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Budget blues arent over
Funding pitfalls ahead for Manteca Unified
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Ninety less teachers, cutbacks in transportation, pay cuts for all school workers and layoffs of support staff from custodians to office staff, and reduced classroom budgets.

It is just part of the aftermath of reducing Manteca Unified’s spending by $30 million in response to the $26 billion state deficit that prompted deep cuts in everything from school funding to welfare programs.

Manteca Unified School District Superintendent Jason Messer – on the eve of Monday’s start of the 2009-10 school year – believes that the local district when it comes to further state funding cuts is OK for now.

Even the prospect of the state possibly losing a lawsuit being brought forth by the California Redevelopment Association asserting it is illegal to take $4 billion from redevelopment agencies up and down the state and diverting the money to schools doesn’t worry Messer too much.

“The one thing we got in the (state) budget deal was to keep Proposition 92 intact,” Messer said in reference to the voter-approved measure that was designed to bring certainty to school funding levels.

Messer, though, isn’t naïve. He knows the road ahead is going to have a lot more bumps and possibly some big dips.

Among the possible pitfalls:

•The continued drop in property tax receipts. In Manteca, as an example, property values have been reassessed downward 14.7 percent while Lathrop’s has dropped 15.7 percent. The major of property taxes are now diverted to the state with the biggest benefactor being the backfilling of state money to school districts like Manteca Unified. The drop will impact the 2010-11 budget and beyond.

•The budget deal “gimmicks” that essentially postpone some on expenses into the next fiscal year at the state level and accelerates the collection of future taxes from the 2010-11 fiscal year to the current one will create a “hole” as big of at least $5 billion in next year’s fiscal year state budget.

•The latest budget plan didn’t deal with $3 billion of the $26 billion deficit that was projected to develop between now and June 2010 if the California Legislature hadn’t of acted.

All of that could add up to more fiscal trouble for Manteca Unified and other school districts up and down the state.

Messer noted that last school year the district didn’t really deal with the impacts of cutbacks although there were spending freezes. That means this is the first year in a string of years that more austere times will rule district operations.

It is one of the reasons why be believes the district’s move to drop class-size reduction will pay off in the future by avoiding even deeper cuts down the road.

“There is no realistic way the state can continue to fund class-size reduction,” Messer said.

Manteca – as well as other districts with Mello-Roos taxes that support building classrooms and school facilities to handle growth – could have other potential financial fallout from the drop in property values.

Manteca has issued bonds on the strength of Mello-Roos tax receipts to retire them. While the district currently isn’t in danger of not making debt payments, the impact of the drop in property assessments and the potential it could happen again next year as well is prompting Messer and his staff to monitor the situation.

There are three Mello-Roos districts in Manteca Unified. They each have different formulas for taxation of which part is tied to property value.

The odds for further drops in property assessment are strong. The assessor must readjust property values on Jan. 1 of each year. The 14.7 percent drop for Manteca that was announced in July was based on a snapshot of the market on Jan. 1, 2009. Since then, prices across the board have dropped close to $10,000 of a typical Manteca home based on escrow closings.

Messer also noted even if the economy was to do an about face next month, it would be well over a year if not longer before positive increases in state revenue are realized.