The Healdsburg Unified School District (HUSD) has been able to certify that its financial position is positive — a certification that states that based upon current projections the district can meet its financial obligations for the current and two subsequent fiscal years — despite the anticipation of having negative monthly cash balances in the general fund for three months during the 2020-21 school year.
The district’s general fund cash balance on June 20, 2021 is estimated to be $3,082,584 according to the district’s first interim budget report, and as a result of the multiyear projected ending fund balance the district will be able to maintain the state required minimum “economic uncertainty reserve” of 3% for fiscal years 2020-21, 2021-22, and 2022-23.
Since the HUSD can meet this state mandated requirement it can receive a positive certification.
Much of the data that informs whether or not the district can certify comes from the aforementioned first interim budget, a document that encapsulates budget information, revenues, expenses, and projections from July 1 through Oct. 31 and projects financial activity through June 30.
Here is a snapshot of the first interim budget:
When all of the accounting books were closed for the 2019-20 year the district had not seen any deficit spending, however, because of the scheduled salary increases, loss of revenue from the closure of the Healdsburg Charter School, and increased costs for special education, it’s projected that the district will spend more than it will receive in revenue for the current year and for 2021-22.
“For 2020-21, the district is currently projecting to deficit-spend $1,841,884 and a deficit of $446,217 in 2021-22,” according to the budget report.
As a basic aid district the HUSD receives most of its revenue from local property taxes.
According to the report, “The 2020-21 budget has been updated to reflect final numbers for 2019-20, the Sonoma County Treasurer-Tax Collector’s (SCTTC) estimates, and district projections.”
According to these estimates 2020-21 and 2021-22 will see a property tax revenue reduction of $404,917 due to the 2019 Kincade Fire. In terms of revenue from the city of Healdsburg’s dissolved redevelopment agency, the district is budgeting 85% of what was received in 2019-20 ($2.7 million) for 2020-21 and beyond.
Part of the district’s revenue also comes from the CARES Act, a COVID-19 federal relief package that provides emergency relief funds to respond to the pandemic and the many challenges it brings.
“The CARES Act funding is a big piece of this. We’ve received $1.2 million but it’s split between the HUSD and the charter school. We received $110,000 for the charter school,” said Debbie Odetto, the district’s director of business services. Odetto said the district received an overall allocation of $1,121,115.
While the district typically doesn’t receive that much in general unrestricted federal funds, it did receive $9,700 for the 2020-21 year.
The district has seen significant reductions in restricted federal revenues, revenues that are provided to certain programs that support English language learners, low-income students and other student groups.
“Revenues are based on the latest information, with carryovers from 2019-20 included,” the report states.
Part of the expenditures for the year include a 5.5% salary increase for all district classified employees.
“Classified salaries also reflect the 5.5% salary schedule increase and 2% bonus payment in 2020-21. Step increases (estimated) are included for all classified employees. The district has increased the classified salaries by 2.75 FTE (full time employee) for 2020-2021 to assist with extra duties during the pandemic,” the report states.
In terms of employee benefits and retirement benefits, the health care benefit caps were increased by 12% for both certificated and classified employees and workers compensation dropped down to 1.20%.
Additionally, the 2020-21 year will see the fourth of five annual payments of $219,064 to the Public Agency Retirement Services for the district retirement incentive that was offered in 2016-17, and the second of five payments of $74,342 for the incentive that was offered in 2018-19.
In terms of utilities and other expenses, utility and overhead costs have increased this year but are assumed to be “flat” in future years and budget expenditures have increased significantly due to the pandemic and the need to supply students, teachers and staff with work materials, software, technology, supplies and personal protective equipment.
The district has budgeted a $200,000 contribution to the cafeteria fund in 2020-2021. The contribution is intended to help cover “additional costs related to the pandemic along with supplies needed for social distancing upon the return to school.”
“A difference of $1.2 million left us with a reserve percentage of 23.34%, great news,” Odetto said.
The 23.34% in reserves is 10.01% more than the school board mandated reserve policy of 13.33%.
“Based on the latest revenue and expenditure estimates, the district will end the year with a 13.29% reserve, but for 2021-22 the district reserves are projected to drop to 8.83%,” the report states.
The district’s budget and reserves will be revisited when the second interim 2020-21 budget is presented to the school board in March, 2021.