Future financial possibilities were the chief topic at last week’s Hemet Unified School District (HUSD) meeting. Financial Services Director Pam Buckhout outlined the prospective changes from the current state budget condition and how they might affect HUSD finances over the next three years.
“The multiyear projections show the district may need to make additional cuts to expenses in the coming years if it is to maintain its five percent reserve through 2013-14,” Vince Christakos, assistant superintendent for Business Services, said in the “2011-12 — First Interim Report.”
Since the initial 2011-12 budget was adopted, Buckhout told the board that the decline in its end-of-year balances will be $5.9 million. The revision is a result of revenue decreases, a net change of -$4.5 million, combined with the restoration of salaries and benefits amounting to $2.1 million.
The 2011-12 ending balance of $29.3 million includes $10.5 million available for the next two fiscal years — 2012-13 and 2013-14.
While HUSD can weather the likely January state school funding reductions, as a result of lowered revenue collections, the following years may require additional adjustments at the local level, according to Christakos.
Projected changes in state funding are expected to reduce revenues an additional $8.5 million in the future. To maintain the necessary reserves, the board may have to find future reductions equivalent to $4.5 million.
HUSD entered into agreements with its bargaining unit members in late 2009-10 to reduce salary and benefit costs by 6.5 percent through a combination of work year reductions, staff reductions, increased class sizes and salary roll-backs. The agreements expire on June 30, 2012.
If the board were to restore all of the past staff reductions and state funding did not improve, the projected 2013-14 balance is a $18.1 million deficit which would eliminate district reserves.
But Christakos emphasized that the loss of funding is only one aspect of the fiscal problems at the state level. In addition, the funding that will be delivered is likely to come at a slower pace imposing, cash flow problems on most school districts. “Nearly $33 million state aid for 2011-12 won’t be received until July or August,” Buckhout told the board.
Hemet has already borrowed $23 million to get through the fall cash problem. This will be repaid in March. But the district is likely to need to temporarily borrow another $14 million between now and June to get to next fall, he said.
