Pali Digs Deeper into Budget Reserve

With the deadline to submit a budget to the state looming, Palisades Charter High School’s board of directors voted 8-2 on June 9 to approve a $21.7-million budget, which calls for dipping into the reserve by about $840,000. ‘I am concerned about going into the [$5.3 million] reserve to this extent,’ Board member Darcy Stamler (a parent representative) said before the vote. Board Chair Rene Rodman agreed: ‘If we have three years of [state cuts], we are out of reserve. We need to make this organization stable over the long term.’ Although the school has a $5.3-million reserve, $1.5 million of that money is designated for lifetime retirement benefits. PaliHi’s Chief Business Officer Greg Wood informed the board that the budget could be resubmitted after the June 30 deadline, but ‘we have to have a starting point,’ he said. Therefore, the board charged PaliHi’s Budget and Finance Committee to reexamine the budget this summer to find another $340,000 in savings. The board does not want to dip into the $5.3-million reserve by any more than $500,000. The committee, which is charged with creating a proposed budget for the board to approve, already trimmed the 2009-10 operating budget by $1.1 million this spring.   Some of those cuts include reducing facilities and technology expenditures by $300,000; cutting consulting contracts and facility costs with Los Angeles Unified School District by $280,000; and trimming textbook spending by $200,000. In addition, three days of professional development will be eliminated or reduced to one day for a savings of about $100,000, Wood said. Teachers currently have the option of participating in the training, which is before school starts in September (the hours are not a part of the contract year). PaliHi will also offer fewer summer school courses for a savings of $63,000. Wood explained that the committee would have proposed a more balanced budget, but when it met on May 26 to develop its final proposal, it did not know how the failure of the May ballot measures would affect funding, or the amount of federal stimulus money it would receive. The school received $800,000 in federal stimulus money for 2008-09, but Wood said funding from the state fell more than the committee anticipated, resulting in a larger deficit. PaliHi could, however, receive more federal stimulus money in 2009-10. ‘If there is any bright news on the horizon, I’d say that’s where we might have it,’ said Wood, who told the board it is fortunate to have such a large reserve, created since the school gained fiscal independence from Los Angeles Unified School District in 2003. The state requires schools to have 3 percent of its funding in reserve, and PaliHi is at 15 percent. As a result, the school does not have to lay off employees this fall (salaries and benefits make up 81 percent of the budget). Rodman agreed, but said PaliHi may have to negotiate with the unions to cut a percentage of employees’ salaries in the future if the economic situation does not improve. The board also decided to develop a strategic plan by October for rebuilding the reserve through fundraising, corporate partners and grants. The goal would be to replace the reserve money used this fall for education. In the approved budget, $25,000 was set aside to hire a fundraising consultant for that purpose. ‘The coming years will be a challenge,’ Wood said.