California schools brace for fiscal fallout

Thousands of California public schools face the prospect of slashing up to a week of instruction, canceling bus services, or laying off nonteaching staff in the middle of this school year because state revenues are expected to fall below what the governor and lawmakers counted on when they approved an $86 billion general fund budget last June. The Legislative Analyst's Office—the nonpartisan fiscal adviser to California's state lawmakers—predictsRequires Adobe Acrobat Reader the state treasury will be down as much as $3.7 billion, which would automatically trigger up to $2 billion in midyear spending cuts in public programs that will fall hard on K-12 education. The analyst is also projecting a $13 billion shortfall in next year's budget. It's a scenario that could push some school districts into insolvency. They include San Diego Unified, the second-largest district in California, with 132,000 students. Late last week, Gov. Jerry Brown was poised to file papers to qualify a ballot initiative for November 2012 that would raise taxes on the wealthy and boost the sales tax by a half cent to help stave off even deeper cuts to schools next year, according to the Associated Press. A final verdict on the possible midyear cuts will come Dec. 15 when the governor, a Democrat, releases a final forecast for the remainder of the fiscal year, which ends June 30. While it's possible that the governor's finance team could reach a more optimistic conclusion about the level of state income than the legislative analyst, school districts are bracing for the worst. On average, school districts are facing a loss of between $180 and $200 per student. (The average per-pupil spending statewide for the current fiscal year is $7,700, according to the Legislative Analyst's Office). That cut would come on top of the state zeroing out all funding for transportation, which totals nearly $250 million. "The impact will be really severe for classrooms and students," said Paul Hefner, a spokesman for Tom Torlakson, California's superintendent of public instruction. "Everyone recognizes that times are difficult, but school districts have already done everything they can to trim their budgets." A recent poll by the University of Southern California and the Los Angeles Times newspaper found that a strong majority of California voters would be willing to pay higher taxes to support public schools. Those results could bode well for efforts to place an initiative for increased school funding on the November 2012 ballot. 'Just Awful' California public K-12 schools have endured five straight years of spending cuts, totaling about $18 billion. They also have had to operate without another $10 billion that state lawmakers have deferred in recent years but promised to pay back in future years. Funding for public schools in the current fiscal year—$34.7 billion in general fund dollars—along with expenditures for health and human services account for well more than half of the state's general-fund spending. In many school districts, the academic calendar already was cut by a week in the last two years and could be pared even more. Instructional days can be cut under the mid-year budget reductions. Districts can opt to reduce their school year by up to seven instructional days, down to as low as 168. That would put the amount of instructional time that California students receive near or at the bottom when compared with other states, said Arun Ramanathan, the executive director of the Education Trust-West, an Oakland-based nonprofit that advocates for poor and minority children. "It's just awful," said Mr. Ramanathan. "And the rationale for it was, 'Well, nothing happens during the last week of school anyway.' But California is home to 1.8 million English-language learners for whom every one of those days would count." Only districts that can reopen negotiations with their public-employee bargaining units will be able to make an adjustment to the calendar in the middle of the school year. State law prevents districts from laying off teachers in the middle of the school year. Still, with another massive shortfall projected for the 2012-13 fiscal year, teachers are likely to lose jobs, said Dean E. Vogel, the president of the 300,000-member California Teachers Association. Roughly 30,000 educators have been laid off in the last two years, he said. "People want schools to have what they need in terms of good teachers, low class sizes, and other resources," Mr. Vogel said. "The challenge is drawing the connection for people that schools won't get what they need until there is more revenue flowing into the general fund." Looking Ahead For districts that planned their budgets based on the worst-case scenario, there will be enough money in reserves to avoid shrinking the school year or making reductions that will disrupt their educational programs, said Michael Ricketts, an associate vice president for School Services of California, a Sacramento-based company that provides financial, business, and governmental advocacy services to school systems. Districts without reserves to draw on or that didn't plan for midyear cuts will have to rely on options such as canceling bus services and laying off nonteaching staff members, Mr. Ricketts said. "If these midyear cuts go through, I think we are going to see many districts that will be in cash trouble," Mr. Ricketts said. "If districts don't have enough to make payroll, they'll be insolvent." San Diego Unified is facing that possibility if it cannot bridge a projected $92 million shortfall next year, according to Bernie Rhinerson, the chief of staff to Bill Kowba, San Diego's superintendent. The district planned as if the additional state revenues would materialize. The district laid off between 200 and 300 teachers last year, then rehired most after the state budget was approved in June, Mr. Rhinerson said. Now, the district's leadership is focused on how it might reach agreements with its employee unions on deferring raises set to take place in the fiscal year that begins on July 1 and implementing—for the third straight year—a five-day furlough. "We would like to see a revenue solution after five years of cuts and more cuts," Mr. Rhinerson said. "We've cut all that we can."