When classes begin in the East Valley School District on Wednesday, things will be a lot more austere than a year ago.
Teaching and administrative ranks are depleted by 12. Security guards, instructional coaches and librarians have been eliminated. New textbooks will be rare and building maintenance on hold. Programs like the high school’s after-school study club are being scaled back.
School officials say it’s necessary to pull the district out of the $1.3 million hole that began emerging in December and grew over the spring. A combination of a budget that “substantially overestimated” cash reserves with continued overspending left the district nearly broke – borrowing money against future tax revenues.
District officials say budget cuts made in the spring, combined with a spending plan approved last week, should put the district back in solid financial shape, with growing reserves.
“This budget really does put us on the road to recovery,” said Al Swanson, a former Mead administrator brought in this spring to help East Valley get back on its feet.
Some parents remain skeptical, though they’re hopeful about the new administration of Interim Superintendent Debra Howard. They have pushed the district to provide more information about spending decisions and formed a group called Revitalize East Valley to press for quality schools.
One group member, Gail Groth, who has two children in district schools, said she’s been unhappy that more cuts haven’t come out of administration, and felt there was still spending that could be reoriented toward students.
“I’m still not happy,” she said. “Our administrators are overpaid.”
That feeling was exacerbated in May, when news emerged of big raises granted to administrators – between 7 percent and 23 percent.
At the time, Superintendent Christine Burgess defended the raises, saying some were state-funded, required increases, and that all had been negotiated before the budget crisis. Attempts to reach Burgess, who resigned in May after two years on the job, were unsuccessful last week.
Swanson and Howard said the district has made significant cuts in administration, including the elimination of an assistant superintendent position when Howard moved into the top job.
“The first dollar of the cut was aimed at administration,” Swanson said.
Still, out of the 16 positions initially eliminated in the spring, only two were fully administrative. (Four positions were restored in the new budget.) For Groth, that makes it hard to take when she considers the reduction of the high school’s study club from four days a week to three.
“They’re still spending money on things that make a person question,” she said.
Like a lot of school officials, East Valley administrators point to a range of funding problems that make their budgets tight – declining enrollments, eroding state funding, increasing special education costs, and a rising proportion of funding that mandates specific uses.
But the district has had some particular problems of its own. Though Kaiser Aluminum has added some jobs, layoffs in recent years have contributed to a long-term loss of residents, with enrollments dropping by about 100 students in each of the past seven years. With state funding based on enrollments, that has been costly.
The district also doesn’t have a capital maintenance bond like many districts to cover routine upkeep of facilities.
The biggest problem, though, has been dwindling cash reserves. Financial managers consider such reserves vital to fiscal integrity and an ability to adjust.
East Valley’s budgets have run thin on cash reserves in recent years, and budgets in the previous two years intentionally spent down the reserves, Swanson said.
Three years ago, the fund balance was $2.2 million, and it had been cut nearly in half by this year’s budget – and that’s without the mistaken estimate that was $600,000 high. East Valley’s fund balance is estimated at below $100,000 – less than a third of 1 percent of its budget.
Most school districts want balances of 3 percent to 5 percent. East Valley’s official goal for a cash reserve, according to state auditors, is 6 percent to 8 percent.
Spokane Public Schools – a much larger district but one that had to make drastic cuts this year – has a reserve fund of $14 million, about 5 percent of its budget.
Assessing what happened with the East Valley district’s budget has taken on extra sensitivity due to the death in February of business manager Rich Cook. Cook had left his position on medical leave early this year, and some in the district think he was blamed unfairly.
Even if he made budgeting mistakes, they say, his supervisors – including Superintendent Burgess – should bear responsibility.
In a recent interview, Swanson and Howard were careful not to blame Cook. He was responsible for the budget estimates, but “that person doesn’t actually control what is spent,” Swanson said. “We really had a financial crisis going on last year because of spending exceeding revenues.” Leslee McLachlan, president of the East Valley Education Association and a kindergarten teacher at East Farms Elementary, said there was a noticeable spending surge last year, including new high-tech systems for teaching math districtwide. A lot of that spending, according to records and interviews, was done before funding arrived.
“There was a tremendous amount of spending going on,” she said. “I don’t think very much of it was frivolous – certain things you have to have. You have to maintain facilities and equipment, you need textbooks.
“Hindsight’s 20-20, but they should have waited until they saw that money coming in,” she said.
E-mail records between Cook and Burgess, obtained by The Spokesman-Review under the state’s open records laws, show that concerns about a “temporary” cash flow problem surfaced in December.
By Jan. 12, Cook wrote that he was holding checks until a bank loan was in place to cover them.
“We want to remain in business, but we have to keep the heat and lights on and be able to give everyone a paycheck at the end of January, February, March and April,” he wrote. “Thus, we need everyone to work together and reduce spending until revenue catches up.”
It was one of several times that Cook emphasized to administrators that spending needed to stop. In a message Jan. 12, he noted that “POs” – or purchase orders – continued to come in though he’d asked administrators to halt spending that wasn’t absolutely necessary.
Over the next several months, the full nature of the budget hole became apparent. Basically, the district’s revenue estimates were $600,000 too high, and it was overspending by $500,000 more.
When he wrote to Burgess explaining the situation in late January, Cook noted several expenses that were not budgeted or significantly over budget – from $25,000 for lunchroom tables, to legal and insurance bills coming in nearly $90,000 above budget, to $140,000 to cover two teaching positions not in the budget.
“This is the concerning area and will not be made whole by spring taxes, it will take planning and re-prioritization,” he wrote.
Cook left on medical leave shortly thereafter. Swanson, a former longtime administrator in Mead School District, was brought on board temporarily in February. Over the next several months, he helped develop the proposal to cut $1.8 million in spending – to cover the $1.3 million shortfall and put $500,000 toward reserves.
As part of that plan, 16 teaching and administrative positions were reduced, along with across-the-board cuts of 6 percent at each school.
That “recovery plan” became the blueprint for the new budget, Swanson said. The 2007-08 budget of nearly $38 million will be slightly larger than last year’s budget because of some new programs with targeted funding, rising costs and some negotiated cost-of-living raises, but it retains cuts in teachers, classified staff and administrators. The budget for new textbooks is down $200,000.
The budget also looks to start rebuilding a cash reserve, estimating a fund balance of nearly $500,000 by this time next year. And Swanson, who is leaving the temporary position at the end of next week as the district looks for a new financial manager, said that new controls for monitoring spending have been put in place.
The budget was approved by the school board on Tuesday, with one member, Roger Trainor, opposing it because of cuts in security and librarians.
McLachlan, the teachers union president, said district patrons and staff are entering the new academic year with some optimism.
“I’m really hopeful that the lessons have been learned and we can move on,” she said.
Shawn Vestal can be reached at (509) 459-5431 or firstname.lastname@example.org.
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