Pawns

[NOTE:  This post was drafted back in May.  I am feeling 'pissy' towards our state government this morning, so I am posting it.  I changed the post date to today so it will be where it belongs chronologically in my posting history - but it was written about a month ago shortly after attending a workshop on the State budget....it's messy and a 'long and winding road'.  But it might help those who live in California understand the complexity of the budget issues our state is facing.  And it might help others who don't live here understand the complexity of my job and why I am often angst filled about it.  There is no easy answer to any of it - but the future of our children can't keep being the 'fix'.  Our state is having one of the absolute slowest returns from the massive recession - and if our schools continue to be the pawns, future generations will be struggling for decades.  Education is the 'hope' for the future of our next generation - and we are failing them in California.  Big time failing.]
 
This post has been a long time coming....there are various drafts in my folder awaiting continuation.  Every time I start to write it, I stop.  Partly because I don't like to discuss politics; or controversial topics; nor do I like to actually comment publicly on things that are both political and controversial.  I'm not a politician but I am in a role that requires careful consideration and discretion about the things I rant about.

If you've made it through that first paragraph and don't live in California, this is your warning that much of this post won't be relatable....or maybe it will.

It's obvious to all of us that the economy is being incredibly slow in it's recovery.  I'm not an economist or an expert....but clearly, things are not picking up.  Our home value has declined AGAIN to a new 'all time low' - and the previous all time low was a shocking number.  We are seriously under water in terms of our debt to equity ratio - and we are OK with that.  I toy with walking away now and then but I won't do that - I love this house and I have to live somewhere.  So we stay. 

But this post isn't about housing...

In the news this week was our states budget 'gap' increasing from the previous $9.5 billion up to now an anticipated $16 billion gap.  This is the gap between revenue and expenses.

At the $9.5 billion dollar gap, schools were being told to budget for a $440 per ADA (that's attendance - we are paid for the percent of time students are actually attending - not our enrollment - it's complicated and this post is going to be complicated enough without going into any of that - I call it 'butts in the chair'.   That's how we're funded - kids attend and our revenue is based on their attendance).

The Governor has released details of his May Revise - his preliminary budget for the 2012-13 school year came out in January (as it does every year) and then in May, he issues his May Revise.  This year's May Revise actually seemed to imply that maybe we really had hit our 'limit' in terms of education funding reductions - because early results indicated that we might actually not have to reduce by the $440...and that was because part of the proposed reduction to schools wasn't actually a reduction in our revenue.  It was a reduction in the deferrals the state has implemented over the past few years. 

Deferrals are what we've come to call the delays in our actual cash payments from the state.  For years now, the state has been pushing back the apportionments of school districts 'cash'.  There are currently many billions of dollars 'deferred' - cash school districts are owed but we don't have.  And part of the 'gap' that the governor is trying to back fill by reducing our revenue yet again was based on the state paying back some of those deferrals.....

So it's not really a gap between revenue and expense as it seem(ed) at first glance.  And if you take out that 'pay back' , the per ADA reduction is less.  And that change makes a really huge difference to districts that are on the brink of disaster....

But that's not what's happening...

See, schools are the pawn in the Governor's desire to have a tax increase measure be on the ballot in November and be passed.  A proposal of an increase to sales tax and an increase to the personal income tax of the state's highest earners.  It's our only 'hope', really.  We've done everything we can do to make reductions.  No new revenue for five years.  Not a dime.  The last truly 'new' money our district received was in 2007-08.  My district has a reduction in annual revenue of over $3 million a year....that's $15 million we haven't had over the last five years.

The Governor is basically saying that it doesn't matter that part of the 'reduction' being placed on schools again is to pay back some of the cash we haven't received.  If the tax initiative doesn't go through, he's taking that money from our revenue regardless - a sort of double 'whammy' - because we will be paying ourselves back some of the cash we are owed.  He will reduce our funding by $440 per ADA vs. $300 per ADA unless the taxes pass.  We pay for that deferral 'pay back' and he wants it known that the taxes are the 'trigger' for that - without the new taxes, that's the plan.

I have worked in K-14 education for 10 years this August - and today was the first time I realized that we are basically pawns in this political mess.  Sure, I've always known that politics is a part of everything - but holy crap.  Today's realization that the taxes are the goal - and districts all over the state will pay the price if voters don't approve them was like a stomach punch.

If you ask the average voter in California today if they will vote on the tax increase, you'll get answers all over the place.  If you imply that the tax increase will provide schools with 'new' revenue - which is what I believe the average voter believes the tax increase will do - they may vote differently.  But we aren't talking about new revenue.  'New' revenue is the absence of another cut.  They are not the same thing - by any stretch of the imagination.

Now don't get me wrong - I will take the absence of a $440 per ADA reduction over 'nothing' any day....our district will be making very hard decisions in the upcoming school year if that reduction goes through.  But I think the average voter thinks the new taxes will 'fix' education - and we are a long way from being fixed.  We've had millions of dollars of actual revenue reduced; and we've had even more millions of real cash deferred from our budgets - for a very long time.  Think about what it would be like for your home budget if your employer said 'well, we owe you your paycheck but we can't send you the cash to cover it for a couple months...but you hang in there, 'kay?  And we'll get it all worked out as fast as we can'.  You'd have to borrow - right?  From somewhere?  Maybe put your mortgage on a credit card for a couple months to get by - 'cuz if you don't have the cash, what else can you do?  So districts all over the state are borrowing to make payroll; are borrowing to pay vendors for supplies and electricity, etc.  How long would be able to sustain that in your current household budget?  Not long, right?

And I close with this:  all of the above was based on a $9.7 billion gap between revenue and expense in the State's budget . But the gap is now projected to be over $16 billion.  There's no discussion (yet) on how that gap will be bridged.

Whether or not you are for or against new taxes, you have to do that math before you decide.  Because states all over America can't keep bridging gaps like the above gap without carefully considering that part of the answer has to be increased revenue.  You can't 'reduce budget' your way out of these kind of gaps - or you'll end up like California.  We can't get out of the hole we are in because we keep digging ourselves in deeper by doing things that don't solve the 'root' of the issue.

And don't blame the Governor.  I don't.  I think he's doing the best he can and I think he's done far more than his predecessor to try to force the legislature to do the right thing.  He's a politician who doesn't give a crap about being re-elected - and they are few and far between...so more power to him.

Thank you for reading this far.  I am making a 2nd latte and heading out for another fun day of running the 'business' of a school district.