The Coastal Post - December, 1998

Lagunitas School Faces Take Over by County
In Deficit Two of Last Three Years.

By Jim Scanlon

Three members of the Fiscal Management Assistance Team met with the Directors of the Lagunitas School District on Tuesday, November 24 to explain their role in assisting the District in dealing with financial matters which have resulted in deficit spending for the past two years.

Tom Henry, the Director of the team was polite, courteous and conciliatory during his presentation to the Trustees which lasted an hour and a half. Henry explained that his staff would review the District's "First Interim financial report in December and evaluate it either as positive or negative because the District had been in deficit for the past two years.

"This isn't the first District we have come to", he said, " We look at this as an opportunity for staff and Board development". "You are not alone" he add.

Negative evaluations fall into two classes, "may result" or "will result" in deficit. Both result in intervention by his staff, with "will result" being considered a very serious situation requiring a higher level of intervention.

Henry was upbeat and positive, stating he goes up and down the State in the course of his activities and he felt the Lagunitas School District was well managed by a highly competent Superintendent and Business Manager and that there was nothing intrinsically wrong with deficit spending. But he said there were a few worrisome signs and explained how his staff would view the District's first interim report due in December.

Henry stressed that the District had to realistically adjust its budget to keep a 4% reserve fund on hand for economic uncertainty. When Trustee Jean Marlow said that the District had major unanticipated expenses, Henry was sympathetic, but said, the District could spend all its reserves, but had to budget them in for the next year. He seemed to be saying that Trustees might have to make some highly unpopular cuts and he mentioned a few times that negotiations for salary increases had not yet been taken into account.

The intervention of the Fiscal Management Team is not directly related to the highly controversial joint sewage construction project the District is currently completing together with its neighbor, the French Ranch (Luxury Home) Development. The meeting with the Team was the first time in the past year and a half in which the sewage plan has not appeared on the agenda. School Superintendent Larry Enos said that the partially completed system was almost ready for the school to begin using. (This will eliminate the expense of trucking and disposing of waste.)

Although State officials have verbally assured District staff that all expenditures from their half million dollar hardship grant will be reimbursable, and cost overruns (estimated at between $200 and $300 thousand) will be paid, there is still uncertainty. Henry mentioned during the meeting there was talk from Sacramento that an expected state surplus for next year was now being projected as a one billion dollar deficit, and this would add additional uncertainty to school funding.

There was no discussion of what the District would if state funds for its sewer project are not covered completely, but it would obviously result in a first class disaster.

Nor was there any mention of the situation of the Tamalpais School District which has a deficit of $1.7 million, whose financial affairs are being supervised by Henry's team. When this deficit became apparent, some officials criticized the Marin County Office of Education for not intervening earlier to prevent the massive deficit. It seems clear from the meeting with Lagunitas Trustees will not "take a fall again".

The Trustees will receive their First Interim fiscal report on December 8th, and on December 10th, state officials will consider reimbursement of funds from District's hardship grant and the cost overruns on the sewage project. It should be an exciting week!

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