Mt. Diablo USD News Update
Where Kids Come First
May 20, 2011
MAY REVISE QUESTIONS
We've been getting some questions related to the Governor's most recent May Revision. Below are questions and answers to some of the most important issues. Much of the information in this News Update has been supplied by those who work with the District as budget advisors as well as our attendance at the School Services of California workshop on the Governor's May Revision today.
Does the May Revise provide more money for K-12 education above his January proposal?
Yes, it provides $3 billion more to Prop 98 funding above Governor Brown's January budget proposal.
Then why is everyone saying we aren't going to see any additional money at the local level?
Because the Governor proposes using almost all of the new money ($2.88 billion of the $3 billion) to pay back the K-12 and community college deferrals. Over the past several years, the budgets approved by Governor Schwarzenegger have included deferring payments to K-12 districts and community colleges. In Governor Brown's January budget proposal he continued this trend by recommending that the payments that we were supposed to receive in April, May and June of this year be deferred to July 2012. This would have deferred these payments a full 13 to 15 months which would have created significant on-going cash flow issues for school districts. In the May Revise, Governor Brown proposes taking some of the increased State revenues to basically put the payments back into the original time frame. Therefore, we don't receive any additional funding it just helps with cash flow.
Most of the remaining portion of the $3 billion increase (about $221 million) will go to schools (on a yet to be determined formula) to cover the costs of the Governor's new proposal to shift all AB 3632 mental health costs from counties to schools. At this time, it is not clear that the level of funding MDUSD will receive from this new funding mechanism will match the $4.4 million in services our students received through AB 3632 funding.
In the Mt. Diablo Unified School District our best estimate is that this permanent shift of the responsibility for mental health services to the District will create another unfunded mandate in the amount of $3.2 million per year. Our estimates indicate that the amount that will be provided by the State for mental health services will be about $37 per ADA or $1.2 million. Given that the costs associated with MDUSD students for mental health services was $4.4 million this year, the total unfunded mandate is expected to be $3.2 million annually.
So the May revise basically proposes giving school districts the same overall funding levels that were proposed in the January budget?
Yes.
How much is that again?
Essentially, funding is flat year-over-year, that is, the Governor proposes to fund schools at the 2010-11 spending levels. This year, MDUSD received $5,206 as our Revenue Limit per student. Again, the shift of the AB 3632 responsibilities and funding from counties to school districts has not been clearly articulated. What is clear is that the District now bears the financial responsibility for providing mental health services for students and the State is not going to provide the District with funding that is adequate to do so. This is yet another unfunded mandate.
So what happens to the projected $349/ADA cut that the Contra Costa County Office of Education recommended districts use in their Second Interim Budgets in March?
It's still in play. As you recall, the $349/ADA cut estimate was a best guess as to what the total K-12 cut could be, should the tax extensions fail. The Governor's May budget continues to rely upon almost the same level of tax extension revenues as proposed in January. He still needs the same number of Republican votes (four) for his new proposal as his January budget proposal, and thus far he hasn't been able to secure those votes. Many people are recommending that districts continue to budget for the same level of downside risks due to the possibility that the Legislature may fail to extend State taxes as required by Governor Brown's budget proposal.
So should we amend our 2011-12 budgets to reflect any changes proposed in the May Revise?
No. We are being advised to make no changes in budget planning and assumptions until we have more information and certainty as to what the final budget will be. It continues to be a highly volatile and uncertain budget for 2011-12, one dependent on too many variables.
Isn't School Services of California advising school districts to budget to the Governor's May Revise? Why would the Mt. Diablo Unified School District budget more conservatively?
School Services of California has said to budget to the Governor's May Revise, but don't spend the money. We are recommending to the Board to use the more conservative numbers that are based on the State taxes not being extended and if they are extended, we will add expenditures back into the budget. We are required to submit a balanced budget in June 2011. We likely won't know the outcome of the efforts to extend State taxes for months. If the efforts to extend State taxes fail, the cuts would likely come to the District by way of mid-year budget cuts. School districts determine their staffing levels prior to the beginning of the school year and it is almost impossible to achieve significant budget reductions mid-year, which would place the District in a very poor financial position if mid-year budget cuts become necessary.
Isn't this advice counter to what the Governor and Department of Finance staff suggested when they strongly encouraged districts to build budgets based on the May Revise number of $52.4 billion (a $3 billion increase)?
The administration sent a decidedly mixed message. On the one hand they want to avoid the scenario where they encourage school districts to begin dismantling education before we know a final outcome. On the other hand, if you read the May Revise documents carefully, it is clear that the additional $3 billion would not increase local spending levels over January. Furthermore, other parts of the budget documents as well as statements by both the Governor and his staff continue to reference the possibility of up to an additional $5 billion cut to schools should the tax extensions fail and an all-cuts budget results.
We are being advised to stay the course until we have more certainty. At a time when many school districts across the State are filing qualified and negative budgets and some districts are even facing State takeover, we are not comfortable gambling with the future of our students.