Friday, February 12, 2010

The SWC "Shadow Budget" Exposed

To justify class cuts and job elimination, the district is claiming financial calamity. Here's another view:

The following message was sent by Frank Post, a member of the faculty negotiating team, to all instructors in Fall 2009.

Attached you find four documents revealing that SWC has been operating with a shadow budget process.

I have reviewed the last three years of board agendas and attachments and provide these documents in an effort to bring to light the "real" budget situation at Southwestern Community College District.

I have provided five pdf attachments (note: all links will open in new windows/tabs)
#1 is a combined file of all four documents
#2 is General Fund Cash Analysis for period ending May 31, 2008
#3 is General Fund Cash Analysis for period ending April 30, 2009
#4 is General Fund Cash Analysis for period ending October 31, 2009
#5 is Tentative Budget - FY 2009-2010

Let me offer some examples, all of which are confirmed by the District's own documents neatly tucked away inside lengthy Board Agendas but never openly reviewed in actual board meetings.

A. In item #2 we see a Monthly Ending Cash Balance Average of $8,924,460.
B. In item #3 we see a Monthly Ending Cash Balance Average of $9,355,270.
C. In item #4 we see a Monthly Ending Cash Balance Average of $13,531,774.77.

D. Item #5 gives us a glimpse of how the District works its magic.

On the bottom of item #5 we see the total ending Balances of Actual, Adopted and Tentative budget years.

Look carefully at how high the Actual ending balances are for 2006-2007 and 2007-2008, both above 10 million dollars each.

Now look at the ending balances for the Adopted and tentative budgets of 2008-2009 and 2009-2010. Both below 7 million dollars.

So how does it work? Still looking at item #5 we see the number of $5,419,812 as the Total Ending Balance under Adopted Budget 2008-2009. Well that is the number the Governing Board is told to make decisions from. So for example, if the SWC Governing Board wants a 6% budget reserve, well, out of an approximate 90 million dollar budget that is about 5 million dollars. So in this scenario, the board sees that they barely have enough to cover their precious reserve; therefore, SWC MUST be very fiscally conservative that year just in order to maintain its reserve.

BUT, looking at item #4 we see that our "Beginning Cash" for July 2009 is $9,533,133.65, almost 4 millions dollars more than what the board thought they had to spend.

We see the same thing in item #5 happening in 2009-2010 year. The "Total Ending Balance" the board is presented with for the Tentative Budget 2009-2010 year is $6,850.188.

BUT, looking at item #4 we see that already though October 31, 2009 we are carrying an average cash balance at the end of each month of $13,531,774.77.

That 13+ million dollars represents more than 7 million dollars above the 6% reserve the SWC Board wishes to maintain.

What does this all mean? It means that the district hides money away in various accounts, claiming the money will be spent, but it actually never is; thus in reality the district is carrying a "Shadow Reserve" of some several million dollars each year above the stated 6% Governing Board Reserve.

Our beginning balances for each of the past few years (I don't yet have records earlier than 2006-2007) show we have much more cash on hand than what the board believes is available to be spent each year.

I'd be happy to meet and go over this and present the material to you in person if you would like.

I also would ask that you consider requesting that the S.C.E.A. hire an independent accountant (separate from CTA/CCA) that specializes in Educational Budgets and Financing to audit SWC's books.

Frank Post
Faculty, Adapted Computer Technology Specialist
S.C.E.A. Negotiation Team Member
Southwestern College
(619) 421-6700 extension 5275

It's worth mentioning that the February 10, 2010 Board agenda also includes the most recent Quarterly Financial Status Report, CCFS-311Q. It's Item 14B3, on page 281 (out of 285 pages). In the report, question VII asks, "Does the district have significant fiscal problems that must be addressed?" The answers: "This year? NO. Next year? NO."

In fact, the district continues to make money. So where's the financial crisis?

1 comment:

  1. Thank you, thank you, thank you for posting this!
    I am so thankful we have people at SWC willing to stick their necks out and do the digging to find out the real story.