Pandemic, job loss to alter LUSD funding

Leonard Kahn, Lodi Unified School District’s chief business officer, said on Tuesday that the budget outlook for the 2020-21 fiscal year could not be any more dire.

Kahn presented an economic impact report caused by the COVID-19 pandemic to the district’s board of education, and said due to the millions of jobs lost across California in the last five weeks, state revenues will be decreasing, which means the district could see a revenue shortfall by the end of the fiscal year.

According to a spreadsheet

Kahn provided during the meeting, revenues from the state for May and June 2020 were anticipated to be $16.9 million and $63 million, respectively.

However, because 3.2 million Californians are now unemployed or furloughed, Kahn said the San Joaquin County Office of Education has already informed the district that it may not see those revenues until July.

“This is roughly $85 million, and we will need to borrow from all of our reserve accounts to meet our expenditures in the next two months if this comes to pass,” Kahn said. “We don’t know if it will come to pass, and we may know a little more in a week when the May revise is released.”

Expenditures for May were estimated at $34.4 million, and those for June were expected to be about $81.8 million.

Kahn said the pandemic happened so quickly that he didn’t think the state’s department of finance would have an accurate read on its impact anytime soon.

Not only could the district have state funding delayed for two months, but it could see a decrease in cost-of living funding the state provides.

A recent report from the Fiscal Crisis and Management Assistance Team predicts that due to the COVID-19 pandemic, a best case funded COLA from the State of California could be in the -2% range, and a worst case funded COLA could be in the -10% range.

According to FCMAT, potential funded COLA rates have decreased as state revenue projections for the 2020-21 fiscal year have declined.

To that end, FCMAT is recommending local education agencies consider a baseline projection of a 0% funded COLA in their coming budgets.

Kahn said that in March, the district was expecting a 3% funded COLA for nearly $351.3 million in revenue for the coming fiscal year. For fiscal year 2021-22, the district was expecting a 2.8% funded COLA for nearly $356.9 million in revenue.

Kahn projects revenue numbers for each fiscal year will be $10 million less than thought in March.

In addition, district reserves would decline from a projected $47.3 million to $37.1 million in fiscal year 2020-21, and from a projected $45.4 million to $24.9 million in fiscal year 2021-22.

“I don’t know how to paint this picture as slightly other than dire at the moment,” Kahn said. “”If we’re looking for a ray of hope, it may be anecdotal at best, but certainly not meaning less. Some of the larger brokerage companies are starting to say we should see rebounds in the third quarter.”