Paul Wellman

Superintendent Brian Sarvis (right) and interim budget guru Eric Smith deliver some bad budget news at district headquarters Tuesday afternoon.

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Barely regaining its fiscal footing after months of budgetary confusion and a particularly bloody budget-slashing late last spring, the Santa Barbara School District bean-counters were dealt yet another brutal blow on Saturday — this time at the hands of Governor Arnold Schwarzenegger.

Part of a plan as controversial as it is ambitious, Schwarzenegger signed his deficit-defeating state budget bills into reality over the weekend. With billions of dollars of the cuts aimed at education — specifically the funding promised by Proposition 98 — Santa Barbara district officials consequently announced this week that they will be forced to make some $4 million in cuts to programs and personnel this spring. Superintendent Brian Sarvis solemnly stated the obvious at an emergency afternoon meeting on Tuesday, February 19, saying, “There is no doubt that this is a fairly devastating blow to our district budget.”

Just last April, the district’s Board of Education reluctantly made about $2.5 million in cuts from the $125 million annual operating budget in order to meet the state-mandated 3 percent reserve. Much to the surprise of board members and the public alike, the ensuing months saw the district discover varying amounts of surplus cash, and a rather lengthy auditing process ensued. In the end, roughly $2 million of the cuts remained — though Sarvis said only one actual teaching job was lost.

That, however, may no longer be the case, as the board will have to cut approximately twice the amount of funding it did last year. Based on what he called “very reliable numbers,” Sarvis explained the district had been looking at a surplus of $2 million this school year prior to the governor’s plan, about one half million in surplus next year, and a nearly $4.5 million deficit in the 2009-2010 school year. “But that’s all changed now” Sarvis said, “That half million surplus evaporated overnight and became a $4 million deficit.”

Eric Smith, the district’s interim director of business services, put it in more specific terms: “We are going to get 2.4 percent less in state funding next year than we are operating with this year.” Coupled with rising district costs and declining enrollment, that difference threatens to loom even more largely than it does on paper by endangering areas such as instructional materials, student transportation, class-size ratios, and Special Education. Specifically, in Smith’s estimation, Special Ed alone could see a $900,000 cut.

The district’s Board of Education will begin prioritizing possible avenues for downsizing at a February 26 meeting, with no real action likely until March or April. In a district in which roughly 85 percent of the budget goes toward employing people, this reduction will no doubt result in more than a few layoffs, at least at first. The district must give lay-off notice to employees no later than mid-March and its projected budget numbers to the county and state in the early summer — an unfortunate sequence of deadlines that Sarvis said will put pink slips in the mail and force program cuts well in advance of the final state contribution figures.

While this equation usually balances out, with most anticipated lay-offs ultimately cancelled by mid-summer due to retirements and departures, Sarvis said he fears that the slashing of 4.3 percent of the district’s unrestricted funds may be too great to be balanced by annual employee attrition. Thus, the district is exploring the possibility of early retirement incentives, such as paying healthcare costs for up to five years, as means of coaxing the district’s longest-tenured and highest-paid teachers to step down and free up cash to help retain younger teachers. Furthermore, state legislators could always put together a last-minute bailout, though such an outcome is anything but certain.

With tough decisions looming large on the horizon for board members, Smith summed up the bottom line: “When you look at the compounding effects of all these variables, it’s pretty gloomy.”

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