Ben Ciccati

“Have confidence in us. We’ll sort it out.” In effect, that is what Assistant Superintendent of Business Services Ed Diaz is saying. He is referring to the debacle in school finances whereby the $2,500,000 budgetary shortfall he reported in April morphed into the $4,227,724 surplus he reported in June.

The discovery of millions in surplus funds should be cause for celebration. But in April, acting at Mr. Diaz’s urging, the School Board cut $2.5 million in educational programs, personnel, et cetera — cuts that are having a profound impact on the lives of students and teachers. Students, parents, and faculty in the arts and languages have seen classes discontinued and programs decimated. Jobs have been eliminated or reduced. When teachers sought salary increases, they were told the district was penniless.

Some call it a “shell game.” Mr. Diaz calls it a “mistake.” If it is a mistake, why was the $4 million surplus put into newly created accounts reflecting particular agendas? One such account is a Reserve for Future Technology Development. Clearly, some allocation process had begun before the “mistake” was even announced.

Another newly created account is a Reserve for Future Commitments and Encroachments. An “encroachment” occurs when revenues provided for general educational purposes are taken to cover deficits in accounts that are not for general educational purposes. For example, more than $1 million were diverted from general educational funds to cover the deficits from a poorly managed cafeteria operation. This encroachment served special interests within the bureaucracy, papering over inefficiency and protecting jobs. The losers were the kids, for whom that $1 million were intended.

This new reserve has the appearance of a blank check. What commitments? Why underwrite encroachments? Control them instead. If habitual encroachers cannot run into the red in the first place, they won’t need to be bailed out in the future. To regain public trust, the school district must exercise fiscal discipline.

There was no prior approval of these new reserve accounts by the School Board. None of this came to light until about 6 p.m. at a special meeting on Friday, June 29. Superintendent Brian Sarvis was in China. These tactics are usually employed by agencies seeking to avoid public scrutiny.

Mr. Diaz has since offered new reasoning. Because future revenues are expected to decline (due to declining enrollments), the unexpected $4 million surplus must be held to balance the books in the future. Restoring some programs cut in April may be possible with funds that are left over.

This line of reasoning is also being met with suspicion. Enrollments are expected to decline at a rate of 3 percent a year, per-student revenues declining with them. Obviously, if expenditures are not reduced commensurately, there will be deficit spending. And deficit spending always catches up with you. Where is the plan for projected reductions in expenditures due to declining enrollments? It is unconscionable to withhold revenues intended for today’s students in order to cover future deficit spending.

Where is the School Board in all of this? The board has oversight and fiduciary responsibilities. Nonetheless, the board majority has gone along. It rejected an effort to get more information before approving the budget. They also rejected the principle of making the restoration of cut programs the first priority.

Perhaps more important, my board colleagues seem to believe the administration on its own will be able to rebuild the district’s fiscal credibility. At a recent School Board meeting, I moved to ask a state-supported technical assistance group, FCMAT (Fiscal Crisis and Management Assistance Team), to conduct an independent, comprehensive review. It evoked a frown from Superintendent Sarvis and silence from the board majority — not even a second to the motion.

A year ago, in her departing address to the board, Mr. Diaz’s predecessor recommended that FCMAT be asked to come in to conduct a “solvency audit.” In opposing the recommendation, Superintendent Sarvis assured the board it was not necessary — his new man, Ed Diaz, would put the district’s finances in order. Whatever the reality, the perception now, 10 months later, is that the district’s fiscal affairs are in disarray. Few are those who are ready to believe its financial reports.

Self-auditing will not restore credibility. It is time to swallow one’s pride and to admit the necessity for critical scrutiny by dispassionate experts who have nothing to be defensive about.

Nor will the creation of a Budget Advisory Committee restore credibility — at least, not the committee Mr. Diaz is proposing. Quite the contrary, it is designed to build consensus, not to exercise oversight. It would have no independent sources of information and accounting expertise. And it would be under the de facto control of the boss — Superintendent Sarvis. As one long-time observer put it, “Independent thinking can be risky in the District Office. Speaking out is suicidal.”

I believe this is a watershed issue. The Santa Barbara School District’s credibility is in tatters. Loss of credibility can erode public commitment, and without public commitment, the public schools will face a bleak future. Sadly, the system seems to be incapable of doing what is necessary to restore credibility. It is long on apologists and short on catalysts.

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