Office of the Superintendent
(415) 945-3720

MEMO RE: STATE BUDGET UPDATE/SPRING EXPENDITURE GUIDELINES

TO: DISTRICT STAFF
FROM: BILL LEVINSON
DATE: January 29, 2003

Last night the Board reviewed new information regarding the state’s fiscal crisis and its impact on the Tam District. The Board also reviewed the Spring Expenditure Guidelines which will be in place effective 2/1/03 (see B below).

A. FISCAL CRISIS UPDATE:

Much has happened in Sacramento over the past two weeks.

Current 2002-2003 School Year: The Governor’s budget proposals for mid-year expenditure reductions were reviewed by the Assembly and Senate Budget Committees. Both Committees rejected the Governor’s across-the-board cut approach in favor of making limited cuts for this year and deferring $1.09 billion in current year revenue limit apportionments to next year. As the Assembly and Senate versions differ, they will meet to reconcile the differences and then send the compromise version to the Governor who is not supportive of the use of deferrals.

Good News: The Assembly/Senate proposals do not include the 10.82% reductions in categorical funds or the 2.15% hit on revenue limits. If implemented, these two proposals would have resulted in a loss of $700,000 to the Tam District ($260,000 in state funding, $440,000 in basic aid allocation). The current proposals would result in a loss of $91,000 in revenue limit (basic aid) funds and a loss of $96,000 in categorical funds (Library materials-$18K, PAR-$15K, and Instructional materials-$62K).

2003-2004 Budget Year Proposals: The $1 billion in deferrals from the current school year, if implemented, puts even greater pressure on next year’s state budget. The current year budget deliberations did not address next year’s basic aid proposals which are both still in play. And, of course, no final compromise has been reached with the Governor, which means most anything can happen (and usually does).

While neither the Assembly or Senate Budget Committees have begun deliberations on the Governor’s proposals, basic aid districts have been busy contacting legislators, the Governor’s office and state education organizations informing those in a decision, or policy making role of the catastrophic impact on basic aid districts if the 85% basic aid recapture proposal is implemented. Reminder: this proposal calls for the state to capture 85% of the local property tax revenue above and beyond a district’s state determined revenue limit. If implemented, this would result in a $6.5 million dollar revenue reduction to the Tam District. This would be in addition to the $440,000 loss of the $120 per ADA basic aid allocation.

Good News: Our (basic aid districts) efforts in Sacramento are having an impact. As decision makers become aware of this proposal, they are expressing concern for the extreme impact on basic aid districts.

The Challenge: Basic aid districts accept the loss of the $120 per ADA reduction as our “fair share” of state budget reductions. However, as long as the 85% property tax proposal is “in play” in Sacramento, we must do everything possible to make certain our two elected representatives (Joe Nation-Assembly and John Burton-Senate) are aware of the disastrous impact of this proposal on our district.

We must also do everything possible to convince Governor Davis to remove the 85% proposal from consideration. If the proposal is not rescinded by March 1, the District may have no choice but to take action to reduce expenditures substantially for the 2003-2004 school year as there would be no guarantee that catastrophic revenue reductions wouldn’t be approved by the state in April, May or June (or even July, August and September if no budget agreement is reached).

Basic aid districts in California (and Marin) are working together to address this challenge through our state-wide organization, Schools for Sound Finance. We held a state-wide meeting on Monday and have another planned for Wednesday at the Superintendents’ Conference in Monterey and again in Sacramento on February 27. We are receiving ongoing updates as to progress in Sacramento and are coordinating lobbying efforts state-wide.

To impact the Sacramento decision making process, we (District, staff, community and parents) must do the following:

1. Continue efforts to inform our state-wide organizations of the impact of this proposal on our district: CTA, AFT, CSEA, ACSA, CSBA, AISE and others.
2. Contact (phone, e-mail or letters) Joe Nation and John Burton and insist that they work tirelessly to support “fair share” budget reductions for basic aid districts and to eliminate the 85% property tax proposal. They need to inform the Governor that they will support no 2003-2004 state budget which includes the taking of any local property tax dollars from basic aid districts.
3. Contact (phone, e-mail or letters) Governor Davis and insist that he remove the 85% property tax proposal from consideration as soon as possible (before March 1).
4. District to inform parents of the need to participate in this effort through a district mailing and the web site.

What Should Be Said?
The logical arguments against the 85% property tax proposal are:

1. It’s a sudden, extreme measure, having a disastrous impact on a small number (about 50) of basic aid districts. The extreme reduction in funds will result in the loss of jobs at the same time the state needs to increase employment.
2. The budget impact on the basic aid districts is far in excess of any budget cut impact on revenue limit districts. For the Tam District the loss of revenue may exceed $6.5 million.
3. Basic aid districts expect to assume their “fair share” of budget reductions — we are not seeking special treatment. We accept the need to give back the $120 per ADA basic aid allocation.
4. Not all basic aid districts are “wealthy.” Some are low wealth districts (low revenue limits), others serve predominantly low income students (St. Helena-high property values due to vineyards but also serves the children of farm workers). The Tam District serves many low income students.
5. No dollars saved by this measure (about $140 million state-wide) will benefit any child in California as the property tax savings are destined for the non-Prop 98 (education) side of the budget.
6. California has never before “leveled down” school district education spending — we have always “leveled up” spending to higher state-wide levels.
7. California has never taken local property tax dollars destined for local public schools and used them for other purposes.

A sample letter (HTML or rtf download) is provided. Please adjust as needed. See Key Contacts in Sacramento.

It is essential that all contacts be made as soon as possible if we are to impact the legislative process.

Next Steps for the Tam District:
Effective 2/1/03, the administration will implement Spring Expenditure Guidelines to begin the process of reducing expenditures in anticipation of substantial revenue reductions for the 2003-2004 school year.

At the February 11 Board meeting, the administration will review the impact of reducing $7 million from our budget, review proposed staffing guidelines for 2003-2004 and proposed budget development assumptions and strategies.

At the February 25 Board meeting, the administration will present specific plans for reducing the budget and seek authorization from the Board to take the steps needed to implement staffing reductions if the 85% property tax proposal has not been rescinded.

On March 11, the Board may take action on the budget reduction proposals if no action is taken by the state to rescind the property tax proposal.

From March-June 30, the District will monitor the state budget and continue doing everything possible to limit reductions to those proportional to revenue limit district reductions.

B. SPRING EXPENDITURE GUIDELINES:

The following expenditure guidelines are in place effective 2/1/03 until further notice. These guidelines apply to General Fund and Adult/Community Ed Funds only (not Bond Fund).

The purpose of these measures is to reduce expenditures this year in anticipation of substantial reductions in district revenue and expenditures for the 2003-2004 school year. Everyone must do his/her part to mitigate the impact of the state’s fiscal crisis on our students, staff and district. No final decisions regarding next year’s budget expenditures have been made as yet.

1. District Office Expenditures: District Office administrators are charged with saving at least 10-15% of their overall, current year discretionary budget. These savings will not be carried over into the 2003-2004 school year and should be seen as multi-year program reductions.
2. School Discretionary Income: Principals are charged with saving from 10-15% of current year allocations. These savings will be carried over to next year's budget and will be available to schools to spend as an offset to probable 2003-2004 school year budget reductions.
   Discretionary income includes: M/E allocation, Instructional Improvement Funds, block grant allocations, API awards, school grants and state categorical program allocations (those which permit carry overs). Schools will need to move quickly to determine how best to save these funds and to initiate cost saving strategies. Principals are encouraged to involve staff in this process but are authorized to implement saving strategies immediately.
3. Hiring Freeze: On a case by case basis, the district will review, and the superintendent approve, all requests to fill vacant, or add new certificated, classified and administrative positions. This process does not pertain to the probationary/permanent decision making process for certificated and classified employees.
   The decision to fill vacancies or add new positions will be based on the following considerations: 1) safety, 2) operational necessity, 3) legal requirements, 4) cost effectiveness, and 5) resource availability.
4. Staff Development Activities: District and site staff development efforts shall be limited to on-site activities. Expenditures for off-site professional development should be limited to those activities required by, and funded through, external sources, such as grants. PowerSchool training, non-refundable pre-paid conferences and mandated training may continue.
5. Other Staffing Expenditures: District and school activities requiring the use of subs should be limited to maintaining essential services only. Extra hire and temporary replacements for classified positions will be approved only under exceptional circumstances.
6. Energy Conservation: All district employees shall recommit to implementing energy conservation measures as a means of reducing district costs.
7. Capital Expenditures: All general fund capital expenditures (i.e. new furniture, equipment, and computers) shall be reviewed on a case by case basis. The decision to approve these expenditures shall be based on 1) safety, 2) operational necessity, 3) legal requirements, 4) cost effectiveness, and 5) resource availability. Replacement purchases will be reviewed on the same basis.
8. Bond Expenditures: The district will continue to maintain an absolute "fire wall" between the general fund and bond fund expenditures.

If you have questions regarding these guidelines, please feel free to contact Bill Levinson, 415-945-3720 or blevinson@tuhsd.marin.k12.ca.us.

MORE from the Superintendent’s Office on the fiscal crisis:

Budget info (14-Feb-2003)
- Letter to staff, parents & community
- Parent/Student/Community Resident Response form
- Basic Aid Backgrounder: Letter from Bolinas-Stinson Union School District Trustee

MORE fiscal crisis info (29-Jan-2003)
- Letter to staff, parents & community
>> Update & talking points
- Sample letter

ALL fiscal crisis info…

KEY CONTACTS IN SACRAMENTO
These are the telephone, fax and mailing addresses of key officials. Faxed or US-mailed LETTERS rather than emails are preferred.

Governor Gray Davis
c/o Michael Bustamante, Deputy Chief of Staff
State Capitol Bldg.
Sacramento, CA 95814
Ph: 916-445-2841
Fax: 916-445-4633

Secretary for Education Kerry Mazzoni
Office of the Secretary for Education
1121 L Street, Suite 600
Sacramento, CA 95814
Phone: 916-323-0611
Fax: 916-323-3753

Senator John Burton
State Capitol Bldg., Room 205
Sacramento, CA 95814
Ph: 916-445-1412
Fax: 916-445-4722

Assemblyman Joe Nation
State Capitol, Room 3013
Sacramento, CA 95814
Ph: 916-319-2006
Fax: 916-319-2106

Email addresses (note that faxed or US-mailed letters are preferred):
Governor Davis: governor@governor.ca.gov
Joe Nation: joe.nation@asm.ca.gov
Senator Burton’s website: http://democrats.sen.ca.gov/senator/burton/