CUSD report

Trustees scheduled to finalize proposed budget on June 24

The process of creating a school budget amid COVID-19 has been difficult for local school districts, as they try to predict and balance uncertainties of school funding coming down from Gov. Gavin Newsom. For the Cloverdale Unified School District, the conversation surrounding future budgets is even more tumultuous, as the district already had to have tough budget decisions earlier this year, when it issued multiple cuts. While the current proposed district budget doesn’t list cuts, the future of the budget largely depends on the reality of Newsom’s budget — which is projected to either include 10% cuts in state funding or stay flat with deferred funding.

Up until the beginning of June, the district was operating under the assumption that it would be looking at the former scenario, which was proposed in Newsom’s May budget revision.

“He proposed a 10% reduction in LCFF (local control funding formula) funding. With that 10% reduction in our LCFF funding, that would mean that summer layoffs would be triggered for certificated staff, which is management and teachers,” Decker said.

After breaking down projections based on the governor’s May budget, the district met with each school site to try and figure out what potential budget cuts may look like for the district.

“Following that we created some scenarios and we met with union leadership together, so TAC (Teachers Association of Cloverdale) and CSEA (California Schools Employee Association) on June 3. Interestingly enough, on June 3 the California Assembly and the Senate announced that they had agreed on a state budget that would rescind all cuts to TK-12 and higher education that Newsom proposed. It was based on the assumption that Congress would pass, and President Trump would sign, aid for states that would include $14 billion for California,” Decker said.

As of press time, Newsom’s hadn’t signed off on the budget proposal.

“We don’t know if the governor is going to approve the proposed budget where there are no cuts, or if he may veto or modify, we simply do not know,” Decker said. “Here’s what we do know — if you go to the multi-year budget … if you look at 2020-21, you can see that our expenditures far outpace our revenues, which would result in a $1.8 million deficit without some structural changes to the district’s budget.”

The extreme deficit spending projected for the 2020-21 year based on the governor’s May budget revision leaves the district with only $520,558 in its reserve fund, which Decker said leaves it at a 3% reserve — the legal requirement for district reserves. Cloverdale’s school board, however, has an 8% reserve requirement.

“On the out years, if nothing was done, obviously that could not happen,” Decker said, referring to the projections for the 2021-22 and 2022-23 years, which shows the district with negative projected ending fund balances of $1.27 million and $2.39 million, respectively. “We wouldn’t just be negative, we would be taken over by the county, the state, it would be a mess.”

Due to all of the unknowns in Newsom’s budget, Decker said that he thinks the board would be “jumping the gun” if it started to discuss specific budget cuts.

“I think we’re looking at two different budgets — one that may be a 10% reduction to our costs and if that occurs then summer layoffs are triggered, another where it’s deferral-land, where we may be deferred for two months. That means the state will not give us money to pay our bills,” he said.

According to Decker, the district has around $1.45 million each month in bills and, should the state go with the latter option for its school budget, the district would need around $2.9 million in its general fund to cover two months of expenditures without having to take out a loan.

“We’re projected to have $2.3 million in our reserve,” he said, meaning that the district would still have to make around $600,000 in cuts to be able to afford its bills during government deferrals.

“Those are two very different scenarios, and I don’t know if it makes a lot of sense for the board to discuss what these cuts should be when these scenarios are extremely different. I would like to propose that the board wait for some more information from the governor,” he said.

The board of trustees unanimously agreed to wait for the governor’s budget before it makes cuts.

“There is such uncertainty out there and it’s unprecedented, this much uncertainty around the state budget,” Chief Business Official Patricia Mills said.

Should the board approve the proposed budget to be sent to the county for review, it would have an additional 45 days to revise the budget following the release of Newsom’s state budget. At that point, depending on what happens at the state level, the board would discuss cuts.

The current proposed district budget will come back to the board at its meeting this week on Wednesday, June 24.

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