TUSD at Risk of Not Meeting Future Financial Obligations

A recent financial report submitted to the California Department of Education (CDE) by TUSD received a qualified certification indicating that the district may not meet its future financial obligations. The CDE requires that school districts file bi-annual reports on the status of their financial health. These reports are certified as either positive, qualified, or negative. A qualified certification is assigned when a district may not meet its financial obligations for the current or two subsequent fiscal years.

TUSD Deficit Spending

TUSD’s current budget, approved last Monday, forecasts that the District will continue running large deficits over the next several years. In the current year, TUSD ran a $9.5 Million deficit. The projected deficit amount over the next three years is a hefty $22.5 Million.

The deficit spending is putting a huge dent in what was once a very healthy reserve. As recently as Fiscal Year 2013-14 the District had a budgeted $46.1 Million in reserves. The forecast now indicates the reserve will plummet to only $5.2 Million by FY 2019-20. That figure is $2.3 Million below the state mandated minimum.

Just prior to his retirement last year, former Deputy Superintendent Dr. Stabler explained that the District was intentionally spending down the reserve at the behest of the School Board. Alluding to why the Board took such action he said, “It’s the unions that don’t want us to have a reserve because they want to spend the money on salary increases.”

TUSD’s approved budget also included 29 financial indicators that were reviewed to determine fiscal health. Of those 29, 12 were marked as potential areas of concern for fiscal solvency purposes that should be carefully reviewed. Among those areas of concern were:

  • Salaries and Benefits;
  • Available Reserves;
  • Long-Term Debt Commitments;
  • Post Employment Benefits Other than Pensions;
  • Status of Labor Agreements; and
  • Declining Enrollment

During the budget hearing, Board member Michael Wermers commented that the District had never done a qualified budget before. Wermers also noted that other local districts were not facing similar financial challenges and asked whether the District was being overly conservative in its estimates or if things would really get a little hairy in the next couple of years.

In response, superintendent Dr. Mannon attributed the budget challenges to major issues in the state with regard to pension contributions and increases in special education costs. He also insinuated that other Districts not projecting similar challenges to TUSD were either lucky or they were lying.

There are 1025 school districts in California. TUSD is one of 43 districts that received either a qualified or negative certification in CDE’s most recent report. The distinction puts TUSD among a grouping of only 4% of the districts in the state that received the worrisome qualified certification.

School Board Narrowly Extends Controversial Policy Allowing Local Schools to Fundraise for Personnel Expenses

The School Board narrowly approved an extension to a controversial policy that allows local school sites to raise funds to pay for personnel expenses. Had the extension not been approved it would have likely meant the end of elementary booster organizations like the Anza Eagle Education Alliance that were created to help raise funds for needed intervention teachers and other enrichment programs. The 3 to 2 vote followed a somewhat tense discussion, which is an uncommon occurrence for a generally chummy Board that typically passes everything by unanimous vote.

The policy in question was first enacted in 2010 at a time when the District was weathering an economic storm that resulted in deep budget cuts and a sizable reduction in the District’s teaching staff. School Board member Mark Steffen, a consistent critic of the policy, once again argued fervently against it stating that the fiscal conditions are no longer what they were back in 2010. He also added:

“I got to look at every kid and I can’t say look you guys over there have more dollars in your pocket … [so] I’m going to just let you buy a better education than these [other] guys can afford. We might as well have a private school or a charter school … I think it’s inherently wrong for the Board to allow that kind of segregation through finances.”

Board member Terry Ragins joined Steffens in voicing opposition to the policy by stating, “We are a unified district and we are not providing a unified and consistent set of resources to all of our students in all of our schools by allowing this.”

One of the yes votes, Board Member Don Lee commented that he wholeheartedly agreed with Steffens and said that if he could rewind the practice to back when it first started that he would say no, but that it this point he didn’t think they could put the genie back in bottle.

Another one of the yes votes, School Board member Michael Wermers offered his belief that, “we got problems coming financially,” further commenting that “I would dance with the devil to keep funding in our schools.”

When the policy was first enacted Wermers had expressed his uneasiness about it by stating, “Frankly, it gives me the creeps, but in dire, desperate times, we have to make dire, desperate decisions.”

The other Board Member Martha Deutsch, who rarely speaks during Board meetings, was silent on this topic as well, but did vote yes joining Wermers and Lee in the majority.

Only a handful of the elementary schools in the district take advantage of the policy. Riviera appears to be the greatest beneficiary having raised $421,000 in the last three years that it spent on intervention, science, computer, and music teachers. The funds raised by other schools pale in comparison. Victor raised $146,000, Anza $110,500, and Seaside $86,000. None of the other elementary schools raised funds nearing those amounts while Adams, Carr, Lincoln, Torrance, Towers, Wood, and Yukon didn’t raise any funds at all towards personnel expenses.

During the meeting, Ragins also said she was troubled that some of the schools raising funds were not following the minimum set of requirements that the School Board had set out. School Board member Don Lee pressed Ragins to elaborate on that comment, but Ragins would not say more expressing hesitation due to the public setting. She did, however, suggest that the District was investigating the policy violations.

Those procedures as outlined by the policy are as follows:

  1. Funds must be deposited in full with Torrance Unified School District prior to submission of any personnel requisition.
  2. All site decisions must have the approval of the site principal.
  3. All personnel rules and regulations must be followed.
  4. Personnel, paid the contract hourly rate, may be hired for intervention and/or enrichment programs.
  5. Classified personnel may be hired as long as they are paid on an hourly basis.

The extension of the policy approved by the Board will sunset 30 June 2020.

Torrance’s Excessive Spending: Guest Commentary by Elaine Wilson

IN RESPONSE TO THE DAILY BREEZE ARTICLE: http://www.dailybreeze.com/…/rising-pension-costs-crimp-tor…

“Gadfly”!!!! –  A pejorative, demeaning and a typical response voiced by Torrance City Government when a community member forces them to face their excessive spending. NEVER would they have begun to address budgetary problems facing the City, if Mark Stephenson had not continued to bring up the fact that current ‘accounting proof” shows that Torrance cannot continue to spend the amount of money on pension benefits that are NOT SUSTAINABLE and have been ignored for too long. AA rating??? Has anyone heard of Enron, Bernie Madoff, Countrywide or the Collapse of OUR economy 10 years ago???? Those were “excellent risk investments” with high credit ratings – UNTIL THEY WEREN’T .

Mark Stephenson made Torrance City Government face a very real problem. The City may not like the TITLE of Mr. Stephenson’s article:
“ACCOUNTING-WISE – TORRANCE IS BANKRUPT” but it was the ONLY response the I have seen to this problem OR TO Mr. Stephenson in the 2 years that I have been attending City Council Meetings.

In talking with long-time residents, the consensus is that Torrance is ‘stuck’ in the glory days of the 1970’s when money was coming in to City Coffers as if there was not going to be a 21st Century.

As a Torrance homeowner, I am acutely aware and concerned with increasing tax levies. These increases seem to be used to “Balance The Budget”. Curiously, a Budget, when presented, weeks ago, had an admitted ‘shortfall’ of at least $4 million dollars and then was inexplicably announced one week later as suddenly ‘balanced’!!! Councilman, Tim Goodrich was correct in asking for an AUDIT of Torrance City Budget. Thanks also go to Councilman Mike Griffiths who has expressed dissatisfaction with the disturbing process in which City Staff presents budget items and project costs to City Council and taxpayers. Projects never describe continuing costs for maintenance, landscaping, or replacement. Examples are: Proposed Gazebo for Wilson Park (over $800,00) – Proposed Splash Pad for Wilson Park ($1 Million which does not cover water costs, insurance, Two times a day–Chlorine application by worker in hazmat gear) – City Hall “Renovation” (Begins at $1 Million and includes New Fountain and ‘Great Seal’ of Torrance embedded in concrete at the entrance as well as Annex buildings ‘landscaping’) – Proposed Columbia Park ($1 Million Pathway Improvement) – Current and Proposed Electric Signage (Costs Unknowable –Continuing escalating costs for removal and relocation of ‘inadequate’ sign, new signs, upgrade of electrical connections, landscaping and sign ‘protection’ bollards)….the list goes on and on. Project ‘costs’ of $1 million dollars are recurring and misleading for both Council Members and Tax Payers.

Torrance Homeowner and Concerned Citizen,
Elaine Wilson

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