MOORLACH UPDATE — San Bernardino County School Districts — November 5, 2018

The Sun provides my editorial submission on the public school districts in San Bernardino County.

For Orange County, see MOORLACH UPDATE — Get Mad, Get Motivated — October 19, 2018.

For Riverside County, see MOORLACH UPDATE — Riverside County School Districts — October 31, 2018.

For a complete overview, see MOORLACH UPDATE — Public Schools Financial Crisis — November 3, 2018.

Sacramento will have to be focusing more on how it funds the education of California’s students. As one of three members of the Senate Budget and Fiscal Review Subcommittee One on Education, you can be sure I’ll be encouraging my two Democratic colleagues that action is required and the sooner the better.

OPINION

All San Bernardino County

school districts but three bleed

red ink

By JOHN MOORLACH

https://www.sbsun.com/2018/11/03/all-san-bernardino-county-school-districts-but-three-bleed-red-ink/

Of San Bernardino County’s 33 public school districts, only three boast a positive balance sheet. Unfortunately, the other school districts have balance sheets that bleed red ink.

The scoring comes as part of my new report, “Financial Soundness Rankings for California’s Public School Districts, Colleges & Universities.” It reviews the financial soundness of all 944 California public school districts. I performed a similar review of California’s 482 cities back in March.

The rankings derive from each district’s latest Comprehensive Annual Financial Report, which you can find on their respective websites. In each CAFR, look for the “Basic Financial Statements,” starting with the page titled “Statement of Net Position.” Look at the top row for “Government Activities.” Then look down the column to where it says, first “Net Position,” then “Unrestricted.” That’s the number you want: the Unrestricted Net Position, or UNP.

The number will either be positive or, with parentheses around it, negative.

I also divide the UNP by the district’s population to get a per-capita UNP. If negative, that’s the amount each person in the district is in hock for, whether or not your children attend school. Citizens should be concerned about the trajectory of these negative balances, which are commonly attributed to unfunded pension liabilities. As school board members are auditioning for their jobs, they need to be held accountable for dealing with these liabilities.

If the negative number runs too high too long, it will mean cuts in teachers, equipment, band and sports, and ultimately calls for tax increases. In the worst cases, takeover by the state, even bankruptcy, is not out of the question.

Trona Joint Unified boasts a positive UNP per capita of $6,354, the top for the county and the third best of the state’s 944 districts. Bravo! That’s quite an accomplishment. It’s followed by Baker Valley Unified, at $2,223, the 17th best in the state. Then by Cucamonga Elementary, at $1,842, the state’s 23rd best.

Scoring three districts in positive territory, San Bernardino surpasses neighboring Orange and Riverside counties, each of which had just one with a positive balance sheet.

That’s the end of the good news. The remaining 30 districts dip into the red. Fourth best in the county is Chaffey Joint Union High, 323rd best in the state at ($462); next is Alta Loma Elementary, ranked 325th at ($465). At least they were in the top third of California districts.

Only 10 districts in San Bernardino County were in the top half of the state’s 944 districts.

The two lowest-ranking districts were Mt. Baldy Joint Elementary, in 888th place at ($1,688); and Fontana Unified, in 882nd place at ($1,662).

While I’m not predicting bankruptcy for these districts, I’m sure everyone in the county is aware of the risks from the city of San Bernardino’s 2012 Chapter 9 filing. For comparison, the city’s CAFR for 2011, the year before it entered a federal courtroom, showed a UNP of ($260.9 million). That put the per capita UNP at ($1,232). But, this was before the unfunded liability for the employees’ defined-benefit pension plan had to be included in the balance sheet.

As with the city, the problem with these schools districts being in the red largely rests with excessive pension costs busting budgets.

Among the largest districts by population, Chaffey Joint Union High in Ontario ranked 323rd, with a ($462) UNP per capita, Fontana Unified placed 882nd at ($1,682) and Silver Valley Unified placed 880th at ($1,642).

In terms of the raw totals of how much these districts are underwater, the numbers are: ($192 million) for Chaffey, ($405 million) for San Bernardino City Unified and ($309 million) for Fontana. That’s nearly a billion dollars for just three districts.

Here are the per capita UNPs for all of San Bernardino County’s school districts, best to worst:

  1. Trona Joint Unified               $6,354
  2. Baker Valley Unified             $2,223
  3. Cucamonga Elementary       $1,842
  4. Chaffey Joint Union High      ($462)
  5. Alta Loma Elem                      ($465)
  6. Barstow Unified                      ($559)
  7. Lucerne Valley Unified          ($632)
  8. Etiwanda Elementary            ($644)
  9. Victor Valley Union High       ($649)
  10. Helendale Elementary           ($696)
  11. Ontario-Montclair                   ($726)
  12. Morongo Unified                     ($774)
  13. Snowline Joint Unified           ($746)
  14. Apple Valley Unified               ($787)
  15. Rim of the World Uni              ($832)
  16. Mountain View Elem              ($876)
  17. Victor Elem                               ($889)
  18. Yucaipa-Calimesa Joint          ($899)
  19. Chino Valley Unified               ($952)
  20. Hesperia Unified                     ($965)
  21. Adelanto Elementary             ($986)
  22. Bear Valley Unified                 ($987)
  23. Oro Grande Elementary     ($1,037)
  24. Redlands Unified                  ($1,097)
  25. Rialto Unified                        ($1,131)
  26. Needles Unified                    ($1,155)
  27. Upland Unified                     ($1,265)
  28. Colton Joint Unified             ($1,417)
  29. Central Elementary             ($1,473)
  30. San Bernardino City Uni    ($1,531)
  31. Silver Valley Unified           ($1,642)
  32. Fontana Unified                   ($1,662)
  33. Mt. Baldy Joint Elem           ($1,688)

The tallies are part of my effort to track the per capita UNPs of California’s various government balance sheets. In addition to the city balance sheets mentioned earlier, I have tracked counties, community colleges, California State University and the University of California as well as all 50 U.S. states.

You can follow all these analyses on my legislative website. The reports will be regularly updated.

Next year is going to be especially revealing – and distressing – as the Governmental Accounting Standards Board for the first time will require balance sheets to include unfunded retiree medical liabilities, which will show even more city and school districts in critical condition.

And when the next economic recession hits, for even those modestly distressed, it’s going to be one big financial train wreck.

Let’s hope our elected school board members and their administrative staff get in front of this serious cash management squeeze on their horizon. It’s time to be proactive, as taxpayers are not very forgiving with those who are reactive. Especially with supposed leaders who only have one solution: raise taxes.

John M.W. Moorlach, R-Costa Mesa, represents the 37th District in the California Senate

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