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School Spending - Gatti Reviews Budget Woes
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Joking he'd become known as Dr. Doom for his recent warnings on local school district budgets, Stanislaus County Office of Education's Assistant Superintendent for Business Don Gatti lived up to his nickname in addressing the Riverbank Unified School District at its May 15 meeting.

"It's a perfect storm," he said.

The Riverbank district is running a $1.2 million deficit per year, has recently lost three top administrators and more state funds are being withheld.

The county Office of Education is obligated to help and that is why it has appointed Teresa Ryland as a financial expert to advise the district with additional aid from Gatti.

"The district has not moved fast enough to make cuts and that's why we are here," Gatti explained. We've been through the budget to ensure the numbers are accurate. You have a $23 million budget. But you have a depleted administrative staff, an interim superintendent, a temporary HR director and a new business manager. You don't have the horses to get it done."

Gatti suggested the district must consider a worst case scenario (Governor Brown failing to get his tax increases passed at the November election resulting in further cuts to school funding.)

In a business where at least 80 percent of the costs go to pay staff salaries and benefits, "the district must go back to the table with the unions and try to negotiate its concerns," Gatti said. "We've seen this in many districts."

Gatti remarked he didn't know whether the district could find enough cuts to trim $800,000 from expenses in the next budget year but it must make the attempt. Trustees must make cuts that will yield serious money, probably among personnel, and possibly in high priced services like bus transportation.

Answering trustees' questions, Gatti explained bringing in Ryland and himself as financial experts to help the board was the first step the county Office of Education was forced to take.

If that failed, the office must move to the second step of introducing "a financial advisor" who would "have more power and could take over control." The advisor could not force any action on the board but could veto any action it took. While the county office currently provides a financial expert at no cost to the district, for the financial advisor it would shift the cost to the district.

For the third and worst situation where finances became hopeless and the district was basically bankrupt, the California Department of Education in Sacramento would take over the district, appoint a state administrator at district expense and set up a state loan at 8 percent which would take years to pay off.

"Local legislators lose control and the impact on the district lasts up to 20 years. We don't want to go there," he said.

Riverbank joined many local districts this year in predicting "a qualified budget" for 2012-2013 and stating it may or may not be able to pay its bills. This the first time it has submitted such a statement, said business manager Karolyn Crisp, who retired this summer.

At the May 15 meeting, Ryland noted the district's budget is due before the Office of Education for review by Aug. 15 and there is no guarantee it will be approved.