Frequently Asked Questions about the

2009 State Budget Crisis

The state and nation are suffering through a major budget crisis that impacts the already inadequate funding for California's public schools. The current proposals being considered by the legislature would require the Folsom Cordova Unified School District to reduce its expenditures by about nine percent, or $10.5 million. This amount is in addition to $8 million in cuts that have not been restored since 2000-01.

A reduction of this magnitude has the potential to affect a wide variety of services. For a list of all the various ideas generated for reducing the District's expenditures, please see the "Budget Reduction Brainstorm" list at the Budget Central section of the District's website.

The Governing Board and District staff are working diligently to inform the community about the budget crisis and the options for addressing this crisis. Following are some "frequently asked questions" that have surfaced from a District survey about the budget crisis or that have been brought to the District's attention by other sources.

1. Has the Board of Trustees already made decisions about cuts to the budget?

No. The Board has not made any decisions about budget cuts, and the superintendent has not yet made any recommendations for reductions. The Board will not receive a recommendation from the superintendent until after the public forums on the budget scheduled for February 10 (Mills Middle School) and February 12 (Folsom High).

The Board will receive the superintendent's preliminary recommendations on February 19.

2. Can the Board use its state mandated reserves to solve the budget crisis?

Perhaps. The state requires the District to maintain a reserve equal to three percent of its General Fund. In order to use this reserve, the legislature would have to grant a waiver to allow it to be expended. If a waiver is granted, we anticipate that the state might allow the District to use one half of the three percent reserve. Significant cuts will still be required even if the District can use these reserves.

It is also important to note that the reserve would have to be repaid at some future date, affecting the District's ability to restore services and programs when the economy does recover.

3. The District ends each school year with a significant ending balance. Are these funds available?

Not generally. The unexpended funds remaining at the end of the school year have restrictions or have been designated by the source of the funds for a specific purpose.

Please see "Understanding the General Fund Ending Balance" on the Budget Central section of the District's website for a detailed explanation.

4. Will the District first look to reduce its administrative costs?

Yes. The superintendent's recommendations will include reductions to administrative services and positions.

When making cuts to personnel, the District has historically made deeper cuts to administrative services than to any other employee group. In the past decade, administrative positions have absorbed 13.5% of the $8 million in cuts, even though the portion of the budget dedicated to administrative services is about 6%.

The District will again first look for ways to consolidate or eliminate administrative services and personnel before reducing other services and employees.

To learn more about previous budget cuts, see "2008-09 and Prior Years General Fund Budget Reductions," posted at this site.

5. Does the superintendent receive special benefits or compensation such as a housing allowance?

No. The superintendent receives a salary, the same health and welfare benefits as other employees, and a car allowance. The car allowance replaces any and all mileage reimbursements paid to other employees who are required to travel.

The superintendent does not receive a housing allowance and has declined to be reimbursed for the cost of a cell phone.

6. The District is planning to build a new Education Services Center to house the central administration. Can that money be used to solve our current budget crisis?

No. Money from a facilities bond may only be used for the purposes stated in the bond, and cannot legally be used for any other general purposes such as paying teacher salaries or buying books. The Measure M bond, approved by voters in 2006, included funding for a new Education Services Center. Additionally, the state does not provide matching funds for office space, so there is no reason to wait for the potential availability of additional state infrastructure funds.

The District's current central administrative facilities are extremely inefficient and are scattered over four separate locations. It is not unusual for parents with multiple needs to have to travel to more than one facility to complete their business. Similarly, staff that are scattered in various places lose time due to travel and other inefficiencies caused by being spread over several locations in two communities.

Building a District office is never popular, but at some point it becomes necessary in a growing school system. While this may not be a "politically correct" time to build a new office, it is a very good time in terms of economics. With the slowing of construction, the District expects to be able to buy the land and to construct the building at a much lower cost.

Several civic leaders have encouraged the District to proceed because the construction will generate local jobs.

7. Can the District roll back (reduce) and/or freeze salaries for all employees to save jobs?

Perhaps. Any reduction in compensation for members of the Folsom Cordova Education Association (FCEA) or the California School Employees Association (CSEA) must be bargained and agreed to by the leadership and members of the association. Similarly, any plan to shorten the school year, shorten the school day, or furlough employees to save money must be negotiated.

The District and the associations are considering ways to minimize the number of employees that might be laid off. However, changes that impact hours and days of employment, or affect the compensation and/or benefits of employees, are subject to the provisions of the state's collective bargaining statutes.

Note: In 2003-04, FCEA did voluntarily roll back salaries to help with a budget crisis. Additionally, the salary formula used to determine salaries at that time called for an additional reduction. The voluntary roll back was reinstated, but the reduction by formula did carry forward. For a detailed explanation of the 2003- 04 salary roll back, see "0304 FCEA Voluntary Salary Reduction," posted at this website.

8. Can the District save money by eliminating programs such as Adult Education, Student Care, or Food Services?

No. These types of programs are self-supporting and are not a part of the General Fund. Eliminating these services will not generate more funds for our elementary and high schools. In fact, eliminating these programs might have an adverse impact because they help to pay for some costs of facilities, maintenance, and energy.

9. The District has postponed its contribution to retiree medical benefits once already. If we postpone the contribution again, will the District be able to continue to fund the benefits for qualified retirees to age 65?

Yes. The contribution to retiree medical benefits is designed to protect the District's long-range financial security, and the District can delay the contribution for another year.

10. If the state begins issuing IOU’s because it does not have adequate funds to pay its bills, will it affect the District and its employees?

Not immediately. According to state officials, the state's monthly income will not be enough to meet its monthly obligations. Consequently, the state will begin issuing IOU's to some employees and vendors.

However, according to State Controller John Chiang, the state's first obligation will be to pay its debt service (bonds and borrowed money), and its second obligation is to pay schools. There will be enough cash to pay schools for several months. However, if the shortfall between cash and obligations continues indefinitely, even schools could be at risk.