Valley schools take wary approach to state funds

The new state budget commits $1.7 billion more for schools, but with a big catch -- the money won't be available until July, the start of the new budget year.

And with the Legislature's track record of shifting funds, school officials say they aren't banking on it.

"It's like handing you a paycheck and saying it's not good until next year," said Michael Berg, superintendent of Central Unified School District in Fresno. "We are a little bit reluctant to believe them."

The $1.7 billion is a partial reinstatement of K-12 funding cuts. Proposition 98, which guaranteed 40% of the state's budget would be spent on education, has been suspended, leaving schools short-changed by $7.3 billion over the past three years.

But there's no guarantee schools will get a bigger share of Proposition 98 next year, because the state's financial struggles are far from over.

Revenue estimates that were used to prepare this year's budget might be overly optimistic if the real estate market and sales-tax revenues fail to improve as expected.

And incoming Gov. Jerry Brown might have different ideas than his predecessor about how to allocate funds in the upcoming budget.

"The reality is that the state budget is already in a deficit," said Jake Bragonier, Madera Unified spokesman. "As much as the state budget is telling us that we are receiving $3 million more in revenue, it's also telling us that as we dig deeper into the details of the budget there is a strong possibility there could be midyear reductions."

Fresno Unified has been shorted $114 million since the suspension of full Prop. 98 payments, Deputy Superintendent Ruth Quinto said.

The district's annual budget is $625 million; the additional Prop. 98 money would add about $19 million for next year. But it will not be part of any district spending plan, she said.

"The funds are being appropriated, but there is no cash to back it up" at this point, she said.

About 70% of funding for preschool, child care, K-12 and community college education comes from Prop. 98.

The total Prop. 98 funding this year should have been $53.8 billion. But when legislators shifted money because of reduced revenues, the allocation was reduced to $49.5 billion. Prop. 98 funding next year is expected to total more than $51 billion, state officials said. Setting aside money for the next budget year has become an increasingly common practice since 2002, said H.D. Palmer, a deputy director with the state Department of Finance in Sacramento.

"In the more recent few years, the amount of the deferrals has increased," he said.

School districts have gotten used to getting along without their full share of Prop. 98 money, so hearing that Visalia Unified School District was in line for $7 million in additional money "was a complete surprise," said Christine Statton, chief financial officer for the district. "I don't think anyone expected that."

Over the past three years, Visalia Unified has had to carve $29.3 million out of its annual budget, she said. The district's annual general fund budget is $211 million.

School officials would be wise not to rely on that money, said Edgar Cabral, a Sacramento-based analyst in the state's Legislative Analyst's Office.

"If 2011 turns out to be a difficult year, they [state legislators] can undo [it] ..., which means [schools] will never get the money at all," Cabral said.

A report issued Friday by his office showed that districts are falling behind in paying their bills because the state's payments to districts are coming later and later. The report did not say how many districts are affected.

State Department of Education representatives said they have not completed their budget analysis and could not comment on the issue.

Officials with local school districts, which have been eating into reserve funds, cutting benefits and pay, scheduling furloughs and, in some cases, laying off employees, also doubt that they will see the money.

For the current school year, Clovis Unified is using $6 million in reserve funds to balance the budget, and officials have no plans on using its $8.9 million share of additional Prop. 98 funds, said Michael Johnston, assistant superintendent of business services.

Sanger Unified officials also are pessimistic, said Rich Smith, deputy superintendent.

"We are waiting to see if they really mean it," he said. "With new leadership coming in ... we will take a wait-and-see approach."

By January, a clearer picture of the coming year's budget will begin to emerge, and state officials will know then if funds will need to be shifted, said Palmer of the state Department of Finance.

"The next budget will be Gov. Brown's budget," he said. "This is the agreement that is part of this year's budget."