Gloomy Fiscal Reports Greet New MDUSD School Trustees

Whatever enthusiasm was generated by the swearing-in Tuesday night of new Mt. Diablo school board trustees Lynne Dennler and Cheryl Hansen, as well as re-elected trustee Linda Mayo, quickly dissipated in the face of two budget reports full of unanticipated expenses and possible revenue losses.

The trustees unanimously approved the interim budget report after the district's chief financial officer Bryan Richards warned that the district might receive "qualified certification" from Contra Costa County.

What that means, said Richards, is "the district projects that it may not meet its financial obligations for the current fiscal year or two subsequent fiscal years." 

He said the district might have to issue a TRAN (tax and revenue anticipation notes through the California Cash Reserve program) or borrow money for summer cash flow from its building fund if it cannot balance its budget.

Most of the uncertainty lays in the hands of the state Legislature, which faces a $28 billion state budget deficit. Richards quoted Gov.-elect Jerry Brown as saying this week he couldn't promise there would be no more cuts to education "because there will be."

Among the state budget unknowns are cutbacks in funding per students, known as average daily attendance or ADA. According to Richards' presentation to the trustees, the district should receive $6,346 per student from the state.

However, due to state budget cuts, the district is only getting $5,206 per student. The 2010-2011 state budget approved in October cut $250 from the ADA funds.

While the Legislature decided against that one-time-only cut, the Legislative Analyst Office has recommended keeping it, Richards said. That could cut Mt. Diablo's revenue limit of $163 million by $8.5 million.

The district also is receiving less money from the state because its enrollment declined this school year by 291 students. Richards said enrollment is expected to decline through 2021.

The factor the district can control is wages, Richards said. The district spends about $108 million on wages for teachers, administrators and staff. Benefit costs, which Richards described as "skyrocketing," run about $32 million. Negotiations with the district's five unions on issues of salary and benefits are under way.

"The vast number majority of cuts will have to be made in positions," said Board President Gary Eberhart, "and we're running out of positions to cut."

The board also learned the district might be on the hook for $4.8 million in unexpected costs for educating, housing and providing therapy for students with severe mental health problems following a line item veto by Gov. Arnold Schwarzenegger.  The board agreed to fund the programs through June 2011 at a cost of $2.5 million but declined further funding until legal questions over the veto are settled.

Schwarzenegger vetoed funding for AB 3632, which mandates funding through county mental health agencies for students with the most severe problems, such as schizophrenia, violent or self-destructive behavior, said Assistant Superintendant Mildred Browne.

The district was always responsible for education costs for these students, she said, but the governor's veto means the district must now cover residential care and therapy costs, she said.

Several counties and school district, including Los Angeles Unified, have a joined a class action lawsuit to restore the money and a hearing is set to consider a restraining order against the governor's veto.

Current funding runs out Dec. 31, possibly leaving disabled students in the lurch, said Browne. The district could face lawsuits from special education students and their parents if mental health services are not provided.

Clayton Schools Left Off Proposed Closure List

Clayton schools this week escaped being put on list of school closures being proposed by an advisory committee to the  board of trustees.

The committee on Monday night recommended the financially ailing district close  as many as four schools in Concord and Pleasant Hill by the next school year.

No district high schools were on the list compiled by the Mt. Diablo School Closure Advisory Committee. The MDUSD Board of Trustees will make the final decision, sometime early in 2011, according to Assistant Superintendant Rose Lock, who moderated the committee.

The MDUSD Board of Trustees voted in April to save $1.5 million annually by closing some district schools. 

The next meeting is on Jan. 11. Regular meetings are usually held on the second and fourth Tuesday of each month at 7:30 p.m. in the Board Room at the Dent Center, 1936 Carlotta Drive, Concord.