High school district board mulls potential future of financial problems

KING CITY - Board members and staff discussed another possible period of financial problems for the high school district during their latest board meeting last Wednesday. The financial troubles, at this point only a projection into upcoming years, include the possibility of the district needing to take a second loan from the state.

The South Monterey County Joint Union High School District trustees analyzed the district's multi-year projections as part of the 2011-2012 Third Interim Report. The report noted that in the 2013-2014 school year, the district's structural deficit will be $1,933,632. The problem would grow, when in 2014-2015 school year, the structural deficit is projected to be $2,217,728.

"The multi-year projections are based on what we know now and if we don't do anything," said Board President Mike Foster.

The board agenda packet said, "Although great strides have been made in reducing the expenditures of the district, the Federal, States and local economies, as well as the continued decline in enrollment, result in revenues continually being at risk. Results of negotiations for the 2013-2014 fiscal year will have a great impact on the ending balances in 2013-2014 and subsequent years and will determine if the district will need an additional loan."

"We're going to run out of loan possibilities," said Trustee Bob White. Regarding the district running out of funds, and the possibility of needing another loan, White asked, "What do you think the possibilities of that are? And what steps are we taking?"

State Administrator John Bernard started his response by noting, "The current employee contracts that we have now are ending in the 2012-2013 school year. The district has already sunshined what our proposal is, and what our proposal is, is we have to live within our means."

Bernard went on to say that the deficit on the state and federal level means decreased money coming to the district, to the tune of 78 cents on the dollar the district is entitled to. "We still have to live within our means."

Bernard said, "When we did negotiate the first contracts back in 2010, had the state budget been stable then, we would not have this problem now." He explained the unstable state budget means financial problems every six to eight months.

Bernard noted of the amount of money not being paid to the district by the states, "If we were getting what we're supposed to be getting, we would have $3 million a year more than we're getting right now. We wouldn't have to worry about Alejo giving us help on our loan. $3 million would put us in a much better situation."

In regard to the possibility of taking a second loan, Bernard said, "The idea of getting another loan, I don't think is very strong."

Trustee Deborah McAlahney-Dodson said, "If it came to that point, then the legislature would have to decide what to do, because they're part of the reason we're getting to this point. We're doing a lot to not be here, but they're doing other things to offset all the things we're doing."

The first state appropriation loan has already put the district on a bad footing, needing to pay back over five percent interest every year. "The state is not giving us any forgiveness on anything else," said Bernard. "We're being treated like every other school district in the state, even though we have this big issue of paying back 5.4 percent interest, when other districts under state loan are paying under two percent."

A second loan could have similar interest rates. The first loan's rates have caught the attention of Senator Anthony Cannella (R-Ceres), who introduced a bill to restructure the loan and reduce the district's annual interest payments.



For the complete article see the 06-20-2012 issue.

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