Dear Lagunitas School District Community,
At the Board of Trustees meeting on November 20, our administration and board took preliminary steps to address the District’s most significant challenge, an on-going budget deficit.
The law requires that we maintain a reserve of 5% of our overall budget each year. In addition to that, our Board has demonstrated fiscal responsibility by choosing to adopt a policy increasing that amount modestly to a level of 8%.
In the past, the District has been able to maintain that prudent and legally required cash reserve for uncertainty even while deficit spending; essentially we have been able to draw on our reserve in order to pay for our unique and important school programs when other funding was not available. We have also periodically and unpredictably received one-time money from the state and federal government that has allowed us to continue to fund our programs without depleting our reserve to dangerous levels.
In November, when the Board of Trustees approved our interim budget, a critical piece of information became clear: If we continue to spend as we have for the last few years, we will not meet our legal reserve requirement three years from now. Beyond that, we would risk insolvency. Because of that reality and because we cannot count on additional funding from other sources, our Board approved the interim budget in qualified status, meaning that that we have the funds necessary to operate but that we must now develop a plan and take action to balance our budget.
Approving a qualified interim budget is an important first step in addressing our problem. In addition to taking that action, the Board has asked me to inform our school community about this situation, which I am doing by sending you this letter. They have also directed me to form a special finance committee that will work with them in an advisory capacity to develop a plan to address the deficit.
I will be working with the three programs, employee groups and the community to form a committee that will represent the various interests of our school and provide financial and programmatic insight. The board has scheduled a meeting for January 8 with an agenda that will allow for a preliminary discussion with that committee about the process they will adopt to decide on what spending reductions and other changes would be most reasonable. Subsequent opportunities will also be provided for broad public input as we work to solve this problem.
My intent is not to cause alarm. We are still solvent and will be for some time. We will find a way to maintain the core elements and many of the extras in our programs while spending within our means. However, I do not want to sugar coat the matter either. The plain fact is that we spend more money than we receive each year and we need to change that. As a public school district, our capacity to generate income is extremely limited and each year we face large and unpredictable costs that force us to spend from our reserve. We will have to reduce our spending to meet our goal. It will not be easy but our community has repeatedly demonstrated the capacity to work through difficulties and we have every reason to expect that we will rise to this challenge as well.
John Carroll, Superintendent
January 8, 2015