PASO ROBLES — In front of a stand-room-only crowd, Paso Robles Joint Unified School District Superintendent Chris Williams took full responsibility for the district’s recent budget woes.
At Tuesday’s school board meeting it was explained during the PRJUSD Unaudited Actuals Report that district reserves — money in the general fund that hasn’t been budgeted — at the end of the 2017-18 fiscal year had dipped to .96 percent — $754,413.
The California Department of Education requires school districts to maintain a reserve of 3 percent. Following past fiscal troubles in the district, PRJUSD trustees have asked for reserves to be 10 percent.
“One hundred percent my responsibility and accountability that I own this budget — I am responsible for it. I do not point my finger to blame anyone else,” Williams said. “The reality is the time I’ve spent with other areas should have been spent within the budget.”
Williams reiterated this multiple times before turning the presentation over to newly hired Chief Business Officer Brad Pawlowski.
“I stand before you as a superintendent who is extremely disappointed, but I do take full responsibility and accountability,” Williams said. “This budget will be our highest priority and we must come together and basically claw our way back, inch by inch and dollar by dollar, and get back to where we need to be.”
Pawlowski is the third CBO employed by district since Williams came on board in August of 2014. Turnover at the top of the business department was one of the reasons given for the drop in reserves along with overspending in the amount of $1.089 million and revenue overprojections of $790,839.
The district was projected to have a reserve of $2.436 million — 3.11 percent — at the end of 2017-18 fiscal year. The district’s budget was $78.438 million.
With reserves under 2 percent it automatically triggers additional budget approval by the San Luis Obispo County Office of Education and requires the district to contract with a Fiscal Crisis Management Team (FCMAT).
FCMAT will complete a fiscal health analysis that looks at 19 specific areas within the business office of the district.
The county office of education will also appoint a fiscal adviser with budget authority and the district will appoint a budget communications committee.
“Working with our fiscal adviser, working with the county, working with FCMAT we will create a fiscal plan to solvency,” Pawlowski said.
As far as expenses, Pawlowski explained there were some areas that “definitely impacted our spending.”
Expenses in special education increased by approximately $320,000 and certificated and classified salaries were under budgeted by $434,011 and $259,689, respectively, which led to under budgeted employee benefits totalling $149,814.
The audit showed that the district underspent on books and supplies, $102,785, and contracted services, $11,315.
Enrollment of students with special needs has risen from 845 to 935 over the past five years, Pawlowski said.
“The certificated salaries we can point out that most likely this is a position control issue,” he said. “We need to focus on ensuring that when positions are hired they are put into the budget.”
Personnel saw raises of 2.5 percent in 2015-16 and 2 percent in 2017-18. Another 1.5 percent pay increase is budgeted for 2018-19.
As far as the revenues, Pawlowski explained “these were pieces that have probably come up in the past.”
There was an overprojection or miscalculation of average daily attendance (ADA) numbers that resulted in less revenue — $484,334 — and a miscalculation on an accounts receivable item of $306,505.
“When you add up the lost revenues and the over expenditures we are approximately $1.2 million away from our target, which is why our reserve was reduced to .96 percent,” Pawlowski said.
Pawlowski added that although the reserves took a hit, “I want to highlight that we are not deficit spending.”
The district is projecting the reserve to grow in 2018-19 to 2.19 percent — $1.713 million.
The district learned there was budget problem following a December 2017 summary of the district’s finances and subsequent audit that showed its reserves had fallen. A forensic audit of the 2017-18 budget was conducted followed by a not-so-glowing report in June.
It was also pointed out by trustees and others that over the past four years as the district has made strides under Williams’ leadership and the state has bounced back from a recession, PRJUSD’s budget has grown from $61 million to $78 million. The district has also benefited from $6 million in grants and saw the passage of Measure M, a $95 million general obligation bond in 2016.
Attendance in the district has risen to over 6,800 students in preschool through 12th grade and roughly 800 people are employed by the district.
Trustees expressed their support for Williams, his team, and the direction of the district, but said they were worried about the 2018-19 budget.
“With absolute certainty we have overspent each of the last three years,” trustee Field Gibson said. “And in the 18-19 budget we are slightly overspending, not a huge amount … so we are overspending.”
Trustee Matt McClish and others on the board wondered out loud what numbers they could trust.
“How do we know that the numbers moving forward are real,” McClish said. “I’ve been on the board for a little less than a year and they have changed a lot. And that is my biggest concern moving forward.”
Trustee Chris Bausch offered a personal apology to Paso Robles students, employees and citizens.
“Superintendent Williams has done exactly what he was supposed to do,” he said. “We have given him a charge to basically improve our district, lots of little things. Mr. Williams gets very high marks for hitting the gas, making those targets and making our school district better. The school board is supposed to know when to hit the brakes. We have not hit the brakes. That’s why we find ourselves in this predicament.”
Trustees also made it crystal clear that if cuts are needed to bring the budget to where it needs to be that those cuts from the top and will not include furlough days.
Williams hammered the no furlough mantra home as he concluded the nearly 2-hour discussion and outlined the areas that will be looked at in terms of the budget — management, programs and facilities. He planned to meet with staff at school sites over the coming weeks to address their concerns and also penned a letter to staff.
“If you are in a teaching position in a classified spot there has been zero discussion about any movement on your classroom budgets, any movement about furlough days, any movement about reductions,” Williams said. “We have to continue our education, increase what we are doing, and assess where we are at — managerial first, programs second, facilities third and then the other areas.”