ENCINITAS — The San Dieguito Union High School District recently reported that it could face a $9 million deficit for the current school year budget, a revelation that alarmed some parents and stakeholders and caused some to criticize the district’s financial decision making.
But school officials said the district is being overly cautious with its financial projections, which has painted a bleaker picture than what will likely occur.
“We always over estimate our expenditures and underestimate our revenues,” Interim Superintendent Eric Dill said of the district’s budgeting practices. “Our first interim budget is always the worst-case scenario and our work is to close that gap.”
The “gap” Dill referred to is the $9.768 million gap between the projected revenue, $129.9 million, and projected expenditures, $139.7 million, reported to the school board at the Dec. 8 meeting.
District officials originally projected a $6.68 million budget deficit for the school year, but reported nearly $3 million in additional expenses that caused the deficit to rise to the levels that surprised some parents and angered others.
Dill said that some of the increased expenses are carried over from the previous year, when the district received the funds. For example, the district received $1.1 million in restricted funds from the California Lottery last year, but is spending the money this year. So while the books show it as a $1.1 million deficit this year, the district has the money to cover the expenses.
The interim superintendent said the district is confident it will be able to close the gap without layoffs, and that some of the savings are already built into the budget. One example, Dill said, is that the district is required to report a full-year’s salary for the superintendent position, even though the district is still looking for a full-time superintendent.
Additionally, added personnel costs associated with Common Core training over the past three school years is coming to an end as the professional services initiatives aimed that preparing district employees for Common Core are ending.
And the district is cautiously projecting revenues, even though the district’s average daily attendance — the census of the school population — is expected to grow, with new homes being built on the district’s southern edge in Carmel Valley.
One of the most vocal critics of the district’s spending is Lucile Lynch, who ran unsuccessfully for the school board this fall. She criticized incumbents Beth Hergesheimer and Joyce Dallesandro for painting a rosy financial picture to justify the district’s recent decision to give teachers and employees a 12.5 percent pay raise.
During the election, the incumbents touted the previous district year’s budget, which ended in a $4 million surplus.
Lynch said she believed this was disingenuous because the district was already projecting a deficit for the following year.
“The board has an obligation to address the district’s fiscal health with transparency,” Lynch said. “By saying you have a surplus when you know there is a deficit on the horizon, that clouds the issue. That is not a true million-dollar surplus.”
“Nine million (dollars) is a huge projected deficit,” Lynch said. “Let’s say the district forces early retirement for some teachers and saves $2 million, that still leaves a $7 million gap.”
“If you knew that you were going to have this large deficit, then why did you have to give 12.5 percent raises across the board?” Lynch said.
Dill said that the district has historically been cautious in its interim budget projections and outperformed them when the books are closed at the end of the school year.
For example, last year the district was projecting a $2 million deficit all the way until the books were closed and determined that revenues were higher and expenses were lower, resulting in the reported $4 million surplus.
“We built back in expenditures from the prior year that we believe we will actually accrue this year, and we are cautious on our revenue projections,” Dill said. “Those two things almost always result in an increase in the deficit.”
“This time of the year, we have to remind many people that this is a story that we have told before, it is a pattern that repeats,” Dill said. “I think people who have been around long enough understand that this is how the first round often goes.”