MOORLACH UPDATE — School Districts of San Diego County — November 16, 2018

The San Diego Union-Tribune provides my editorial submission on the public school districts in San Diego 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 San Bernardino County, see MOORLACH UPDATE — San Bernardino County School Districts — November 5, 2018.

For a sneak peak at San Diego County, see MOORLACH UPDATE — San Diego County School Districts — November 7, 2018.

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

With the Legislative Analyst’s Office projecting another year of surplus revenues this week, and a new Governor come January, it will be interesting to see what Sacramento will do to financially assist its strapped school districts.

Commentary

Why school districts must focus on financial plans

JOHN M.W. MOORLACH

https://www.sandiegouniontribune.com/opinion/commentary/sd-oe-moorlach-school-budgets-utak-20181115-story.html

Only one of 42 public school districts in San Diego County enjoys a positive balance sheet, Spencer Valley Elementary in Santa Ysibel. The balance sheets of the other 41 districts are dipped in red ink, some substantially.

The scoring comes from my recent report, “Financial Soundness Rankings for California’s Public School Districts, Colleges & Universities.” It reviewed the financial soundness of all 944 California public school districts.

The rankings derive from each district’s latest Comprehensive Annual Financial Report, which you should be able to 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, commonly attributed to unfunded pension liabilities.

If the negative number runs too high too long, it will mean cuts in teachers, equipment, band and sports, and ultimately calls for parcel taxes and more statewide tax increases like Proposition 30. In the worst cases, takeover by the state is not out of the question.

Spencer Valley ran up a positive UNP per capita of $8,007, the 11th best in California. Great.

Unfortunately, after that every district ran negative UNPs per capita. The second “best” in San Diego County was Julian Union Elementary at -$147, 153rd best in the state. Following were San Marcos Unified, in third place in the county at -$150, and 156th best in the state; and Warner Unified, in fourth place in the county at -$201, ranking 172ndbest in the state.

Half of San Diego County’s districts scored in the top half of the state’s 944 districts. That at least is a better performance than for districts in the nearby counties of Orange, Los Angeles, San Bernardino and Riverside.

What’s of greatest concern is the bottom of the list. In 42nd and last place for the county was Cardiff Elementary, at -$2,139, 912th among the 944 state districts. In 41st place for the county was Valley Center-Pauma Unified, in Valley Center, at -$1,756, ranking 894th in the state.

Of special concern is the most populous district: San Diego Unified’s UNP per capita is -$1,381, fifth-worst in the county. But here’s the sticker shock: The UNP itself is -$1.5 billion. The only district even deeper in the red in California is Los Angeles Unified, at -$10.9 billion.

I also have scored the balance sheets of the state’s 58 counties and 482 cities. San Diego city bleeds -$1.6 billion in red ink, -$1,122 per capita. The county bleeds -$1.2 billion in red ink, -$347 per capita.

Add up SDUSD, the city and the county, and the geyser of red ink amounts to $4.3 billion, or -$2,850 per capita. For a family of four, that’s -$11,400!

The per capita UNPs for the 10 best districts, the best on top:

Spencer Valley Elementary           $8,007

Julian Union Elementary                 -$147

San Marcos Unified                           -$150

Warner Unified                                   -$201

South Bay Union                                 -$247

San Dieguito Union High                   -$312

Solana Beach Elementary                  -$361

San Ysidro Elementary                       -$370

Lemon Grove SD                                  -$385

Rancho Santa Fe Elementary             -$401

The per capita UNPs for the 10 worst districts, the worst on top:

42. Cardiff Elementary                      -$2,139

41. Valley Center-Pauma Unified    -$1,756

40. Jamul-Dulzura Union Elem       -$1,659

39. Mountain Empire Unified          -$1,652

38. San Diego Unified                         -$1,381

37. Oceanside Unified                        -$1,290

36. Vista Unified                                  -$1,215

35. Poway Unified                               -$1,090

34. Bonsall Unified                              -$1,006

33. San Pasqual Union Elem                 -$969

Next year, the Governmental Accounting Standards Board for the first time will require that balance sheets include unfunded retiree medical care liabilities, which will show even more city and school districts in critical condition.

It’s time for school district leaders to develop 10-year strategic financial plans that are well communicated to their constituents. You need to know how your district plans to move up its position in the objective ranking.

Moorlach, R-Costa Mesa, represents the 37th District in the state Senate. A CPA, he was Orange County’s treasurer-tax collector.

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