School district financial projections show deficits in coming years
Are Tehachapi schools well-funded? Where does the money needed to run local schools come from? And what challenges might the district face in the near future if there is no substantial increase in school population or one-time funding related to the COVID-19 pandemic isn’t replaced by the state or federal government?
Some of these questions were answered in a recent meeting of the Board of Trustees of Tehachapi Unified School District. And others might be found in a review of the multi-year projection of district finances approved by the school board in December.
The multi-year projections show that the district is financially sound but may face deficits in the following two years that will need to be addressed in the budget process.
PRIMARY FUNDING
Hojat Entezari, chief administrator, business services, made a presentation about what is called the Local Control Funding Formula at the board’s Jan. 10 meeting. With four new members of the school board, Superintendent Stacey Larson-Everson suggested the informational item would be a way to help acquaint them and the public with the components of school funding.
The district’s projected revenue for the current year is just under $74 million, according to the First Interim LCFF report made to the board in December. About two-thirds of the revenue is covered by the LCFF — a combination of county and district taxes, funds from the Education Protection Act enacted by Proposition 30 in 2012 and state aid.
Enacted in 2013-14, the LCFF streamlined California’s K-12 school finance system. According to the Public Policy Institute of California, the LCCF allows funds to be spent for any
educational purpose but requires districts to develop Local Control and Accountability Plans that detail district goals and document how districts plan to measure their progress toward those goals. There are some additional funds that are for specific purposes and not included in the LCFF.
As Entezari explained, various factors determine the amounts of funding California school districts receive as part of the LCFF. The number of students enrolled, average daily attendance and property valuation are among components.
In a chart he showed that the district’s $44,891,699 LCFF entitlement for the current school year comes from three sources. County and district taxes contribute $14,110,610; the Education Protection Act (Proposition 30 passed by voters in 2012) provides $11,176,609 and state aid contributes the most, $19,604,480.
MULTI-YEAR PROJECTIONS
Based upon the multiyear projections provided in the district’s First Interim financial document approved by the board in December, total revenue for the current school year is expected to be nearly $74 million. But the projections for the next two years are both lower
— about $61.5 million. The difference — a decrease of about $12.5 million per year — is largely due to an anticipated reduction in federal and state funding in the current year that was primarily one-time funding related to the COVID-19 pandemic.
With this additional funding in the current school year, and based upon enrollment of 4,180 students, the spending per student in the current year is expected to be about $17,691 per student. However, assuming the number of students stays the same, spending in the following two years would average about $14,708 per student — a drop of about $2,973 per student.
Although the district’s bottom line in the current year is projected at $7.5 million, for the next two school years the projections show a deficit. For the 2023-24 school year the projected deficit is $1.6 million and the following year it is $1.7 million.
EXPENSES
The district’s largest expense is for labor — the salary and benefits provided to its employees including what it calls certificated staff, mostly teachers, and classified staff who perform a range of duties including clerical, food service, maintenance, transportation and
other support work.
According to the multiyear projections, certificated salaries are expected to be just over $15 million in the current year and will increase to $17.3 million in 2024-25. Classified salaries are tagged at $6.3 million this year and projected to increase to $7.5 million in 2024-25. And employee benefits are also expected to increase from $10.3 million this year to $11.3 million in 2024-25.
The projection shows base salaries for certificated staff increasing by more than $2 million from next school year to 2024-25. The base salaries for classified staff are also expected to jump by about $1.2 million over the same span of time.
FUTURE
Between now and the end of the fiscal year the district will need to develop its budget for next school year. Officials will likely be watching the state budget process, as well, as the state is bound by Proposition 98 to provide a minimum level of funding for public schools and community colleges.
Last November, the Legislative Analysts Office noted that the Proposition 98 guarantee may go down for next school year due to the projected state budget deficit. Such a reduction in funding, coupled with inflation, may be another challenge for schools.
But a new source of state funding may come from Proposition 28, passed last November. Beginning next year, the state will be required to provide additional funding to increase arts instruction and/or arts programs in public schools, although the funding must be used primarily to hire new staff.
Entezari and Larson-Everson will continue to provide the school board with financial updates and the district can be expected to pass a tentative budget for the next school year in early summer.