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The Board of Education voted unanimously Thursday night to provide a “negative certification” on the school budget, acknowledging that the district will be unable to meet its financial obligations this year and next without significant budget cuts and revenue growth. 

The vote came after a two-hour budget presentation by officials from the Fiscal Crisis and Management Assistance Team, or FCMAT, a state agency appointed by the Alameda County Office of Education in October to provide financial advice to the district.  

The county office has fiscal oversight responsibilities for every district in its jurisdiction. 

FCMAT estimates that the district will face a $1.6 million budget shortfall this year. The agency is projecting a $7.8 million deficit next year, and a $16.7 million shortfall the following year if the school board does not take appropriate action. 

Despite the $1.6 million deficit, the district should be able to pay all its bills this year, although it will not meet a state requirement for a three percent budget reserve.  

The projected deficits for the next two years would not only eliminate the district’s reserve, but would cut into its operating budget. 

Superintendent Michele Lawrence and board members committed themselves to making the required cuts this year to avoid deficits in the next two years. They indicated at the meeting, and afterward, that layoffs are a possibility. 

Barbara Dean, a FCMAT management analyst who has been working closely with the district for several months, cited a whole host of reasons for the 2001-2002 deficit, and the projected deficits in the coming years. 

Among other things, Dean discussed a $2.5 million hole in the district’s “self-insurance” fund, which covers worker’s compensation and building claims, a $900,000 fee the district owes the state for failure to properly report staff development activities, and a lack of control over payroll services. At one point, Dean said the district needs to make sure that “for every check issued, there is a person alive and working.” 

Superintendent Michele Lawrence agreed that the system’s payment services are dysfunctional. She noted that, in recent weeks, district officials discovered they are dishing out $120,000 per month to cover health and welfare services for people no longer employed by the Berkeley schools. 

Jerry Kurr, associate superintendent of business, said in an interview Friday that the district will attempt to recoup some of those health and welfare funds, paid to local health care providers, in the coming months.  

During the public comment section, several speakers urged the board to take responsibility for the budget difficulties, arguing that they have known about the district’s fiscal problems for a long time.  

“The freight train has been coming for three years,” said Nancy Riddle, vice-chair of the Citizens’ Budget Advisory Committee, “and the right thing to do tonight is to take full responsibility.” 

Board members did not directly address the issue at the meeting. But, in an interview Friday, Shirley Issel, president of the board, said the body has taken responsibility by acknowledging the problem and bringing in a talented Superintendent this year to confront it. 

“The public needs a board that knows when something is wrong and takes responsibility for digging into it,” she said. “We acknowledged the problem with the Superintendent search.”  

Issel added that the district’s outdated and inadequate data systems have failed to provide the board with the information they need to make sound policy decisions. 

The district was supposed to transfer its data operations to Quintessential School Systems, or QSS, a processor that handles payroll, personnel, purchasing, and financial information, by June 2001.  

Now, the district is looking to complete the conversion by July 1. Kurr said the payroll and financial components, at a minimum, will be in place by that date. 

During the public comment period, Carol Wilkins, a Berkeley parent, called on the board to include the public in any budget cutting decisions this year. 

“Difficult decisions will be made and they will need to be made quickly,” she said. “But that doesn’t mean they’ll need to be done in the dark.” 

Later in the evening, Lawrence warned that, at this point in the year, the district will have to move quickly to make cuts, allowing for less public input than she would like.  

John Selawsky, a board member, replied that the school leadership should “certainly be as transparent with the public as we can.” 

“Absolutely,” Lawrence said.  

Selawsky recommended some immediate belt-tightening measures Friday morning – calling for an end to non-essential travel and overtime work, the elimination of cell phones in the district and a hiring freeze, with exceptions where needed. 

Selawsky said it is too early to discuss layoffs, but added that “it looks like a possibility.” 

District personnel are already gearing up for a battle over layoffs. Pat Robertson, a store keeper for the schools, and president of the operations unit of Local 1, which represents classified staff in the district, laid the blame for the deficit at the feet of district administrators. He urged the board to begin cutting there, not among custodial and food services employees. 

“A lot of the operational decisions were made by the management on up,” he said. “The cuts ought to be from there on down.”