Even if Gov. Arnold Schwarzenegger doesn’t make any cuts to California schools, San Diego Unified financial staffers expect that the district will need to close a $25 million budget gap next school year, and an $8 million gap the year after that.

Fall projections from San Diego Unified show that revenues are expected to drop and spending will rise, even if there are no actual cuts to school budgets statewide. Such cuts are widely expected in light of the California budget crisis. The projections do include rising utility costs, automatic increases in employee salaries and benefits, and an expected lack of a cost-of-living adjustment in state funding.

Chief Financial Officer James Masias said the projections can only include the financial information from actions that have already been taken by the legislature — not the cuts floated by Schwarzenegger. It is a required periodic report for all California school districts.

“We know this is going to be different in a month. We know it will be different in two months,” said Superintendent Terry Grier. “But we are required to use the information we have today.”

School board member Katherine Nakamura put it differently: “So this is a make-believe budget,” she said.

After a lengthy debate, the school board voted to issue a “positive” financial certification based on the projections, which would mean that the school district will be able to pay its bills, as recommended by staffers.

Both Nakamura and school board member John de Beck strenuously opposed that idea. De Beck said that the dismal news about budgets showed that San Diego Unified should actually give a “qualified” certification that says that the school district may not be able to cover its costs and keep its minimum reserves intact.

“It means we are fixing to do stuff that will make it better,” de Beck said.

School board President Shelia Jackson said that a qualified rating could harm the credit rating for the school district as it prepares to finance a massive facilities bond. New board

members Richard Barrera and John Lee Evans joined her in voting for the positive rating. Whether it certifies itself as positive or qualified, the school district must come up with ways to address the known shortfall and any additional state cuts by March 10, staffers said, and possible cuts are already being prepared for the school board to review.

Nakamura said, “This is the same sort of head-in-the-sand idea as bailing out Detroit. I have real concerns about the honesty of this report.”


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