The Denair Unified School District may be on the brink of insolvency, as the district is unable to meet its financial obligations for the current school year.
At a special school board meeting held Thursday night, Assistant Superintendent of Business for the Stanislaus County Office of Education Don Gatt and School Business Consultant Teresa Ryland expressed concern over DUSD's budget for 2012-13.
Based on the district’s multi-year projections, reserve levels, deficit spending and continuing declining enrollment, the Stanislaus County Superintendent of Schools made the finding that DUSD may be unable to meet its financial obligations for the current and two subsequent fiscal years.
“Given a significantly lower cash balance than last (year) and continued deficit spending, a large budget reduction needs to happen within the next few months,” said Ryland. “Without these large reductions, the district will have a difficult time staying in business.”
DUSD projected to deficit spend its total General Fund of $156,840, representing 1.69 percent of the budgeted total expenditures and transfers out of 2012-13. In addition, the district’s multiyear projections reflected surpluses of $90,331 for 2013-14 and $267,000 for 2014-15. The county's analysis of DUSD's finances was vastly different.
The district has also issued varying types of debt over the past several years.
By law, the County Office of Education is required to step in and assist if, “a school district may be unable to meet its financial obligations for the current or two subsequent fiscal years."
According to Gatt, another ongoing issue is the declining enrollment for the district over the past years.
“Continued declining enrollment will further reduce revenue should ADA not materialize,” said Gatt. “We hope the district understands the seriousness of this situation and is committed to resolving its budget shortfall.”
Since 80 percent of the district’s budget is based on salaries and statutory benefits, immediate cuts and possible layoffs will be necessary, said district administration.
“Had we planned ahead of time, we wouldn’t have been in this situation,” said DUSD Superintendent Edward Parraz. “We put all our eggs in one basket and hoped that if Proposition 30 passed, it would solve our budget problems. Based on the budget analysis, we regretfully found out that even if Prop 30 passes, we will not have enough for our budget. Trigger cuts will have to be necessary.”
DUSD Board members will discuss budget reductions at their Nov. 8 meeting. The board meeting will begin with closed session at 6:30 p.m. and open session at 7:30 p.m. The meeting will be held in the Board Room next to the district office at 3460 Lester Rd., Denair.
“We have all the information in front of us,” said Parraz. “All we have to do is make a decision. It’s going to be a tough road ahead of us but we’ve worked well with our bargaining units and there’s no doubt that we will get through this.”