While the district received a welcome dose of good news when Governor Schwarzenegger’s initial budget proposals included no mid-year cuts that would have immediately impacted local schools, the long-term outlook remains challenging.

A combination of anticipated state budget cuts and declining enrollment will once again hit district finances with a one-two punch for the coming year.

“They didn’t do any mid-year cuts, but instead they rolled it all into next year,” Superintendent Gail McWilliams said of the state budget proposal.

The district has eliminated positions in recent years, and is currently asking its employee groups to accept five furlough days during the remainder of the current school year and five more in the 2010-11 year.

The furloughs would represent approximately a 2.2 to 2.7 percent pay cut for all employees, saving the district about $450,000, according to the superintendent.

McWilliams said the classified employee group has agreed to the furloughs. District administration met with leaders of the certificated staff Jan. 25 but no agreement was reached. The two parties were to meet again last Monday, Feb. 1.

The issue of furloughs is an emotional one, McWilliams said, because it directly impacts all employees.

She said, though, that an agreement needs to be in place quickly if the district is to enact furloughs. The earlier the district knows if furlough days are accepted, the more flexibility it has in scheduling those days through the remainder of the current school year.

The furloughs would cut the school calendar from 180 days to 175.

That step would help the district absorb anticipated funding cuts, but would not make up the entire difference.

Even with furloughs, McWilliams acknowledged, it is unlikely the district can make the necessary cuts without impacting jobs.

Declining enrollment alone dictates that the district adjust its staffing levels, she pointed out.

“When you are declining, you have to reduce staff. We will have to make some staffing cuts, but hopefully it is not as deep as it would be without the furloughs,” the superintendent commented.

Enrollment is down about 75 students from last year, and is down to the level of 10 years ago. After peaking at 2,000 students, four years of declining enrollment have left Gustine Unified with an enrollment slightly above 1,700.

State funding for education also remains uncertain. The governor’s initial proposal called for a cut of $201 per student, directed toward district office administration. In reality, though, McWilliams said the district must prepare to make those cuts elsewhere because district-level administration staffing has already been reduced.

“For those of us who have no additional administration, we will be awaiting clarification on how to make these reductions,” McWilliams indicated.

Other potential budget pitfalls exist, she added.

The governor’s budget proposal depends on extensive support from the federal government, McWilliams noted. If that does not materialize, the fall-out could result in still more reductions in per-pupil funding.

While the state’s budget is subject to numerous revisions in the months ahead, school districts must make budget-related decisions in a matter of weeks because of the March 15 deadline to notify certificated employees of potential layoffs.

“By the time the state legislature decides on the budget it is too late for us to make changes,” McWilliams remarked. “A lot of the governor’s budget proposal depends on California getting money from the federal government, and that’s a pretty ‘iffy’ deal. I feel it could get worse before it gets better.”

A district budget committee has twice met to brainstorm potential funding cuts, McWilliams said, and a wide variety of ideas have been put on the table.

There are drawbacks to many suggestions that at first glance appear to hold cost-cutting potential, she stated.

Athletics could be curtailed or eliminated, for example, but how many students would then transfer elsewhere, costing the district ADA?

The district could sell its administrative headquarters......but would it get a reasonable price in the current market?

Could school sites be consolidated or relocated? Those options were discussed at length, McWilliams said, but do not appear feasible or cost-effective.

The committee will continue meeting to explore options, but McWilliams cautioned that there are no easy solutions to the budget crisis.

“We have to do some big things to get to the kind of numbers we need,” she reflected.

The school board will host a budget workshop tonight (Thursday) beginning at 6 p.m. The study session is open to the public.