State Fiscal Stabilization Funds: The federal stimulus package, known as the American Recovery and Reinvestment Act (ARRA) of 2009, provided the state of California with funding for the State Fiscal Stabilization Fund (SFSF). MCUSD applied for and was granted federal SFSF funding, which was received late in the 2008-09 budget year. As such, MCUSD, like most SDs, ended up carrying over a significant amount into 2009-10. These are one-time funds with specific spending guidelines that are also reflected in the ending balance. These funds are intended to implement school reform and improvement efforts, while also saving and creating jobs. These one-time resources are to be spent in ways most likely to improve results for students, long-term gains and school system capacity. Districts are required to submit a quarterly expenditure report to ensure accountability.

Cash flow, deficit spending, and multi-year budget projections: The state is expected to make additional cuts to funding mid-year and to continue to delay payments to educational agencies. Furthermore, it is expected to take the state several years to restore lost funding to education. In addition, most of MCUSD’s unrestricted general fund 82.4 percent supports personnel costs. Typically these costs rise every year, due in part to salary and health benefit increases that deservingly come with years of service. Given these factors, MCUSD, like many SDs, slowed down spending and made cuts to build 2008-09 reserves. This was done in order to make required multi-year budget projections that show economic solvency for the current and two successive school years, plus ensure enough cash on hand (cash flow) to meet payroll needs, and other expenditures. Even so, the MCUSD, current year, 2009-10 budget reflects deficit spending (more expenses than income), which cannot continue indefinitely. Moreover, experts warn that seemingly high 2008-09 ending fund balances are unlikely to carry SDs through the next few years. Careful budget management is imperative.

MCUSD continues to investigate other cost saving measures, with a committee now formed to study the option of implementing a four-day school week and another soon forming to investigate school consolidation if it becomes a financial necessity.

The financial challenges facing SDs throughout the state will undoubtedly continue for the next few years. And while MCUSD’s budget reduction efforts in 08-09 have resulted in an ending balance that will help to address the 09-10 funding reductions, careful multi-year budget planning will continue to be a crucial element to the district’s ongoing success.