May 4, 2008

Schools seek way to fill budget hole

Sen. Yee sponsors bill allowing district to borrow $1.4M from property sale

By Neil Gonzales / Bay Area News Group

Proposed state legislation could help the San Bruno Park School District take advantage of a hefty property sale to ease more immediate budget challenges.

Last year, the district sold the old Carl Sandburg School property for $30 million, but state education codes earmark those types of funds for capital-improvement projects.

However, a bill by state Sen. Leland Yee, D-San Francisco, would allow the district to borrow $1.4 million from the sale proceeds and use the self-loan to fund retired-employee benefits.

"I think we need to be creative in these tough budget times, and this (bill) is a creative approach," Yee spokesman Adam Keigwin said. "I think other school districts in a similar situation might take a look at it. But this is not a free pass. (San Bruno Park still has) to pay back the money."

Senate Bill 1447 is still winding its way through the early phases of the Legislature's approval process but notched a strong start. It recently earned a 9-0 approval vote from the Senate Education Committee and is scheduled May 12 to be heard in the Senate Appropriations Committee.

Yee's bill would require the district to repay itself with interest in 10 years and meet other conditions.

The bill initially indicated that San Bruno Park would be able to use the $1.4 million for general operating purposes. But that has been amended to allow the district that money for a specific, one-time general fund expense in the 2008-2009 fiscal year.

District leaders have decided to use the money for retiree benefits.

"If you don't take care of it now ... you'll have two things to take care of later: retiree and current employee benefits," district Superintendent David Hutt said. "We're looking at all the tools to access revenue and reduce expenditures."

But even with Yee's bill, the district still faces a loss of more than $1 million in state funding for the upcoming school year given Gov. Arnold Schwarzenegger's cost-cutting budget proposal.

"We're still working on a number of possibilities to balance (San Bruno Park's) budget," Hutt said.

That could include a 50 percent pay cut for the superintendent and chief business officer and the elimination of an assistant superintendent, district officials said.