Where is the
District’s 8% in Reserves?
The District has disputed LCTA’s
claim that there is a predicted reserve in excess of 8%. We would
therefore like to clarify where these monies can be found in the
District’s second interim budget that was presented to the community at
a school board meeting in January 2005 to substantiate this
claim. If anyone is interested in looking through a copy of the
District’s budget, you may request a copy from the District office.
- The end of the year general fund balance is predicted to be
$1,115,644. This includes the county recommended reserve of 3%
($1,099,644) for economic uncertainties. This leaves
approximately $16,000 available to be used for any purpose.
- Another fund called the special reserve fund (Fund 17) has $1.2
million. The county and state do not require any money to be left
in this fund at the end of each school year. Approximately
$330,000 was moved into this account to pay for the 2% STRS
contribution that the governor threatened to make Districts responsible
for covering. Of course, we now know that the governor is not
requiring Districts or any other public employers to budget for this
cost. This makes that money available again for the District to
utilize as they see appropriate. The $330,000 would cover the
cost of a 2.36% cost of living adjustment for the teachers,
psychologists, counselors and nurse. Beyond this, the other
$870,000 can also be used at the District’s discretion.
- The retirement fund (Fund 71) has a reserve of $170,000 which is
also not required to have a balance at the end of a school year.
The District claimed on their
website on May 12, 2005: “Another challenge with reserves is that they
represent 'savings accounts' or one-time money. Since compensation is
on-going, it would not be prudent for the District to use 'one-time
money' to increase compensation since the money may not be available in
following years from that depleted fund.”
LCTA’s response: The funded
increase of 3.57% that the District received this year will be funded
next year. In addition, the District will receive 4.23%
(estimated in the Governor’s May revise of the state budget).
This means that the monies will increase for the 2005-2006 school
year. With the certainty of the upcoming increases in funding,
there will continue to be enough money to provide District employees
with a cost of living adjustment as well as maintain healthcare without
jeopardizing the economic security of the District.
The District claimed on their
website on May 12, 2005: “California law usually requires the depleted
reserves be restored, which might be impossible without increased state
revenue.”
LCTA’s response: The state of
California does require that the 3% reserves be restored each year if
they are used during the school year for economic uncertainty. It
does not require that all reserve funds be restored, therefore, the
District is not in danger of needing to use future monies to restore
any reserve accounts.
Last updated: May
26,
2005 - Return to LCTA homepage