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Sacramento’s educate now get paid later strategy means cash flow woes

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POSTED August 10, 2009 1:51 a.m.

The new math, Sacramento-style, kicks in as Manteca Unified today starts the 2009-10 school year.


Some $3.5 billion for ongoing expenses for California’s schools will be arriving in local districts as much as seven months after they are needed.

That is a one-time delay in payments to schools on top of $4 billion annually that is now being delayed from flowing to school’s coffers anywhere from two months to six months after the money is spent.


The one-time delay of distributing $3.5 billion is one of the “gimmicks” the California Legislature used to almost bridge the projected $26 billion state deficit.


It is a move that is sending many districts precariously close to the financial abyss as even borrowing with interest from internal restricted accounts won’t allow some districts to do the required juggling act.


“Cash flow is going to be a big issue this school year,” Manteca Unified School District Superintendent Jason Messer said.


It will be noticeable in small ways such as teachers being allowed only to spend as little as 25 percent of their classroom supply budget in the critical first month or so of the school year. The money is expected to come in eventually to cover 100 percent of what was budgeted that includes teacher salaries and such based on commitments for Sacramento. The problem is school districts won’t get the money until months after the expenditures are made.


Manteca Unified came close to not making their last two payrolls of the 2008-09 school year for the same reason.


Requiring local school districts to spend money for programs and not sending the funds for months later especially those that fall under categorical educational offerings – has been a way of life for Sacramento for years. It is a strategy that is being used more and more by Sacramento with each passing deficit to the point it is making it next to impossible for districts to have any leeway.


The state budget deal did take the problems it would create for local districts into account by allowing them to lower their emergency operating reserve from 3 percent of the budget to just 1 percent.


“What that means is Manteca Unified instead of being six days from bankruptcy it’ll be OK to be only two days from bankruptcy,” Messer said.


Although Messer’s remarks were intended to be a tad sarcastic, whacking back the emergency reserve when all other budget accounts are under duress due to deliberately postponed financial payments from the state puts Manteca Unified on the cash flow tight rope.


It means every expenditure and their timing will come under intense scrutiny this school year.


The tight cash flow comes after the district slashed expenditures by $30 million during the past seven months to deal with the state’s inability to honor 100 percent of its financial commitments to education due to the economic slowdown. Cutbacks to date include 5 percent in support employee wage cuts, 1.8 percent on average teacher salary cuts, the loss of 90 teaching jobs, the loss of classified jobs, pay cuts, reduction in home-to-school transportation, and staffing cuts at the administrative level.


Messer said things are not going to be the same as they were in previous years.


“Some teachers are treating this as a teachable moment,” Messer said of the current fiscal crisis that has has forced drastic school budget cuts.


Messer noted that those who lived through the Great Depression take a different attitude on what is happening now than someone who didn’t.


“We’ve talked a lot about this with staff,” Messer said. “We are going to be doing things with a lot less money but we are still going to teach kids and (be successful.)”


Messer said the district – teachers, support staff and students – will “survive and thrive.”

To contact Dennis Wyatt, e-mail dwyatt@mantecabulletin.com








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