Stanislaus County schools warned of spending in the red

They're not crying wolf.

Stanislaus County's school districts truly are in financial trouble, and deep cuts must be made to balance budgets, the county's top school finance official warned.

"We've been blowing the horn for a long time about how bad things are," said Donald Gatti, assistant superintendent for business services for the Stanislaus County Office of Education.

But not all school districts have heeded Gatti's warning that financial bad times aren't going away soon. Instead of gradually cutting their budgets to match reduced income levels, Gatti said, most Stanislaus districts have been deficit spending.

That's got to stop, Gatti said Wednesday.

"We're telling them they have to plan for the worst and hope for the best," said Gatti, whose office must certify that the county's 25 school districts are fiscally sound.

Expect the worst to hit in the fall. Gatti predicted that's when students will face larger classes and fewer educational offerings, while many young, talented teachers will lose their jobs.

Blame declining enrollments and shrinking education budgets on the recession and housing crisis, which have dramatically lowered state revenues from sales, income and property taxes.

All California public schools must slice their budgets, but Gatti said the fiscal woes are exacerbated in Stanislaus County because school enrollments keep dropping.

"Our school districts probably haven't been quick enough to react to declining enrollments," he said.

Modesto City Schools, for instance, has about 3,600 fewer students now than it did in 2002, but it has yet to close a campus.

"Sometimes, the politics of a situation make it difficult to make the tough cuts," Gatti acknowledged. He said the "easy cuts" -- such as not buying new equipment and not replacing employees who leave -- have been made.

But, he warned, that's not enough.

Now is the time for brutal reductions. Gatti said that includes reducing salaries, laying off employees, eliminating programs now and closing campuses in the near future.

"It's going to be almost impossible to balance budgets without cutting salaries," Gatti said.

Modesto City Schools, for instance, must cut at least $25 million from its budget, and the Ceres Unified School District needs to slash $10 million.

Both those districts want employees to agree to lower salaries. Modesto proposes cutting its nonmanagement employees' pay 16 percent, and Ceres seeks 8.5 percent salary cuts.

Reducing staff is the other option.

Stanislaus County's 25 public school districts issued more than 960 layoff warnings this month to teachers, librarians, counselors and administrators.

Some of those districts, including Modesto, hope to avoid most layoffs by reducing salaries, but employee unions have yet to agree.

Ceres didn't issue layoff warnings, so state law forbids it from laying off any teachers in the 2010-11 budget year. As a result, if the unions refuse to lower salaries, the district won't be able to balance its budget.

That's put Ceres on a financial watch list with the county's Office of Education, which must certify that districts in the county are fiscally solvent.

"Ceres really doesn't have a fallback position," said Gatti, noting that union negotiations are at an impasse.

Two northwest Modesto school districts -- Salida Union and Stanislaus Union -- also are on the watch list.

Gatti said Salida "has crafted a nice recovery plan to get back on track." That plan includes closing one of its campuses, Mildred Perkins Elementary, this summer.

Stanislaus Union closed its Muncy Elementary last year.

Even without declining enrollment, school budgets would be tight. California funds school districts on a per-pupil basis. That funding "has been about the same amount since the 2006-07 school year," Gatti said, even though it was supposed to have increased 18 percent.

Things could get worse.

Gatti said the budget projections for 2010-11 are based on California getting an extra $7 billion from the federal government. If Washington rejects the state's request for more money, Gatti said, additional cuts will be needed.

"We're very nervous," he said about California's revised budget projections, which are due in May.

What he wishes would be revised is unfunded government mandates. Gatti said the state and federal governments require schools to do many noneducational things that cost millions of dollars annually, but they don't allocate the money required to do those things.

"This is an opportunity for us to reinvent ourselves," Gatti suggested. "Eliminate the mandates."

Bee staff writer J.N. Sbranti

can be reached at or 578-2396.