Paso school district’s reserves are below 1% — and now the county is stepping in to help

The Paso Robles Joint Unified School District is working through a budget crisis.
The Paso Robles Joint Unified School District is working through a budget crisis.

Paso Robles Joint Unified School District’s budget reserves have seen a steep decline during the past few years — now county education officials have stepped in to help clean up its financial situation.

The district’s reserves for economic uncertainty hit 0.96 percent at the end of the 2017-2018 school year, down from the 3 percent reserve school officials projected in June, according to the San Luis Obispo County Office of Education.

County officials gave a presentation at Tuesday’s Board of Trustees meeting and announced steps the district will take to correct its finances, including potential cuts to next year’s budget.

The California State Board of Education requires that Paso Robles maintain a minimum reserve of 3 percent. The district’s current $754,413.60 reserve is less than 1 percent of its total $78,274,810.87 budget.

The district’s emergency fund has decreased markedly since 2015, when it maintained a 10 percent reserve. By February, the reserve had been drawn down by half, to 5.63 percent.

Superintendent Chris Williams then attributed the decline to accounting errors made before he became head of the district in 2014.

In addition, he said the 2016-2017 average daily attendance was miscalculated, causing officials to overestimate how much state funding schools would receive.

Sheldon Smith, assistant superintendent of business services for the county, said the recent decline was again the result of over-projecting average daily attendance. The district used 2017-2018 numbers to project 2018-2019 attendance, which turned out to be inaccurate.

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In addition, two of Paso Robles’ top financial positions — chief business officer and fiscal director — were vacant for extended periods of time and were only recently filled, causing understaffing issues, Smith said.

Smith conditionally approved the district’s budget because Paso Robles has enough money to make it through the year. Moving forward, district officials must meet four guidelines set by county education officials.

  • Officials will develop a fiscal stabilization plan by Nov. 5 showing an ability to maintain a 3 percent reserve for multiple budget years.
  • The district will form a budget communication committee to update constituencies on the district’s fiscal health.
  • A fiscal crisis management team will conduct a risk analysis to show what went wrong with the district’s finances.

  • A fiscal advisor will monitor the district’s stabilization plan progress.

District plans for the future

Although the district must cut expenditures, administrators and trustees said layoffs will be a last resort and facilities projects will continue as planned.

Brad Pawlowski, who became the district’s chief business officer in July, said the dropping reserve was largely the result of average daily attendance calculation errors and overspending on personnel.

Officials’ plan to increase the reserve includes assessing district management positions, evaluating existing programs, increasing fees and looking at overall positions, in that order, Pawlowski said.

“Our board is committed to tackling this problem head-on,” he said.

Some board trustees were more optimistic than others about improving the district’s fiscal situation.

Trustee Chris Bausch said he thinks it will take at least three years to correct the district’s finances. He said the district has been aware of its overspending and failed to curtail it.

“I think the board is to blame because we failed to keep track on the numbers,” he said.

Trustee Field Gibson said he sees the situation as an accounting process issue. The district needs to fix its financial system and tighten its belt to improve things, he said.

Gibson also mentioned a lack of continuity in the district’s financial administration and said Pawlowski is the fifth chief business officer he’s worked with during his eight years on the board.

“It’s not a crisis,” he said. “We have an accounting problem.”

Trustee Matt McClish, who was appointed to replace an outgoing board member in November, said he welcomes the county’s help and looks forward to reviewing their assessment of the district’s fiscal health.

McClish said if the district were his own business, he’d want to make sure there were processes in place to make sure the situation never happens again.

“Time will tell, but I think in a year, this is all going to be in our rearview mirror,” he said.

Lindsey Holden: 805-781-7939, @lindseymholden
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