March 11, 2005

ESUHSD begins step three of Budget Task Force process

By Stephanie Foo
Times Intern

East Side Union High School District’s Budget Task Force began the third step of the budget process on March 7. This step explores possible scenarios that could close the budget gap in an environment where the task force will discuss ideas, propose strategies and identify any obstacles that may occur.

About 30 community members attended the meeting at Evergreen Valley High School in addition to the task force itself, which is composed of teachers, members of the board, classified staff, students and community members.
At the previous March 2 Budget Task Force meeting, the public got a peek at four potential scenarios prepared by the administration to get the ball rolling. The most drastic component in each scenario was potentially reducing the current six-period school day to a five-period day to save roughly $5.4 million.

These scenarios were not recommended by the administration nor endorsed by the board or the board president. They were simply presented to comply with the request from task force members that the ESUHSD administration use their expertise to come up with some initial ideas.

Regarding the possibility of changing the school day from six periods to five, Superintendent Esperanza Zendejas explained after the meeting that this was just an idea and if it came to this, the district would only recommend it for one year.

“The entire school district would not be on five periods, it would only be for students who have enough credits to graduate,” said Zendejas. “There are some students who are behind in their credits, and they would have six periods.”

$7 million deficit and growing
However, real solutions must be addressed to solve the district’s large financial deficit, which for this year alone stands at $7,012,311.

“Even when we resolve the $7 million debt, we’ll still have the extra $9 to 9.5 million to pay off for next year because of the structural relationship cost to each other,” explained Manuel Herrera, board president.

“We will have a 3 percent reserve next year and we have a 2 percent reserve this year. If it dips to anything below 1.5 percent, that could lead to a state takeover,” asserted Chief Financial Officer Jack Mahrt, adding that, “We do have the money to loan ourselves. Measure G is there to loan from. We wouldn’t need to get a state loan to bail us out … we can borrow to ourselves, however, we have to pay it back within that same fiscal year.”

Rising health care costs
When asked why the district’s budget was in such a state of disarray in the first place, Mahrt cited the rising costs of insurance policies as a large part of the problem.

Herrera acknowledged that dealing with the insurance costs will be brought under consideration, saying, “Every organization, both in and out of education is coping with the phenomena of accelerating health costs. In that sense, it’s under informal review; how can we better manage this? Do we need to look at other providers? Is there a way to minimize costs? … Certainly that’s one of the major pieces of costs in the district for managing this situation.”

Guiding principles for managing cutbacks
After Mahrt’s budget report the committee decided on some guiding principles and values for managing budget cutbacks. The committee will employ these rules to help them focus on possibilities to shrink the district’s deficit.

Some guidelines include:
- Cut furthest from the classroom,
but don’t cut so much that a program loses it value (be conscious of what you’re doing)
- Find additional sources of revenue instead of just cutting
- Be creative, think out of the box
- Bring everything to the table

“I found it really illuminating to hear the additional guiding principles and values that people were suggesting,” said Herrera. “I think generally the group was able to arrive at some agreements today as to how to be in this conversation, and that in and of itself is an achievement for the task force participants, given how diverse they are and how potentially adversarial they could be.”

The meeting concluded with a microphone open to the floor for suggestions for budget solutions. Several propositions were made by committee and community members, such as suspending nighttime sporting events for one year to save energy costs and increasing class sizes.

“I was very glad to see the suggestions and the creative thinking,” said Superintendent Esparanza Zendejas. “I was impressed by the comments that were made by the public, and we are going to go back and do some more homework on some of the ideas that were presented and for the next week, that is what we are going to be working with.”

Finding more revenue sources
An important issue that came up frequently throughout the meeting was the need to look at generating more outside revenues to help alleviate the deficit and reduce the deep cuts currently being explored. But how would that revenue be generated?

“Major sources have been state and categorical grant programs where they’re issued with certain specifications called Request for Proposals (RFPs),” Herrera elaborated. “Districts have to take the initiative to familiarize themselves with these RFPs and then prepare a competitive application…they could bring in hundreds of thousands if not millions of dollars, but they take great effort…but it’s worth doing.”

Mahrt added that the district has been making sure that it is getting all of its indirect cost rates associated with existing grants. Typically, between 3-and 8 percent of grant dollars should be dedicated to the business expenses related to keeping the grant going (payroll, personnel, purchasing, etc.)

“We’re also looking at new additional grants, but with the downturn in the economy, a lot of the grants that were out there two years ago are no longer there,” he added.

Offsetting expenses
The district’s best bet, according to Mahrt, is finding ways to offset expenses to the General Fund. Working with the Central County Occupational Center (CCOC), where students attend occupational training at CCOC for half the day and spend the other half of the day at school, is one idea. He estimates the district could gain $300,000 to $500,000 with this arrangement.

Other revenue generating ideas that have come up in the past include selling or leasing the current district office at 830 N. Capitol Ave.

Future parcel tax
Although the East Side Teachers Association and several board members were pushing to discuss placing another parcel tax proposal before voters, Mahrt said that this was a very risky if done in a special election. Just placing the measure on a ballot would cost about $2 million, and if it failed, that cost would increase the district’s deficit by $2 million.

Some parents and community members are still very anxious about the possible scenarios and the cuts under consideration.

“I’m most worried about cutting the day…reducing the number of classes. Students will have absolutely no chance at getting into college,” said Suzette Bromagem, a parent with two students attending Piedmont Hills High School.

She also mentioned that the catered meals for the committee members were wasteful. “Any company in a budget crisis would not cater food at their meetings. They’re also eating in front of us, which is rude.”

Whatever steps are taken, the threat of state takeover looms if the budget crisis is not resolved.

“Everyone must be a part of the solution,” said Board Member Craig Mann. “Not all stakeholders are going up to the bar and being part of the solution process…Until every stakeholder answers… ‘Ask not what your school district can do for you, but what you can do for your school district,’ we can’t afford to have anyone sitting on their hands.”

Schedule of remaining Budget Task Force meetings

The ESUSHD’s Budget Task Force has completed the first two steps of the process, “Vetting the budget” (verifying the figures/budget crisis) and “Presentations from stakeholders.”

Here’s a schedule of the remaining meetings dedicated to step three of the process, exploring different scenarios to resolve the budget crisis. All of these meetings may not be necessary, but have been scheduled in case they are needed. All meetings are open to the public and begin at 6 p.m.:

- Tuesday, March 15 at
ESUHSD Lounge
830 N. Capitol Ave
San Jose 95133

- Tuesday April 5 at
Evergreen Valley High
School Cougar Hall
3300 Quimby Road
San Jose 95148

- Monday, April 11 at
Evergreen Valley High
School Cougar Hall

- Tuesday, April 19 at
ESUHSD Lounge

- Monday, April  25 at
ESUHSD Lounge

- Tuesday, May 3 at
ESUHSD Lounge

The Budget Task Force process will end with a report to the board of trustees in late May, prior to the June 2005 budget hearings and the adoption of the 2005-2006 budget. Check the ESUHSD Web site (www.esuhsd.org) if you’d like to see past reports or have further questions.