California facing large budget deficits.

"Schools today are facing a period of unprecedented fiscal crisis," said state schools chief Jack O’Connell. The number of California school districts on fiscal shaky ground has increased 38 percent since January, he said.

O’Connell blamed the districts’ financial troubles on inadequate state funding because of the budget crisis. Public education in California received $17 billion less in state funds than anticipated over the past two years, he said.

In the 2006-07 school year, 22 California school districts made the state’s fiscal early-warning list. In January this year that number grew to 126. Today it is 174, making up 16 percent of the state’s public school system.

School districts are put on the watch list when they are unable to meet their financial obligations over a two- or three-year period.

If they can’t pay the bills and maintain state-required reserves for this schoo l year or the next, they move into negative certification. In the Sacramento region, Natomas Unified is only district with that designation.

The twice-yearly reports offer a "snapshot of our schools’ financial health," O’Connell said Tuesday. "The picture for our schools is bleak."

Sacramento County’s biggest districts – Elk Grove Unified, Sacramento City Unified, San Juan Unified and Twin Rivers Unified, along with Folsom Cordova Unified – are each making repeat appearances on the watch list. All five were on the list issued in March.

Joining the list this month was tiny Robla School District, which includes six elementary schools in the city of Sacramento. It last appeared on the list during the 2007-08 school year.

Natomas Unified is on the state’s list of 14 school districts with a negative rating. Its finances must be monitored by the county Office of Education’s staff. Natomas Unified has been under the watchful eye of a consultant that the office contracted with in September.

Natomas interim Superintendent General Davie isn’t surprised to see the district on the negative list for a second year.

"The district didn’t get into this situation in one year," Davie said. "It took multiple years. And it will take multiple years to get out."

Davie said the district’s precarious financial condition is due to a "perfect storm" that included a loss of state funding, declining enrollment and the fact that budget cuts weren’t made soon enough.

He said Natomas Unified lost about $10 million a year in state funding in recent years and had to cut $12 million from last year’s school budget.

The cuts resulted in a balanced budget for next year, Davie said. But the district couldn’t show the required reserves for the 2011-12 school year, resulting in the negative rating.

"We’ll have to go back for concessions and look for ways to cut costs," Davie said. "We can look forward to that for the next three or four years."

The former San Juan Unified superintendent has been Natomas’ interim leader since the departure of Steve Farrar in November. He will relinquish the reins of the district to newly hired Superintendent Bobbie Plough in July.

"I came out of retirement to dismantle a system, and that is very painful," Davie said. "I’m praying that our lawmakers are able to reverse the trend."

El Dorado and Placer counties actually have fewer districts on the early-warning list than last year – each reducing their number by half.

In El Dorado County, Buckeye Union Elementary, Gold Trail Union Elementary and Gold Oak Elementary school districts remain on the list this year.

In Placer County, Placer Hills Union Elementary, Rocklin Unified and Colfax Elementary remain on the list.

Making its first recent appearance on the list is Marysville Joint Unified School District in Yuba County.

No school districts in Yolo or Sutter counties were designated.

Every district wants to avoid the final stage in the process: a state takeover. A district that has exhausted all options to pay its bills is eligible for a state loan.
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Its board and superintendent are replaced by a state-appointed trustee, and the district remains under state control until the loan is paid off, or sometimes longer.

O’Connell expressed concern that more state districts would be added to the watch list if the state continues to cut education.

"Cuts aren’t in the best interest of our students," he said. "There have been cuts upon cuts upon cuts to public education."

"These cuts, simply put, are heartbreaking."