Mid-Year Cuts Inevitable?

As you may recall, school districts were bailed out at the last minute for this year in the state budget process. K-12 education funding was kept flat from 2010-2011 to 2011-2012. That allowed Berryessa to avoid having to implement cuts that we had been discussing for much of the spring.

Since the state was unable to secure any guaranteed new revenues, the budget bailout was based on a projection of about $4 billion in increased revenue resulting from an improving economy. The caveat in the final agreement was that if revenues fell short of the projected level, automatic cuts would be triggered midway through the budget year, in January 2012. If updated projections show the state falling up to $2 billion short, cuts will be made to state unversities, child care, and health programs. If revenues fall more than $2 billion short, K-12 education face cuts of up to $1.9 billion. The full level of cuts would mean a reduction of about $250 per student in the current year. For Berryessa, that would create an additional hole of over $2 million.

Based on revenue reports from the first quarter of the fiscal year, it does not look like the state will meet the optimistic budget projections they made in June. The likelihood that the state will fall short by the entire $4 billion is growing as the economic recovery remains very slow.

The cuts are supposed to be automatic based on certain state budget triggers, at the discretion of Governor Brown. I asked one of our Assembly members last week whether the Governor would pull the trigger by himself or consult with the legislature first. I was told that while the Governor would have the authority to make the cuts on his own, he would likely confer with our representatives first. Perhaps adjustments will be made so that schools won't take as big of a hit.

When our Board adopted this year's budget, we prepared for the possibility of midyear cuts by setting aside enough money to cover the shortfall without having to change our course in the middle of the year. But if we end up spending that money in the current year, the district faces tough decisions on what to cut from our budget next year in order to remain solvent. We could be in for a bumpy ride if current budget projections are correct.