After a period in which William S. Hart Union High School District officials feared that the district’s finances could be in jeopardy, district officials said at Wednesday’s governing board meeting that those issues are no longer.
The governing board approved a second interim financial report on Wednesday that shows the district having more than double the state-mandated reserves for the current school year and the next two.
Ralph Peschek, the district’s assistant superintendent of business services, thanked district staff for their work in getting the finances back in order to appease both the state and the county.
“There are literally hundreds of calculations and hundreds of journal entries required to accomplish this task,” Peschek said.
Despite a budget reserve of $116 million at the end of the last school year, reports of declining enrollment and average daily attendance, combined with a steep drop in state education funding after Gov. Gavin Newsom’s latest budget projection and an expected 7.5% drop in the cost-of-living adjustment, drew red flags from the Los Angeles County Office of Education.
The projected 0.76% COLA represents a $30 million loss of revenue for the district in the upcoming school year, Peschek said.
The district was tasked with creating a fiscal stabilization plan after having to qualify its certification of its first interim financial report in December, meaning the district would be under the state-mandated 3% budget reserve in any of the next three years. That plan was approved by the board in January and is set to see the district spend approximately $43 million less than previously estimated.
The new multi-year projection sees the district with projected ending fund balances of $98.3 million after this year, $82.8 million after next year and $65.2 million the year after. That represents an $8 million increase in reserves for this year, Peschek said.
“Some of the actions with the greatest impact to the budget and second interim include the analysis and updating of our enrollment and daily attendance projections, which added to the revenue lines for us,” Peschek said. “We’ve empowered social workers and the wellness teams at the school sites to engage students and families who are experiencing attendance issues to improve our average daily attendance. And we have seen results, some schools seeing a 2% increase over last year, but every school experiencing at least 1%, year to date.”
Other ways that the district has righted its finances include downsizing staff levels, or layoffs, and a renegotiated legal contract that sees the district paying a fixed rate for legal services.
The previous financial report in December projected the district with an ending fund balance of $89.9 million after this school year, followed by $30 million less after each subsequent school year. The district is now set to continue to spend from its reserves, but at a lower rate that satisfies state law.
“Even with the governor’s issues to our revenue, the work that staff has done and the fiscal stability plan will help to offset that and put us in this position where we can positively certify in second interim,” Peschek said. “We believe we’ll be able to positively certify moving into budget adoption (in June). That fiscal stability plan was critical and the board’s foresight in addressing it rapidly has placed us in the position that we’re in today, a better position than six months ago.”
As the district seems to have righted the ship, financially speaking, teachers have pointed to the district’s rising ending fund balances over recent years as reason for salary increases. The Hart District Teachers Association has been operating without a contract since June, and more than 800 teachers rallied outside of the district’s administrative office before and at the beginning of Wednesday’s meeting to voice displeasure over the district refusing to give out raises.
Board member Cherise Moore wanted clarification on the projections having the district with roughly $6 million less in its restricted ending fund balance at the end of this school year. Brittany Kruczynski, the district’s director of fiscal services, said much of that comes from special education funding, which the state is providing less funding for in the immediate future.
That, she said, has resulted in some unrestricted general fund money being used to cover expenses that are already set to be paid.
“There’s a reduction in expenditures that results in a reduction in our contribution from the unrestricted general fund into special education programs,” Kruczynski said. “But then we also have increases that may have resulted in the general fund because of other balancing that we did.”
Board member Bob Jensen, an accountant and a member of the William S. Hart Joint School Financing Authority, added that while some of the restricted funds can be used for staffing purposes, the bottom line is that those funds are typically restricted to a very specific purpose.
“It’s all restricted,” Jensen said. “Probably more not for people, but yes, some for people.”
Both Peschek and Kruczynski echoed similar sentiments, with Kruczynski saying that most restricted funds are meant to be used to add staff, not supplant those who are already staffed.
“We can’t take any existing internal expenses from the unrestricted general fund and just shift them to those restricted grants,” Kruczynski said. “That means that we have to offer additional services or additional staff on top of what we’re already doing.”
