January 14, 2005

ESD NEWS BRIEFS

First Interim Report

ESD unable to file a positive certification

For the first time since the Evergreen School District (ESD) has been required to produce a First Interim Report for the state, the district could not file a “positive certification.”

Instead, ESD filed a “qualified certification” stating that the district may not be able to meet its financial obligations for the current fiscal year and subsequent two fiscal years.

According to a memo from Jim Crawford, ESD assistant superintendent of business services, “the district will have sufficient funds for 2004-05; however, balancing the budget in future years is in doubt.”

The memo also stated “the district’s ability to make necessary budget cuts has been diminished by the $6 million in cuts that have already been made over the last four years. Now, the district needs an additional $5.5 million in cuts to reverse the deficit for 2005-06.”

Crawford attributes the deficit to:

- Increases in medical insurance premiums
- Step/column movement on the teachers’ salary schedule
- Increases in Special Education costs
- Encroachment from the Class Size Reduction program

“The increase to medical insurance is the single largest contributor to the deficit,” continues Crawford in the memo.

“In 1999-2000, the district paid 17 cents of every dollar for benefits. Today, that number has increased to 24 cents.

On an $86 million budget, that equals an additional $6 million to the deficit.”

The memo further states that the remaining $5.5 million in cuts will need to come from items that are part of the union contracts. Changes in medical benefits, salary raises, step/column, class size, prep periods, retirement benefits and reductions in other areas will be required to bring the district fund balances back into positive status.

“If $5.5 million in reductions is not achieved by July 1, the district’s deficit will be too large for any single year reduction and will force the district into bankruptcy,” concludes Crawford in the memo.

[Editor’s note: The East Side Union High School District had to file a “negative certification” of the First Interim Report, indicating that based on current projections, ESUHSD would be unable to meet its financial obligations for the remainder of the fiscal year or for the subsequent fiscal year.]