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State delays payment to school districts

Local school districts have had to go to reserves in order to operate

Posted: July 13, 2009 10:52 p.m.
Updated: July 14, 2009 4:55 a.m.
As the state delays a $4 billion payment to California school districts to deal with the state budget crisis, local superintendents said Monday they will be able to continue daily operations while dipping into reserves and district funds.

"We will be able to meet our payroll and our other current expenses," said Sue Guthrie, chief financial officer for the Hart district, in a statement.

The William S. Hart High School District was expecting to receive $13.4 million, the last payment for the 2008-09 fiscal year, on Friday.

In anticipation of the three-week delay, the Hart district issued $12.9 million in Tax Anticipation Revenue Notes to get through cash flow.

"We currently have $3.1 million in the bank and $12.9 million in borrowed (Tax Anticipation Revenue Notes) funds," Guthrie said.

"We have expenses of $12 million a month, so when the state defers money it owes us, it makes it difficult for us to pay for our day-to-day operations."

Still, school districts that issue revenue notes have to pay interest.

The delayed payment, known as the principal apportionment, is the largest annual payment of state funds to California's public education system, according to State Superintendent Jack O'Connell.

The last payment for the 2008-09 fiscal year was scheduled for Friday, O'Connell said. Instead, that payment will be made July 30, he said

Another payment from the California Department of Education for the 2009-10 fiscal year, normally scheduled for the end of July, will be deferred until October, O'Connell said.

The Hart district has received some $2 million in federal funding for its special education programs, which will help cover some of the district's operating expenses while it waits for the deferred state funding, Guthrie said.

Sulphur Springs School District expects about a $3 million payment from the state, said Superintendent Robert Nolet.

"It makes a significant issue in terms of cash flow," Nolet said.

The temporary shortfall will be filled with the revenue notes and dipping into district funds.

"We believe we'll be able to make payroll," Nolet said.

Until the funding comes in, Newhall School District will rely on its reserve.

"For a couple of years, we've been building that reserve because we know cash flow in general was going to be a big problem," Superintendent Marc Winger said. "We've got cash on hand to carry us through."

But the deferment is not a new tactic as the state has consistently put off payments to schools, Winger said.

"It's unfortunately typical that in the last five years, they have come to this to solve budget gaps," Winger said.

Newhall School District's final payment for the 2008-09 fiscal year is just over $2 million, Winger said.

School districts are left to deal with the fallout from an absent state budget.

"They put the burdens on school districts for cash flow," Winger said.

Today marks two weeks that the state has not adopted a budget for the 2009-10 fiscal year, which has left school districts across the state in limbo.

"We're still waiting to find out what adjustments we're going to have to make the in the 2009-10 school year budget," Nolet said.
Each day the state waits to adopt a budget will most likely mean a larger deficit, Nolet said.


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