Just one Santa Clara County School District Outputs a Positive Balance Sheet

John Moorlach
State Senator representing the 37th Senate District

Silicon Valley might have to change its name to Red Ink Valley. Officially named Santa Clara County, just one of its 31 public school districts, Orchard Elementary, enjoys a positive balance sheet, according to my tally of all 944 districts in California. Not just its teachers, but Orchard’s administrators deserve apples.

All the other 30 districts’ balance sheets are in the red, some seriously so. One is Cupertino Union, whose district boundaries include Apple Inc., the world’s second most valuable corporation. It is strange that the area in America with the most concentrated wealth has school districts in fiscal distress.

The scorecard is provided in my recent report, “Financial Soundness Rankings for California’s Public School Districts, Colleges & Universities.” It was compiled after reviewing the financial soundness of all 944 California public school districts.

The “algorithm,” to use a digital term, for the rankings is derived from each district’s latest Comprehensive Annual Financial Report, which you should be able to find on their respective websites. In each CAFR, look for the “Basic Financial Statements,” starting with the page titled “Statement of Net Position.”

Look at the top row for “Government Activities.” Then look down the column to where it says, first “Net Position,” then “Unrestricted.”

That’s the number you want: the Unrestricted Net Position, or UNP.

The number will either be positive or, with parentheses around it, negative.

I then divide the UNP by the district’s population, according to the latest numbers from the California Department of Education, to get a per-capita UNP. If negative, that’s the amount each person in the district is in hock for, whether or not your children attend school. Citizens should be concerned about the trajectory of these negative balances, commonly attributed to unfunded pension liabilities.

If the negative number runs too high too long, it will mean cuts in teachers, equipment, band and sports, and ultimately calls for parcel taxes and more statewide tax increases like Proposition 30. In the worst cases, takeover by the state is not out of the question.

Orchard Valley scored a UNP of $12 per capita, just into positive territory, and the 115th best of the 944 California districts.

After that, every other district ran a negative UNP. The second best in the county was Campbell Union High in San Jose, at ($169) per capita, 164th best in California. Next is Fremont Union High in Sunnyvale at ($244), 191st in the State; it includes Homestead High, the alma mater of Apple co-founders Steve Wozniak and the late Steve Jobs. Then comes East Side Union High in San Jose at ($298), 214th in the State.

The worst districts are in pretty bad shape. Saratoga Union High in Saratoga clocked at ($2,280) per capita, 934th of 944 California districts. Then came Palo Alto Unified at ($2,241), ranking 927th. Maybe the Hoover Institution can lend an assist? Then came Gilroy Unified at ($2,129), 911th on the state list.

The districts on the lower half of the list, suffering a per capita UNP of ($690) or lower, are most at risk. Of Santa Clara county’s 31 districts, 11 are in such bad shape. That’s about a third of the county’s districts.

Here’s the full list of the districts listed by per capita UNP:

1 Orchard Elementary $12
2 Campbell Union High ($169)
3 Fremont Union High ($244)
4 East Side Union High ($298)
5 Lakeside Joint ($314)
6 Cambrian ($345)
7 Santa Clara Unified ($441)
8 Sunnyvale ($472)
9 Moreland ($515)
10 Mountain View Whisman ($523)
11 Mountain View-Los Altos ($529)
12 Morgan Hill Unified ($548)
13 Campbell Union ($549)
14 Union Elementary ($552)
15 Los Gatos Union Elem ($569)
16 Berryessa Union Elem ($596)
17 Oak Grove Elementary ($598)
18 Luther Burbank ($638)
19 Franklin-McKinley Elem ($643)
20 Los Gatos-Saratoga Joint ($662)
21 San Jose Unified ($686)
22 Alum Rock Union Elem ($694)
23 Los Altos Elementary ($781)
24 Evergreen Elementary ($898)
25 Mount Pleasant Elem ($902)
26 Cupertino Union ($922)
27 Milpitas Unified ($942)
28 Loma Prieta Joint Union ($1,145)
29 Gilroy Unified ($2,129)
30 Palo Alto Unified ($2,421)
31 Saratoga Union Elem ($2,820)

This year, the Governmental Accounting Standards Board for the first time will require balance sheets to include unfunded retiree medical care liabilities, which will show even more school districts in critical condition. Expect to see the impact in the most recently released CAFRs for the fiscal year ended June 30, 2018.

With all that petabyte brainpower, Santa Clara County can do better. State and local leaders need to focus on a long-term strategic financial plan for each school district.

Sen. John M.W. Moorlach, R-Costa Mesa, represents the 37th District in the California Senate

 

 

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