The days when budgetary reserves in excess of 11 percent have faded; those reserves are spent. Months of wrestling with the numbers have not found easier solutions; there will be layoffs at Bret Harte High School in 2013.
That was the stark reality that hit the Bret Harte Union High School District Board of Education Wednesday as a boardroom packed with staff heard of the financial ugliness that’s been brewing for several years.
“I stand before you and say I spent down $1.4 million in reserves” over the past three years, Superintendent Michael Chimente said as he began to present three options the board must select from to maintain district reserves. “I was hoping to ride this thing out.”
That thing Chimente hoped to ride out is the drop in property tax revenues Bret Harte receives in order to educate its students. As what is called a community-funded district, Bret Harte gets the vast majority of its funding from local property taxes, which have steadily declined as the recession has plagued the economy. Also crippling the coffers is the lack of new construction happening in the district, because developer fees the district once took in helped make payments on Certificates of Participation, loans schools can take out to fund new facilities. Those fees were used to make payments on the COPs and then boosted the general fund.
As recently as the 2006-’07 budget year, Chimente said Bret Harte collected as much as $900,000 in developer fees, which were used to make COP payments in the $450,000 range; the rest went to the general fund to support everything at Bret Harte High, John Vierra Independent High and Vallecito High, the district’s alternative high school.
In 2012, only about $54,000 in developer fees were collected. The board did act, however, to refinance some of its COPs with some proceeds from Measure K – a 2008 general obligation bond approved by voters – and the annual payments were reduced to around $245,000.
The district is also educating fewer students, which exacerbates the problem by further reducing revenues. Chimente said projections show the district would have 738 students in 2014; when he arrived at Bret Harte there were about 980.
Still more reductions in funding came as the Legislature and governor approved what was deemed a “fair share” hit to community-funded districts. The charges sought to equalize the financing of community-funded and revenue limit school districts, for which per-pupil support is calculated by a complicated formula that uses local property taxes that are then backfilled by the state. Even with the passage of Proposition 30 in November, Bret Harte Chief Business Official Gloria Carrillo said the district faces a “fair share” hit of just over $543,000 this year. There is talk, she said, that Gov. Jerry Brown might reduce the size of that hit, but school officials won’t learn those details until Brown releases his May revised budget.
“If we were a revenue limit district,” Chimente said, “we would have $2 million less right now.”
Up until now, Bret Harte has used one-time federal monies and shifted what are called categorical dollars – funds earmarked for specific programs that the California Legislature temporarily allowed schools to use to backfill just about anywhere – to help fill its budget gaps, but it has eaten into what was once an 11 percent reserve in the past few years.
The state requires Bret Harte to maintain at least 4 percent of its approximately $9 million annual budget in reserve in case things get even worse. Carrillo said that 4 percent wouldn’t even meet 30 days’ worth of expenses at the district. Its 2012-’13 spending plan finishes the year with about 4.5 percent in reserve.
“We are between the jaws of the vice (the state’s “fair share” hit and dwindling property taxes),” Chimente said. “We have found ourselves where we cannot spend more reserves. We can no longer afford to look at one-time fixes.”
He then laid out three proposals for the board, two of which plan for the district receiving 2 percent less in revenue and one that presumes that property taxes will be flat. All three plans call for teacher (between three and seven positions) and classified (between two and three) layoffs and two include a reduction of one administrator.
Two of the plans look to move Vallecito students to the Bret Harte campus in Angels Camp, an idea met with concern in 2012 when Chimente tried to relocate the campus while the Angels Camp school had construction already in progress. In March, Chimente told the board that it would face mounting Americans With Disabilities Act improvement costs (of around $1 million) at the Vallecito campus if the board opted to keep the alternative school where it is. But on Wednesday, at least one teacher said the move would be a bad idea.
Kim Landreth, who has taught at Vallecito for seven years, said she spoke with Vallecito graduates and many said they felt they would not have graduated high school without the attention they received at the school. She said through tears that while many Bret Harte students plan to attend four-year colleges, many who graduate from Vallecito High attend community colleges and work in the community. She added that the seclusion and quieter nature of the campus means students feel less stressed out than they did attending class at the bustling Angels Camp campus.
“We are very much aware of the benefits of Vallecito,” board Chairwoman Joan Lark said. “Our backs are against the wall. This is a horrible decision to have to make. I wish we didn’t have to make it.”
The decision is on the agenda for Monday’s regular board meeting.
“We need some decisions because we are in the middle of developing a budget” for next year, Chimente said, and because school districts must notify certificated teachers of potential layoffs by March 15 with final decisions made in mid-May. “We are on a fast-track to make decisions, but we won’t know where taxes fall until June.”
“This is not a pleasant position for any of us to be in,” Lark concluded.
The board will meet at 6 p.m. Monday at the district boardroom at 323 S. Main St., Angels Camp.