Denair Unified School District is part of a California Department of Education list of 127 school districts with “serious financial challenges,” meaning they either will not or may not meet financial obligations this year or in the next two years.

The CDE’s First Interim Status Report for 2011-12 indicates that 1 in 3 public school students in the state attend a district in financial jeopardy. There are 1,037 school districts or local education agencies across California.

"The financial emergency facing our schools remains both wide and deep,” said State Superintendent of Public Instruction Tom Torlakson. “The deep cuts made to school funding —and looming uncertainties about the future — are driving school districts to the brink of insolvency. Plain and simple, our schools need new revenues to get back on solid financial ground.”

The CDE report breaks districts’ financial health down into three financial categories. The first being a “positive certification,” in which the district is in a healthy financial status for this year and the next two years. A “qualified” certification is when a district may not meet its financial obligations for the current or two subsequent years. This certification allows the district’s county office of education to provide assistance. Denair Unified is in the group of qualified certification districts and it is the only district in the Turlock area.

A “negative” certification — the most serious of the classifications — is assigned when a district will be unable to meet its financial obligations for the remainder of the current year or for the subsequent fiscal year. This certification means the district’s county office of education may intervene in the district’s finances.

The CDE reports that Denair’s total budget for this year is $10.1 million. According to DUSD Assistant Superintendent of Business Services Judy Sylvester, the district will likely have a 2.33 percent reserve in the 2012-13 school year, less than the state required 3 percent needed to be considered solvent or healthy.

However, Sylvester indicated the 2.33 percent reserves may not paint the entire picture of financial health. At first interim the district had expected to take trigger cuts of about $294,000 with sagging revenues from the state budget. But Sylvester said the majority of those cuts never materialized.

“The difference between 2.33 percent and 3 percent is $65,287 so we are okay, given that difference,” she said. “I am working on the second interim report but given the uncertainty (with the state budget) we don’t know exactly what our budget will look like yet.”

In Stanislaus County there are five districts in the qualified group — not counting Denair: Modesto City High, Modesto City Elementary, Knights Ferry Elementary, La Grange Elementary and Riverbank Unified.

There are no Stanislaus County schools in the negative category.

The number of districts in qualified or negative status declined slightly from last June when the Second Interim Status Report for FY 2010-11 was issued, but overall remain at historic highs. As late as 2006-07, only 22 districts were in negative or qualified status at any time during the fiscal year.