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George Neely Lodi Unified School District has much at stake on November ballot

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George Neely

George Neely, Lodi Unified School District trustee

“It’s a misconception that we can’t get rid of a teacher who’s not performing. If we’re having a problem with a teacher, there are ways we have dealt with that in the past.”

George Neely, Lodi Unified School District

“I don’t think there was anybody there who didn’t want to bring graduations back, but there are physical limitations.”

George Neely

Age: 61.

Occupation: Director at ABLE Academy.

Family: Married 18 years in second marriage, with two sons from a previous marriage.

Community activities: Board of trustees for GOT Kids Foundation; former member of the Lodi Public Library board; enrolled in night school to get his administrative credential.

Posted: Tuesday, October 9, 2012 12:00 am

In November, California voters will make a choice that could substantially impact the funding of our schools. Propositions 30 and 38 both increase revenues by raising taxes and promise to fend off further budget cuts to education.

I will not go into the details of the propositions, as much has been written about that already. However, I would like to shed some light on the current situation at Lodi Unified and the potential impact of the propositions here at home.

If there are no further cuts to the state budget after the November election, Lodi Unified should get about $214 million in revenue for the current fiscal year. Of that amount, 92 percent will come from state and local taxes and other 8 percent from the federal government. This is a decrease of the about $28 million, or about 12 percent, over the last four years.

The biggest part of our state revenue is based on our Average Daily Attendance, or ADA. The more students that attend school, the more money we receive. On the surface that sounds like a good idea, but in practice it causes a lot of problems.

There are currently about 28,500 students attending Lodi Unified schools, and we have over 50 schools. Current funding is about $5,000 per student. Let's say that we had a decline of 200 students spread out over the district (we have had much greater drops than that recently, but round numbers are easier to work with). That means we would lose $1 million in state funds. However, the cost of running the schools would remain almost the same. A decline of a few students per school site does not reduce our fixed cost. We still need the same number of teachers and other staff. We still have to light, heat and cool the classrooms. We still have to provide all the same services, but with substantially less money.

Where does our money go? Our biggest expense by far is personnel, which in the current year is about 81 percent of our total expenses. This covers all salaries and benefits for the entire district. We budget about 10 percent for books and supplies, and about 9 percent for contracted services. The category of "contracted services" covers everything from copier leases to alarm monitoring and much, much more.

If you look at our latest amended budget, you will see that Lodi Unified shows a healthy reserve of about $52 million. Part of the money is held in reserve for known future major expenses facing the district, and part it is held due to the uncertainty of the state's fiscal situation.

Sounds great, doesn't it? The problem is that we don't really have that as cash. Most of it is the form of IOUs from the state. This is one of those "smoke and mirrors" moves by our state government to make it look like they're funding education while balancing the budget. What they actually do is move a portion of the money schools are allocated for the current year into the next fiscal year. So, not only did the state cut funding to our schools, but some of the money they allocated to us doesn't come until the next year.

Apparently our legislature likes this particular tactic, as they have repeated the process several times. They are now in debt to Lodi Unified for over $40 million. This means that in order to meet our obligations in a timely manner, we must borrow against the IOUs. The interest we pay on that money comes from our general fund, and last year it amounted to about $500,000.

The bright side to having this large reserve (even built on the IOUs) is that, unlike many other districts in our area, Lodi Unified was able to avoid layoffs this year. That is a big deal. In addition to the educational and personnel benefits of keeping our people in their jobs, we didn't have to waste money on the layoff process or the inevitable attorney fees associated with layoffs. The estimated savings here is about $350,000.

Another advantage is that, regardless of the outcome of the November ballot measures, Lodi Unified will be able to make it through the current school year. However, what next year holds for this district is dependent on November's ballot.

If Prop. 30 does not pass, Governor Brown and the legislature will cut education funds. This cut will translate to about $12 million for Lodi Unified. It will be effective for the current school year and, in all likelihood, continue into next year as well. Our reserve will be slashed this year, gone next, and we will be in the red on the third. The significance of this is that a school district risks intervention by the county and the state into their management if they cannot show three years worth of a stable budget.

We also need to understand that if Prop. 30 does pass, Lodi Unified will not receive additional funding. Any extra revenue generated from Prop. 30 will be used to pay some of the massive debt owed to schools. That only means that we will be forced to borrow a little less.

The other measure on the ballot, Prop. 38, calls for higher income tax hikes and targets money to specific areas of education. The problem is that, even though it directs money to schools, the legislature can reduce other sources of school funding, thus wiping out any gains.

So here are my thoughts on the situation: No one likes or wants a tax hike, but the impact of another $12 million cut from our district's budget is unacceptable.

The impact will also be felt in our community. Lodi Unified is the largest employer in this area, and with 81 percent of our budget going to personnel, we know it will not be possible to achieve cuts of that magnitude without cutting payroll. A reduced payroll to our employees means fewer purchases on the local economy. It means fewer dinners out or trips to the movies for LUSD employees and/or employees that have been let go.

I understand the reluctance of some to vote to raise taxes. I respect philosophical differences of opinion on this issue, but I sincerely believe that the alternative is far worse. Lodi Unified has already absorbed over $28 million in funding cuts in a short time. The possibility of a retroactive cut of $12 million and the momentous consequences it brings must transcend those philosophical differences.

George Neely is a Lodi Unified School District trustee.

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