Is Berryessa Facing Bankruptcy?

Yesterday, CBS 5 posted a story on their website about South Bay School Districts that "face bankruptcy."  The story says that "a new state report shows that many school districts in low income areas could be facing bankruptcy, including four in Santa Clara County. The school districts that could be in financial trouble include Berryessa Union, Evergreen Elementary and Ravenswood City." 

The story is based on the second interim report that our district submitted to the County Office of Education in March.  At that time, we admitted that based on current budget projections, and without drastic cuts, our district would go into negative balance in the 2013-2014 budget year.  For that reason, our budget was given what is called a "qualified certification."  The media identifies districts with that designation as having a potential for bankruptcy.

While the story is overly alarmist, it is definitely true that Berryessa School District is faced with a major challenge, should the state tax measures supporting schools fail in the November 2012 election.  We have built into our budget an assumption that the tax measures fail and the Governor's trigger cuts are implemented.  The result would be a cut of nearly $450 per student.  The Governor has proposed giving districts the ability to cut an additional 15 days out of the school year over a two year period if the tax measure fails. 

At our May board meeting last week, we approved our third interim budget report.  We now have a "positive certification" because we demonstrated a theoretical way to balance our budget in the 2013-14 school year.  The submitted interim report included increasing class sizes for kindergarten through third grade to 30 students, and shortening the school year by an additional 10 days (we already have shaved 2 days off of the school year).  Such changes would have to be negotiated with our employee groups, but such drastic action would be necessary if the worst case scenario came to pass.

This year's budget situation is even more unpredictable than in past years.  I attended, along with three district administrators, an informative workshop earlier this week on the California budget and its impact on schools.  The Governor's May revision to his budget provides flat funding for schools, but only if his tax initiative is approved by voters.  That is why we cannot count on the revenue and must plan for the possibility of the large cuts I mentioned above.

We have set aside enough money to make it through the coming school year (2012-13) without any cuts.  We will make it through next year even if the large mid-year cuts occur.  That is why we made the risky but right move to keep the status quo and avoid laying off any district employees.  The following year is where we are facing huge risks.  We hope that the Governor's tax measure will pass and the economy will exhibit growth, so that we can avoid further erosion of the educational services we provide our students.