The Stanislaus County Office of Education is stepping up to help the embattled Denair Unified School District deal with its cash flow problems by issuing a $1.1 million loan.
After the potential intervening of the state Financial Crisis and Management Assistance Team last year, Denair Unified has managed to stay on a path towards financial recovery and the loan from the county is a step that could place the District in a healthier fiscal state in the long term. However, the District is far from being self sufficient and according to superintendent Aaron Rosander, the threat of a state takeover is still a possibility if the District is not methodical and intelligent in its spending.
“I would say the threat is still there, but not nearly as loud or as dangerous as it once was,” said Rosander.
While the District’s cash flow problem is just one aspect of the ongoing financial crisis, like many other districts in the state DUSD has suffered from payment deferrals at the federal, state and local levels. As a small district with tight funds, DUSD relies on these apportionments to pay its bills. DUSD needs the loan from the county to compensate for the time between the sporadic payments unlike other, larger districts which often have enough savings to get through rough times. SCOE is lending DUSD the money with an interest rate of .949 percent, which is the amount the county would have earned on the sum.
“It’s a bargain basement rate. It ends up being a very nice favor they are doing for us by that rate,” said Rosander.
While the loan will allow the DUSD to make payments in the subsequent school year, balancing the District’s budget is the ultimate goal. The fiscal recovery plan anticipates that DUSD will be solvent by the end of the 2015-2016 school year, but that will be contingent upon two main factors: student enrollment and paying off loans. Enrollment has been declining in DUSD for the past several years, which when paired with layoffs, does reduce overhead and help bring spending in line with revenue. However, the long term goal is to draw students to the small District which produces not only a better educational experience for students, but more money and better fiscal health for the District.
“While student attendance does not affect cash directly, it would affect the District’s revenue because it generates more money. More attendance means more enrollment which means improved revenue,” said Rosander.
According to its fiscal recovery path, DUSD revenue is anticipated to equal expenditures by the end of the 2015-2016 school year.