Goldberg's Perspective: Why Still $3.5M in Cuts?

The following has been published with permission from Beverly Hills Unified School District Board of Education President Brian Goldberg and comes from his newsletter "Goldberg's Perspective." 

If Proposition 30 passed, why is the district still looking at $3.5 million in cuts?

Proposition 30 did not restore any cuts; it provided funding to prevent additional cuts. Let me illustrate with numbers. In 2007-2008, when I was first elected to the school board, our per-pupil funding was $6,441.49. If Proposition 30 had not passed, it would have been $5,311.12 per-pupil for the 2012-2013 school year. Instead, the reductions are to $5,768.12 per pupil if we were still a revenue limit district. Thankfully, we became a basic aid district in 2009-2010 school year, which increased our funding to $6,589.45 per-pupil that year and it will only dip to $6,577.89 per-pupil for the 2012-2013 school year. The reason our funding is being cut is because the State of California is taking from all basic aid districts a "fair share" in order to equalize the pain.

Let me put this in total dollars for you:

If we were not a basic aid district, total cuts would be $3,030,165 from five years ago (it is important to remember that many expenses increase each year regardless of board action, i.e. step and column increases to staff, benefits, electricity, fuel, supplies, equipment, maintenance, etc.). As a basic aid district, our budget will only be decreased by $52,020 this year from our 2007-2008 levels, based on a student population of 4,500.

We have been using one-time money that we recovered as a result of identifying and eliminating corruption and mismanagement from previous employees at the District Office, Food Services and Consultants, etc. to fill the gap while we work on long term systemic solutions to our budgeting process. For example, we have collected nearly $6 million in funds stemming from the Christensen disaster, with nearly $3.5 million of those recovered funds used to support our students in the classroom while the remaining $2.5 million was used to repay the Measure E funds that were used to collect those judgments and settlements.

Furthermore, outside revenue sources that we rely on from the City of Beverly Hills and Beverly Hills Education Foundation (BHEF) have unfortunately been reduced.

The very successful One Campaign, spearheaded by the BHEF, generated an additional $700,000 for the district to restore cuts last year, but the community would need to raise those funds and more on an ongoing basis in order to maintain the positions saved last year. In this year's budget, we absorbed those costs with no additional funds to support those positions, leaving a $700,000 hole in our local revenue line on our annual budget. While the City of Beverly Hills has been and continues to be very supportive of our schools, the recent JPA annual contribution reduction by roughly $300,000 a year also contributes to the deficit in our budget. For those keeping score, that is roughly one million dollars a year in lost revenue.

What about expenditures?

I have done my best to balance the current needs of our students while at the same time keeping an eye on long term considerations, i.e. reserves and MTAs plans to tunnel under instructional buildings at the High School. I am proud of my record of accomplishment, but recognize a lot more work is ahead of us. When I was elected to the school board in 2007-2008, our expenditures for the district were $55,116,024. Our projected total expenditures for this school year are $54,430,000, a reduction of roughly $50K, while at the same time there have been increased costs. The largest increase is in labor costs, which are the largest portion of our budget. You cannot cut staff without impacting programs. Next year's budget projects total expenditures of $50,510,000, a reduction of $4.6 million dollars. The numbers clearly demonstrate that the district is doing MORE with LESS, rather than less with more.

***Over the last five years, we have reduced our expenditures while restoring the smallest average class size in Los Angeles County, increased instructional minutes at the High School, maintained the state minimum days of instruction at 180, increased graduation requirements and rigor for all students, and raised our API scores and ranking for the District. How many school districts can list those accomplishments? ***

Why does the City have a surplus and the school district does not?

We are fortunate that the City of Beverly Hills is in better shape than many other local municipalities. Cities, unlike school districts, charge fees for services and can raise those fees or rates with a simple majority vote of the city council. School districts CANNOT charge fees for providing our core programs, period. Cities can raise fees and rates on services to keep pace with inflation and increases in costs for providing those services, school districts CANNOT. The City of Beverly Hills has raised fees and taxes over the last five years for general fund purposes; the BHUSD has not because we CANNOT. Cities can levy taxes on a host of items; most tax increases can be passed with a simple majority YES vote BY the VOTERS. School districts are limited in the taxes they can raise; for capital improvement projects (buildings and physical infrastructure), it requires a minimum of 55% YES vote for a bond measure. For school districts to raise money for the general fund, which pays for the actual education in the classroom, they can pass a parcel tax, which requires a 66.7% YES vote.

School districts were supposed to get guaranteed funds through voter approved Proposition 98, but the state is not meeting the requirements of Proposition 98. Basic Aid districts are supposed to keep our local property taxes above what we would receive from the State, but the State is taking what it calls "FAIR SHARE CUTS". If BHUSD were to receive the money we are entitled to under state law and the Constitution of the State of California, we would have $3,148,740 more dollars this year, and each year going forward that number would be increasing with our assessed valuation.

Another difference between cities and school boards is that the State of California requires school boards to prepare a three year budget, while the state legislature and governor cannot even pass an annual budget on time. This means we have to project expenditures without knowing what the revenue is going to be year to year. Unlike cities, we have another entity, the State of California, which reviews and APPROVES our budget. The shortfall in our budget is compounded if we do not make cuts in the coming year budget because of the State's requirement for a three year budget.  

Our budget projection for the 2014-2015 school year is $50,049,000, a 9% budget reduction from 2008 (a reduction of $5,067,024). This budget is ultraconservative, because most of our revenue, which is outside of the local school board's control, shows flat revenue for three years with limited options to increase revenue on our own, unlike the City of Beverly Hills. As you can see, comparing the City of Beverly Hills vs. Beverly Hills Unified School District is beyond apples and oranges; it is like comparing a human to a rock.

What can we do?

Rather than pointing fingers and playing politics with the schools, let's come together as a community and support our efforts to generate the funds needed to get off the State's dime as quickly as possible. Let's work with our city partners on ways to bridge the gap for the coming year and sit down together to figure out a way to solve the long term problems instead of kicking the can down the road like Sacramento has done for so many years.

Here are some suggestions that you can do:

• Support the Beverly Hills Education Foundation on an ongoing and annual basis to ensure we have the funds available to restore cuts not for one year but a minimum of three years.
• Support the Parent Teacher Associations (PTA) with 100% participation. Get involved! Be part of the solution rather than the problem!
• Vote Yes! on a Parcel Tax dedicated to our schools
• Encourage the City of Beverly Hills to make a loan to the Beverly Hills Unified School District to bridge the gap
• Encourage the City of Beverly Hills to increase the Joint Powers Agreement

As a community, we must understand that whether you have children or grandchildren in the schools, we all have a vested interest in the success of our schools. Property values are directly linked to the success of our schools. Therefore, from a purely selfish stand point, if you live, work or own in Beverly Hills, you benefit from great public schools in the form of property tax revenue that goes to support city services. We must understand and live these words: A public education is free but a great education costs time and money. The majority of your property tax dollars are not used to support schools, rather your taxes go to support other government services, so the notion that you already paid your "fair share" is simply not sustainable based on the facts. It is time to roll up your sleeves, put aside the politics, and get to work fixing the root problems.

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