On Wednesday, June 22nd, at 7:00 p.m. in City Hall, the Piedmont Unified School District (PUSD) administration will ask the Board of Education to approve a proposed 2010-11 budget with multi-year budget projections reflecting an $878,000 shortfall in FY 2013-14.

The budget includes a warning:  “Criteria and standards that are “Not Met,” and supplemental information and additional fiscal indicators that are “Yes,” may indicate areas of potential concern for fiscal solvency purposes and should be carefully reviewed.”  (At p. 5-7.)  These areas of concern include:

• The District provides post–employment benefits (other than pensions) which are lifetime benefits and funded on a “pay-as-you-go” basis.
• Projected reserves do not meet minimum requirements
• There are ongoing general fund expenditures in excess of 1% funded with one time resources. 
• The District has long-term (multi-year) commitments or debt.

The year 2011-12 budget is balanced, and there are sufficient reserves to meet obligations for 2012-13.   The $878,000 shortfall occurs in 2013-14. 

Parcel Tax Funds

Historically funds are set aside in the first year of the parcel tax to support programs in the last year of the parcel tax.  No portion of the Measure B Parcel Tax funds ($8.5 million annually) have been set aside for future use: the balance in the Parcel Tax reserve account is $19.    The Citizens Advisory Committee has advised a transfer from the general fund to this account in order to provide funding for programs in 2013-14.  (At p. 95-96.)  The proposed 2011-12 budget does not include the recommended set aside.

Regarding the temporary Emergency Parcel Tax Measure ($950,000 per year for 3 years), the proposed budget indicates the District will not begin discussions regarding how to offset the loss of funding from this parcel tax until after it expires on June 30, 2012.  (At p. 15.)

Forging Ahead

Despite these issues, the administration is recommending the Board “stay the course” with the multi-year budget plan it has developed.  The Recap of a prior May 25th Board meeting noted, “The Board will need to adopt a budget by the end of June which reflects a balanced budget for 2011-12, and strategies for addressing projected shortfalls in 2012-13, and 2013-14.”.

After adoption of the 2010-11 budget by the School Board (agenda item VII-A), the following agenda item (VII-B) will offer the public the opportunity to speak on 2011-12 budget priorities and program reductions, including 6-12 Library Support Services, K-12 Counseling, K-12 Administration, K-5 Music, Reading Resource, Math/Science Enrichment, Librarians, class size, furlough days, reserve levels, parcel taxes, student and/or professional development, and fund raising activities.  The Board will discuss priorities “in anticipation of . . . additional Parent Club fund-raising in 2011-12” and provide direction to staff.  (6-22-11 Board Agenda, p. 2.)   This item is expected to be heard at approximately 8:35 p.m.

Specific strategies for resolving the projected $878,000 shortfall are not included in the proposed budget prepared by staff.  Likewise, a specific amount of ongoing 2011-12 reductions necessary to balance the budget by 2013-14 is not estimated. 

The Recap of the May 25th meeting noted that “If the tax revenue extensions are not passed, the District may be looking at mid-year cuts or additional deferrals.”  Due to compounding, immediate ongoing reductions can have greater impact on the 2013-14 deficit than one-time reductions or reductions in later years.

Salaries and Benefits

While State revenues are expected to be stable, PUSD salary and benefits are projected to continue to rise, despite recently negotiated collective bargaining agreements.  Salaries and benefits represent all but 12% of PUSD expense.  (See p. 13.)  The new agreements include:

• 15% increase in post-employment benefit increases in 2012/13 and 2013/14
• 1.5% increase in total certificated and classified salaries for step and column in 2012/13 and  2013/14
• 1.0% decrease in total compensation in 2011-12 (includes 0.3% increase in health and welfare benefits and 0% increase in step and column, benefits and longevity pay.) (At p. 35.)

Link:  Highlights of Budget Assumptions

Link:  Priorities for Any New Funding

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