An accounting error, further state cuts, lower-than-anticipated-enrollment and rising staffing costs means an additional $1.4 million in cuts from next year’s San Carlos schools budget.

Miscalculation of special education costs, primarily caused by inaccurate information about legally-required expenses, was the largest factor in the budget news revealed this week. This $900,000 loss is coupled with a drop in state funding, less money realized from enrollment and higher-than-anticipated staffing costs creating a $1.4 million issue for the San Carlos Elementary School District. On Tuesday, the Board of Trustees held a special meeting at which the board agreed to take a number of actions to rectify the issue including a hiring freeze, implementing oversight on future accounting work, cutting costs during the school year and working with the community.

“I realize this news is disheartening to us all,” Superintendent Craig Baker wrote in a letter to the community. “I want to assure you, however, that we are on top of and I am actively managing this budget crisis. Now that we have uncovered all aspects of this crisis (which I truly believe we have), it is time to focus our collective energies on moving forward and solving this problem, while ensuring accountability for every dollar spent along the way.”

The accounting error was attributed to the Student Services Department which projected an estimated $800,000 net reduction in special education costs. Instead, the district encountered a $170,000 increase, according to a two-page document posted on the district’s Web site by the board Communication Committee, which consists of trustees Beth Hunkapiller and Seth Rosenblatt working with Baker.

“Some of this discrepancy is due to normal variations in costs, but approximately $900,000 of this, however, is due to a miscalculation at the time the budget was adopted,” the committee wrote.

Losses will be partially offset by about $250,000 from the county. The money represents a savings from the district using less of the county-run services. The district, which previously approved some deficit spending for the current year, will need to use an additional $570,000 from its reserves, dropping the reserves to $930,000 at the end of the year. The 3.81 percent reserve to the $22.4 million overall budget is just above the state-mandated 3 percent, but much lower than the 6.48 percent estimated when the budget was adopted in June.

“Obviously, it’s very upsetting and I just keep thinking about the lack of funding for education and how it’s not just our district,” said board President Carrie Du Bois. “It’s not just our district, every district has a terrifying situation where the cuts are hurting kids.”

Noting cuts will be needed for next year, Du Bois was fearful of facing the list of potential program reductions debuted last year.

“This will be cutting at the bones,” she said. “There’s no fat, no extra. We don’t overspend. For me, I’m afraid to see that list again.”

Board Vice President Mark Olbert was not thrilled to deficit spend at such a high level, but noting doing so means the district can plan for cuts with greater savings in the long run.

Renewing Measure D, a $98 annual parcel tax approved by voters in 2003, was a priority in the district before the new budget news. Passing an extension before it expires in 2011 will now be even more important for the district to maintain what services it can. The effect of this situation on such a ballot measure is yet to be seen, but officials were optimistic the public would see this mistake was simply that.

“I’m hopeful, that through outreach and education and the communication effort that Craig [Baker] is undertaking, I’m hopeful that we’re going to get the key message points: There is no misuse of resources here,” said Olbert. “Additionally, the funding spent, was funding spent to deliver educational services to students in need. ... Yes there was a breakdown in the budgeting process; yes we need to learn for the mistake. But we’re doing what we always do and trying to provide the best education for children.”

Heather Murtagh can be reached by e-mail: heather@smdailyjournal.com or by phone: (650) 344-5200 ext. 105.