Deficit Spending Notation In Central SD Resurrects Political Collusion Accusations

By Mark Gutglueck
Charges which surfaced at the height of this year’s electoral season that the administration in the Central School District had utilized public money for political purposes was resurrected this week when a district official offered information which suggests a mailer sent out in October contained an overly optimistic misrepresentation of the district’s state of finances.
The first week of October, the district at a $7,800 expense sent out a mailer to 18,000 households within the boundaries of the Central School District. Ostensibly, that flier outlined educational and other programs available at district schools and provided an update on Measure N, a $35 million bond approved by voters in 2014 to repair and update facilities. It stated “The Board of Trustees approved a 44 million dollar balanced budget for 2016-17, just four years after the biggest spending cuts California has ever seen in K [Kindergarten] thru 12 education.” Further down on the page it listed the names of the district’s board of trustees – Joan Weiss, Kathy Thompson, Stacy Henry, Hugh Jackson and Barbara Rich, in that order – as well as the district’s superintendent, Donna Libutti.
The mailer arrived in the mailboxes of district residents just as the absentee ballots and sample ballots for the November 8 election were being delivered to registered voters throughout the county, including those in the Central School District. The City of Rancho Cucamonga boasts five school districts, of which the seven-school Central School District is one. The district and Libutti came under fire at the time the mailer went out because two of the district incumbent board members, Joan Weiss and Kathy Thompson, were being challenged by Robert Moya, a retired railroad executive who has a grandchild attending school in the district. The mailer celebrated the district’s recent accomplishments and listed programs and activities at the district’s schools, while touting Central as “one of the top school districts in the county.” It read, in part, “The district maintains high levels of accountability and transparency to ensure all funds received are used to meet the needs of all students.”
It was alleged that the mailer was a thinly-veiled effort to boost the campaigns of Weiss and Thompson. Libutti, who had made no secret of her support of the incumbents and had been criticized by Moya on a number of issues, publicly took responsibility for the creation and posting of the brochure. Libutti was using public money, her detractors charged, to improperly advantage Weiss and Thompson. Ultimately, Weiss and Thompson were victorious on November 8.
The matter would have receded into obscurity but for a development this week, when Lori Isom, the district’s assistant superintendent for business services gave the district’s first interim financial report on the district’s ongoing 2016-17 budget. In the report, Isom contradicted the information in the mailer sent out in October. In 2016-17, Isom projected, the Central School District would, by the end of the fiscal year on June 30, 2017, show a deficit of $985,205.97 based upon conservative calculations. Additionally, Isom said, the district would run deficits of $1,975,330.11 in 2017-18, and $2,060,151.05 in 2018-19. Isom used the term deficit in reference to a situation in which the district’s income in those years would fall below the amount of expenditures. She said the calculations were made upon the assumption that the district would receive the least amount of revenue due it from its various state and federal sources and that its expenditures would be the maximum that could be anticipated, given normal expenditure factors such as teacher leave and sick time. In all likelihood, Isom said, the deficit the district would actually run in each of those years would be less than projected. She said that because of declining enrollment at the district’s schools, the district would be reducing its faculty numbers, largely through natural attrition brought on by teacher retirements on a yearly basis. Despite the projected spending deifits, the district would remain solvent, Isom said, by virtue of its beginning balance available at the beginning of each fiscal year, consisting of a combination of carryover funds from the previous years and the district’s reserves.
In this way, Isom said, the district had a beginning balance of $7,425,662.33 as of July 1 of this year; will have a beginning balance of $6,490,456.36 as of July 1, 2017; and a beginning balance of $4,515,126.25 on July 1, 2018. The district is projected to take in $44,756,242 this current fiscal year and spend $45,750,447.97; receive $42,886,277 in fiscal 2017-18 and spend $44,861,607.11 in the same time frame; and bring in $43,258,150 in 2018-19 and spend $45,358,201.05 during those 12 months, again according to Isom’s conservative projections.
Isom said the district is required each year to give a certification of its financial condition to the state, using three standards: positive, meaning it is projected to meet all of its financial obligations for the next three years and maintain a three percent reserve; qualified, meaning it might not meet all of its financial obligations for the next three years and still maintain a three percent reserve; and negative, meaning it definitely will not meet its financial obligations over the next three years while maintaining a three percent reserve. Recording a negative financial certification can trigger the state’s takeover of a financially challenged district.
Isom said the Central School District is able to maintain its positive qualification, despite the projection of deficit spending, because of the cushion of the beginning balance projected for each respective budget for 2016-17, 2017-18 and 2018-19.
David J. Palmer, a parent in the Central School District, this week told the Sentinel, “The Central School District superintendent mailed a controversial brochure update during the recent election to the community that stated: “The Board of Trustees approved a 44 million dollar balanced budget for 2016-2017, just four years after the biggest spending cuts California has ever seen in K thru 12 education.” This was controversial, as it was brought to the public’s attention that this may have been a political move by the superintendent to help the incumbents’ re-election campaign. The brochure cost the district $7,800 to produce and mail. Previous updates were produced in house and sent home with students. The district has now admitted it is in a state of deficit spending and it projects that runaway spending will continue. This proves that the brochure was a lie and corroborates the allegation that it was sent as a political move.”

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