Small districts, sharp axes: here are some proactive steps that can be taken at both the district and school site level to successfully cope with the continuing budget crisis

Leadership, May-June, 2004 by Clifford E. Tyler, Robert W. Kibby

Have the following questions crossed your mind as a small school district administrator who is actively working with board members, staff and community to prepare for the next round of budget cuts for schools?

* How are we going to cut our school budgets even further after last year?

* How are we going to maintain quality programs for children, and meet increased school accountability demands, with possible declining enrollment?

* Do we plan for further cuts despite voter approval of Propositions 57 and 58?

* What happens if the Democratic-controlled Legislature fails to support Gov. Schwarzenegger's budget plans?

* What happens if national economic recovery efforts fall short and fail to deliver badly needed additional revenues?

Small district superintendents and chief business officials have successfully worked with boards of trustees and district and school/community stakeholders to develop innovative ways to cope with severe budget shortfalls several times in the past 25 years. In each of those times, innovative school leaders have successfully reduced budget expenditures as far away from the classroom as possible to balance the school budget. They developed a long range-spending plan by projecting revenues and expenditures in current austere, poor economic times to cope with tough school finance times.

The initiatives

The Gann Limit (Proposition 4) was part of the taxpayers' revolt of the 1970s. It was a constitutional amendment to place limits on allowable growth in state and local government spending to increase no faster than inflation and the change in personal income. The current voter-approved Gann spending limit maintains Proposition 98 funding except in the most extreme state revenue shortfall circumstances.

Proposition 98 and later Proposition 111, approved by the voters in November 1979 and 1990 respectively, were a joint effort by the Education Coalition to establish a funding floor for K-14 education with three formula options.

Gov. Schwarzenegger was obviously successful in convincing the voters to approve Proposition 57 (the $15 billion Economic Recovery Bond) and Proposition 58 (the Balanced Budget Act) on March 2. He also initiated budget cuts in health and human services, and negotiated a partial suspension of Proposition 98 (a $2 billion funding increase instead of a $4 billion increase for 2004-05 calendar year) with the Education Coalition.

Despite the governor's proposals and negotiated concessions, there are still many unknowns that could seriously imperil school funding, including an anticipated $8 billion state budget deficit for 2004-05 and lesser budget deficits for following years, depending on the pace of the state and national economic recovery.

Consequently, it is still incumbent upon small district superintendents, chief business officials and their leadership teams to revise budget projects and develop another spending cut plan to balance their budgets.

To successfully cope with an anticipated budget crisis, what is the best process to follow in developing a budget expenditure plan? What specific ways can local school districts save money? There are several proactive steps that small district superintendents and/or chief business officers can take at the district level and principals can take at the school site level.

The first step is for districts and school sites to put together an information plan to keep the community, staff members and local press well informed concerning the status of the budget. This can be done through periodic press releases, factual community/staff newsletters and board meeting information items.

Small districts should also organize or re-activate a district or school site budget committee. The purpose of the committee is to develop a coalition of staff and community stakeholders as partners in the budget development and information process, and ultimately win their confidence and support of essential budget reductions.

The committee should be composed of board of trustees; approved employee association (union) leaders; selected and respected district and school site administrators; parent, community and business leaders; and local appointed and elected government officials. All members should be committed to serving a finite term of time on the committee.

The budget development process includes involving the budget committee in the annual external audit process, first and second interim reports, budget certification from the county office of education, developing a budget development calendar for board of trustees approval, estimating current budget year revenues and expenditures, setting expenditure priorities based on the district's strategic plan, and projecting long-range revenues and expenditures.

The committee could also be involved in developing awl internal audit process, and in setting two alternative scenarios for balancing the district budget, depending on the severity of the revenue shortfall: best-case and worst-case balanced budget scenarios.