The last school board meeting of the year was short, but not particularly sweet thanks to Chief Budget Officer Mary Schafer’s discovery of an accounting error that meant the high school district had $200,000 a year less to work with than previously thought.
This was compounded, in a one-two punch, by her announcement that the district had to pay out $221,500 in two separate litigation settlements related to special education, the details of which are being fiercely guarded by the district administration, the district board and California’s Office of Administrative Hearings for privacy reasons.
The school board meeting had barely started and already the district was down over $400,000 for the next school year.
As a result, Schafer presented a new, even grimmer three-year budget, which was unanimously approved by the school board.
Three years of deficit spending
Total estimated revenues for the 2019-20 school year were $25.1 million, while estimated expenditures were $25.5 million, which leaves a deficit of $526,295 for next year. This deficit could be covered out of the district’s estimated beginning balance of $2.6 million. After transferring $770,807 to the required reserve account, and setting aside $1.3 million for assigned or restricted expenses, that leaves the district with a big $11,701 in mad money, which is shaving it pretty close.
The numbers are better for 2020-21, thanks, according to Schafer, to a higher cost-of-living increase. Estimated revenues are $25.2 million, while estimated expenditures are $25.1 million, which leaves a more manageable deficit of $9,804.
The third year is the real kicker, however. Thanks to declining enrollment and a slightly lower cost-of-living increase, the district is looking at only $24.9 million in revenue, while expenditures continue to climb to $25.5 million. This leaves a third-year deficit of $718,556.
Commenting on this trajectory at the June 12 meeting, Schafer said, “So the fiscal recovery plan (a County Office of Education-mandated plan to lead the district out of the red) is not going to solve the long-term trend problem. We need more revenue, and we need to figure out a way to deliver services differently. The budget committee will be looking at all types of things and bringing them to the board.”
At the June 26 board meeting, Schafer mentioned the phrase “closing a campus” as one possible solution to this downward trend.
Behind the numbers
Schafer said the expenditure estimates in the budget were based on several things, including a 64% increase in the district’s property/liability insurance, an expected 11.4% increase to PERS retirement, as well as steadily rising health insurance costs for teachers and classified employees.
Her revenue estimates were based on estimates of the number of students that will be attending the high schools in the district over the next three years. She also figured revenue from the district parcel tax at a rate of $48 per parcel per year. The district is hoping voters will approve a $72 per parcel per year tax on the March 2020 ballot, which could make the budget picture for year three a tad sunnier.