More CA school districts hit the state’s distress list

Not that I’m surprised, but today the state released its list of school districts in financial distress and the Sacramento Bee reports that the number is higher than ever before

School districts file a projected budget with the state by June 30 of every year, covering the fiscal year running from July 1 to the following June 30. Then, they file “interim reports” as the year progresses, so that the state can monitor whether they are staying on track financially.  A district can be given positive, negative or “qualified” certification by the state based on the financial statements it files with any of its budget reports. 

Positive certification means your budget for the current year is balanced, and your projections for the two years following the current year show positive cash flow and the required amount of cash in reserve (two percent in the case of SFUSD). If the state thinks you may not meet your financial obligations in the current or future years, you are given qualified certification; if the state believes you will not meet your financial obligations in the current year or future years, you are given negative certification. According to the Bee:

Happily, despite our looming $113 million budget shortfall through 2012, SFUSD did not hit the “qualified” or “negative” certification lists — yet at least. The consequences of landing on these lists grow progressively more severe, with closer and closer oversight from the state.  This report from School Services of California goes into the possible consequences of a negative or qualified report in great detail; also of interest is this list of warning signs that are most commonly encountered as districts approach a fiscal meltdown.
These developments are interesting in the context of the vote the Board will take tomorrow night — on whether to approve the Superintendent’s proposed Budget Deficit Action Plan.  The Action Plan is not a budget, but it does lay out a framework for how the Superintendent proposes to close the $113 million gap.  The Superintendent’s argument for passing such a plan now is to signal to our labor partners, the state and the bond rating agencies that we are committed to fiscal responsibility and will make hard choices when they are necessary. I tend to agree with that, but I also can see from my e-mail that we need to do a better job of educating members of the public about the various choices before us.
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