Troubling report on LEA fiscal solvency

Troubling report on LEA fiscal solvency

(Calif.) The number of school districts in California reporting potentially severe fiscal challenges remains uncomfortably high, with 47 reporting a negative or qualified budget certification.

The figure is a big jump from last summer when 41 local educational agencies officially warned the state that they might be in trouble.

At first glance, the new report released this week by the California Department of Education would seem unlikely. Last year, the Proposition 98 funding guarantee reached a record $77.8 billion—a massive upswing from the $47.3 billion provided in 2011-12 at the nadir of the recession.

During that period, per-pupil funding has jumped 66 percent.

But many LEAs are also dealing with a number of challenges that have escalated costs. Pension liabilities are perhaps at the top of the list after legislation passed in 2014 increased the share of retirement costs LEAs must provide grew incrementally from 8.25 percent to 19.1 percent by 2020-21.

That was one big reason Gov. Gavin Newsom has proposed giving districts $3 billion in one-time money to help with pension costs.

Another, however, is ongoing expensive of rising employee salaries and benefits.

Several districts on the warning list have had or are engaged in difficult contract negotiations with their teachers union and in some cases, had to concede to demands that they may be unable to afford—Los Angeles Unified is one of those districts, and Oakland Unified is another.

Under state law, LEAs are required to file two reports with the state on the status of their financial health. One comes out while lawmakers and the governor are beginning negotiations over the state budget and the second one comes out later in the spring.

The report found five LEAs in the negative category—meaning that based on current projects, each cannot meet all its financial obligations:

  • Amador County Office of Education
  • Feather Falls Union Elementary, Butte County
  • Southern Kern Unified
  • Sacramento City Unified
  • Sweetwater Union High, San Diego County

An additional 42 LEAs reported a “qualified” certification, which means that, based on current projections, they may not meet all their financial obligations.

Click here to view the entire list.

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