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Report; SD Schools facing ‘really, really tight’ finances

The San Diego Unified School District Board of Education voted 3-2 Tuesday night to approve a state-mandated financial report that described perilous conditions for the immediate future.

Despite reducing spending the past several years, the next two fiscal years will be “really, really tight,” said James Masias, the district’s chief financial officer.

The report, to be sent to the San Diego County Office of Education next week, is a statement on whether the district can meet its financial obligations for the current fiscal year and the two that follow.

After required reserves are figured in, the ending balance in the district’s unrestricted general fund account in the current fiscal year is projected to be $20.1 million, but only if rigid spending controls are followed, according to Masias.

The next two years, the ending balance drops to just more than $700,000 for an unrestricted general fund budget of more than $700 million, Masias said.

End-of-year surpluses are usually well into the millions of dollars, even in lean times. The San Diego district is the second-largest in California, and total spending has topped $2 billion in the recent past.

School district budgets are divided into unrestricted funds, which can be spent as the district deems fit, and restricted funds, which includes federal and state money for specific programs.

The restricted fund ending balance at the end of the 2011-12 fiscal year could drop to $81,034, according to Masias. That compares to $34 million this year.

Most of the difference comes from projections of lower revenues.

“We’re getting down to the skeleton — we’re hitting the bone marrow, so to speak,” Masias said.

Those skimpy surpluses also assume that in future years school board members will re-implement half-day kindergarten, eliminate vice principals and librarians and increase class sizes for the first through third grades to the maximum allowable.

Board member John DeBeck, who voted against approving the report, said the “assumptions might be flawed.”

Katherine Nakamura also dissented.

“We’ve again and again failed to balance the budget responsibly,” Nakamura said. “I think we’ve painted ourselves in a corner.”