Paso Robles schools facing a rare situation for a district in county — insolvency

Facing cuts up to $2 million, the Paso Robles Joint Unified School District might not be fiscally solvent by the end of this school year — a predicament that has forced the county Office of Education to step in and provide oversight and support.

The board formally submitted a negative certification Tuesday, saying it might not have the 1 percent reserve fund required by the state by the end of the year.

To avoid a state takeover, the district must now quickly trim its budget.

“We’re quite confident we can get through this in a relatively short time,” said Paso Robles school board President Jay Packer.

With no major revenue options, talk of teacher layoffs and pay cuts will resurface.

“Where we’re in a pinch is in the salaries and benefits,” Packer said, noting that 91 percent of the district’s budget is dedicated to wages and benefits such as health insurance. Before recent budget cuts, those accounted for 85 percent of the budget.

Despite the dire situation, county schools Superintendent Julian Crocker lauded the Paso Robles district for being realistic about the problem.

“It’s not a pleasant thing to say, ‘We’re in deep financial trouble’ — and they did,” said Crocker, who thinks this might be the first time the county has had a district submit a negative certification.

As Paso Robles looks to cut spending, the county will offer guidance, as will School Services of California, a nonprofit school assistance organization the district has hired to help. If the district fails to maintain its reserves, it could be forced to take a loan from the state, requiring the state to take over.

Crocker said he would like the school board to use its February meetings to review a financial plan and decide what actions to take by March 1.

In dealing with the budget, there are three levels of certification — negative, qualified and positive. Last year, six of the 10 districts in the county, including Paso Robles, were qualified.

In the past, the state required districts to have a 3 percent reserve fund, which would be around $1.6 million for Paso Robles. But in light of budget cuts, the state allowed schools to have just 1 percent — about $500,000 in Paso Robles’ case.

“I did not support that move,” Crocker said, noting that a 1 percent reserve is too small for a district the size of Paso Robles’. “Even 3 percent is crazy, but the point is (Paso Robles) wouldn’t be able to meet that 1 percent to cover any unforeseen expenditure.”

Part of the problem for Paso Robles is declining enrollment. In past years, enrollment grew at a rate of 2 percent to 5 percent a year. But the district lost 40 students last year and 200 the year before, Packer said. State funding is based in large part on enrollment.

Cuts announced by Gov. Jerry Brown on Tuesday will cost Paso Robles an additional $100,000 from the general fund and $300,000 in transportation.

When the district agreed to its budget last summer, the state had yet to pass its own budget, so the Paso Robles board had to project how much funding would be available. Meanwhile, last-minute federal money that had helped Paso Robles in the past was no longer available.

“There are always surprises in the way that schools are funded,” Packer said.

While cuts have become a regular part of the budgeting process, Packer said he doesn’t want them to hinder classroom performance — something that’s important in a district that has steadily improved its test scores in recent years.

“We’re just beginning to cross the bridge,” he said. “And by the time we get to the other end of the bridge, we’ll be stronger.”