During their annual budgeting, a school district usually estimates each annual expenditure on the conservative side, adding slightly to each rather than what it anticipates on spending, just to play it safe in case something unusual happens.
Cutting the Margin of Safety
Our District has touted that it is looking for ways to support District salary increases through budgetary cost savings. One way would be by cutting these self-prescribed budgetary safety margins. How far our District is willing to go in cutting its annual million-dollar safety margin is not yet known. Let’s say our District cuts the margins by half, thereby saving about $500,000 to support the School Board’s salary increases.
Working with the Numbers
In the next five fiscal years, those annual savings could add up to a nice sum of $2.5M. (5 x $500K = $2.5M.)
Over the same five-year period, if you combine the latest ongoing 2 percent raises ($813K), granted by the Board to all 530 fulltime District employees, with their automatic annual Step and Column increases ($500K), it would mean the District’s added cost of employing its staff would balloon over $19.5M (1+2+3+4+5 = 15) (15 x $1.3M = $19.5M).
Four Million Dollars Annually
To cover all five years of their planned agreement of ongoing salary increases, the District will have to come up with almost $4 million in savings for each of the next five years.
Is our District really in such a financial position, after years of deferrals and cuts in attrition, to achieve such a daunting, long-term fiscal goal?
Factoring in the Factors
Let’s look at some factors given by the District in its deficit reduction plan: It will transfer $300K of onetime money from its Adult Ed fund, transfer the entire deferred maintenance $245K in onetime money into the General Fund, and it will consider (not yet decided) applying for a (yet, un-named) mandated cost block grant of $300K.
In addition to all these onetime money solutions the district is looking at cutting staff through attrition. Our legislature is still years away from returning the state’s K-12 educational funding back to its target goal of 2007-08 spending levels.
Not Even Close
All these smaller “onetime savings,” and the slow increase of the state’s ongoing funding, do not even approach what this District will need to sustain the School Board’s 2 percent raises and Step and Column increases over five years.
A Silver Lining
Even though it does not appear to the common sense fiscal observer that the Culver City USD will not even be close to having enough actual money on hand to pay for all of these granted salary increases, it appears to have enough to pay for the additional smoke and mirrors needed to pull off this truly amazing financial feat.
Mr. Laase may be contacted at GMLaase@aol.com
