The Hemet Unified School District trustees approved the Second Interim Financial Report Tuesday night. However, it will be labeled as qualified since the future budget year 2013-14 does not meet criteria for adequate reserves.
HUSD is more than half way through the current fiscal year 2011-12 and expects to have a $32.9 million surplus. But very tight assumptions about the prospects for Gov. Jerry Brown’s tax initiative and agreements with the Hemet Teachers’ Association result in deficits for the next two years.
The possible combined two-year-deficit of $38.8 million is sufficiently large to deplete the District’s reserves. The result is a negative balance of $5.9 million at the end of the 2013-14 fiscal year. Consequently the future budget is considered “qualified.”
In his nearly 20 years serving as trustee, Idyllwild’s Bill Sanborn, current HUSD Board president, does not remember another qualified report.
“The ‘Qualified’ label is a result of no signed agreements from the associations,” HUSD Superintendent Dr. Stephen Lowder wrote in an email. “We believe we will have the agreements in the near future, but I have never had a qualified budget in 35 years!”
However, these worse case assumptions could change in the next two years. Sanborn and Vince Christakos, deputy superintendent for business services, were both optimistic that a new contract with HTA is on the horizon and certainly before the 2013-14 fiscal year begins.
Alleviating only one of the negative assumptions is not sufficient to avoid significant deficits, Christakos stressed.
HUSD will need the tax measures passed and a new and favorable contract with its teachers.
This year, when the state controller determined that 2011-12 revenue would not meet the legislature’s goal, several budget cuts were automatically triggered, including K-12 programs. One of the severely reduced programs was school transportation.
Last month, the legislature adjusted the budget to restore the transportation cuts and made more general reductions. The overall result was another $900,000 slice from the HUSD budget.
The board also approved another early retirement package for employees to consider this spring. “We hope about 30 people will sign on,” Lowder said.
