Print this Article

Advice for Budget Planners

We Have the May Revise….What Do We Do Now?

By Kari Sousa - May 26, 2011

Long gone are the days of using the May Revise to make final adjustments to our school district budgets before the June adoption.  Even though this year’s May Revise contains largely the same proposals the Governor presented in January, a state budget deal remains far from done – and school districts are left wondering what to do next.

While the Governor would like you to plan your district budgets around the optimistic picture presented in his May Revision, the amount of uncertainty surrounding this proposal, as well as the severity of the budget alternatives if the proposed tax extension does not pass, are too much for many districts and County Offices of Education to ignore.

When examining what to do now, it is important for districts to determine three things. 

First, consult with your County Office of Education to determine what their expectations are for your budget.  It will do no good to build your budget on the assumptions of the Governor’s proposal if your County Office will not approve this budget without additional revisions or other components. 

Second, review your district’s financial condition to determine your ability to weather an “all-cuts” state budget.  If your district is living on a narrow margin, with a minimal fund balance and on-going budget deficits, your district should be less willing to accept the Governor’s proposal without a realistic contingency plan. 

Third, it is important to examine the tone of your community.  “Qualified” budgets (meaning a district budget that is rated “qualified,” rather than “positive,” by the County Office of Education) are becoming much more common and acceptable in some districts these days.  Planning for the Governor’s May Revise will likely mean your district will have a qualified budget certification at First Interim, if the Governor is unable to pass the tax extension and your district has not developed a viable contingency plan.

Developing a Contingency Plan

In order to hedge against the possibility of an “all-cuts” state budget, many County Offices of Education are likely to require a budget contingency plan that will serve as a roadmap for expenditure reductions your district will enact if state revenues to school districts are slashed under a yet-to-be-specified “all-cuts” budget proposal.  When developing this plan, it is important to work strategically, and consider all available options, including the use of available fund balances and resources, temporary reductions, and negotiated salary and benefit reductions from employee groups through furloughs or rollbacks.  When assembling the contingency plan, here are some thoughts to consider:

  1. Adopt Non-Personnel Items First – By demonstrating that the "low hanging fruit" has already been plucked before going to bargaining units asking for salary or benefit concessions, you are able to build good will with your bargaining units and increase the likelihood that concessions will be approved.
  2. Pursue Contingent Concessions in Negotiations - While contingent negotiations are often not desirable because of the uncertainty they can place in your budgeting process, they are sometimes a necessary element to get a deal, where there may otherwise be none. 
  3. Consider the Multi-Year Impact of Budget Reductions – What may not be able to be adopted in the current year, due to legal and timing restraints, can be adopted for subsequent years.  Use your one-time resources to temporarily get you through, until these on-going reductions can be implemented.

Editor's Note:  Kari Sousa is Director of District Support Services with the education consulting firm Total School Solutions. Sousa formerly served as Assistant Superintendent of Business Services with a Northern California school district with an enrollment of approximately 25,000 students. Sousa is also a California Certified Public Accountant (CPA).