The La Cañada Unified School District Board of Education reviewed budget revisions based on state projections that are forcing the district to consider belt-tightening measures.
In a move that might foreshadow future cuts, a resolution was passed at the Feb. 29 Board meeting to terminate four instructors at the elementary level for music and drama classes due to a drop in funding.
Superintendent Wendy Sinnette reported some preliminary changes that the district will see in its budget, adding that LCUSD would need “significant budgetary belt-tightening.” The district will end the 2023-24 year with a projected deficit of about $4.2 million though the district forecasts it will reduce the deficit to $356,271 by fiscal year 2026-27.
“The Sacramento Legislative Analyst’s Office, the LAO, is warning superintendents and school boards who have begun working on their next year’s budget that more storm clouds are on the fiscal horizon,” said Sinnette. “In the Feb. 15 report, the LAO forecasted that future erosion of state revenues will likely reduce state funding for TK-12 by an additional $7.7 billion — $5.2 billion in 2023-24 and another $2.5 billion in 2025-26.”
Those projections are on top of the $13.7 billion in shavings that Gov. Gavin Newson announced in his proposed budget for the current cycle, which was released more than a month ago, Sinnette said. The governor’s January budget proposal had built in a small cost-of-living adjustment, or COLA, increase to 3.94%, which is now projected at .76%, and will likely be reduced further because of average daily attendance, she added.
“While Newsom has vowed to preserve funding commitments for schools and community colleges, deteriorating state revenue estimates may force him to reconsider that promise when he revises the budget in May,” said Sinnette.
In February, the California Department of Finance released its report on January revenues, which confirmed that revenues were headed in the wrong direction.
“Receipts from the personal income tax, which is the largest source of state revenue, were down $5 billion, or 25% from the $20.4 billion that the state had forecast,” said Sinnette.
For the full fiscal year starting July 1, total state revenues are down by $5.9 billion from a forecast of $121 billion. And with 40% of state revenues going to schools and community colleges through Proposition 98, Sinnette said it’s hard not to plan for significant cuts.
Sinnette reassured both the Board and the community that the district will have meetings over the next several months to work on the budget and clearly communicate changes.
“There’s much more news to come and planning with regards to these issues,” said Sinnette.
Assistant Superintendent of Business and Operations Melissa Greenwood presented the second interim report to the Board with data as of Jan. 31.
“Overall, in the general fund balance, we did see an increase in revenue from first interim and an increase in expenditures as well,” said Greenwood.
The local control funding formula, or LCFF, is about 65% of funding for the district. The LCFF increased by $47,574 based on enrollment, which was higher than projected in the first interim financial report.
Other state funding also saw a hike of $72,670 resulting from an increase in average daily attendance, or ADA, and additional student testing revenue. Local revenue increased by $182,737, the highest uptick since the first interim report. The uptick resulted from interest revenue from the county.
On the expense side, the district shelled out more money than expected on vacation payouts, stipends for school-affiliated organizations and supplies in the second interim.
The report projected enrollment increases, average attendance increases and decreases in one-time funds and expenditures for the long-term. The report also made calculations for the governor’s new cost of living adjustment increase, inflation of the consumer price index.
Greenwood pointed out that statewide average attendance is about 90-93% while the projected figure for the district in 2024-25 is 97%.
Sinnette commended the district and leaders at each school site for working to increase its ADA numbers back to pre-pandemic numbers.
“This has been a goal, because we saw a dip post-pandemic,” said Sinnette. “Everybody’s working really hard. There’s a lot of phone calls, a lot of communication with parents, and we’re seeing results. So, if we can keep that number trending upward, it’ll help our bottom line.”
With a steady increase in revenue for the projected budget in the years to come, La Cañada Flintridge Educational Foundation funding is down about 30% this year, which will affect the district’s budget.
“We’ve adjusted their revenue for next year and the years out, about $400,000,” said Greenwood. “This directly impacts our revenue depending on where they come at. This year, they were at $2.3 million in revenue, contributions or donations to the school district, and for next year’s budget we are looking at about $1.9 million.”
With a decrease of state funding, Greenwood said the district is planning out expenditures as much as possible based on incoming revenues. The district might have to reduce some expenditures, such as textbook adoptions for the next year. With projected state revenue uncertain, the district is being conservative with the budget and making sure it can continue to run all its programs.
A COLA update will come in April and Greenwood will be back in June for next year’s budget adoption.
“I think these numbers are at the very least sobering,” said Board President Josh Epstein. “I think the general assumption is that the May revise is going to be significantly worse, and when the governor came back with his proposed budget, it felt very optimistic and maybe a tad unrealistic, and now we’re sort of stuck in between waiting for that other shoe to drop. But I appreciate all the work that’s been done.”
Board member Joe Radabaugh also thanked the staff and Sinnette for informing the community on possible changes and cuts to the budget.
“I appreciate Wendy and staff ringing the bell of concern with the community, because we really are tethered directly to what happens at the state level,” said Radabaugh. “We’re going to feel it and the belt-tightening needs to happen.”
STAFFING CUTS
The Board unanimously approved a resolution that would terminate the employment of three music instructors and one drama instructor at the elementary level for the following school year, resulting from a decrease in donations from the La Cañada Flintridge Educational Foundation.
“We are incredibly grateful to our local community for supporting our school programs, but when we have anticipated shortfalls, we must plan to tighten our belts as we’ve talked about earlier,” said Assistant Superintendent of Human Resources Debra Cradduck.
With a decrease in funding from the LCFEF, the district cannot support the music and drama program at the elementary sites for the next school year. The termination of the four instructors would incur a savings for the district of approximately $207,000.
“We understand how critical the music and drama programs are to the elementary experience in LCUSD, and we are committed to identifying a new funding source, whether that’s from private donors, a new state or federal money or another resource that could come forward to help,” said Cradduck. “We intend to explore as many alternatives as possible in the coming weeks and months to identify replacement funding to continue to provide music and drama for elementary students.”
Cradduck said that the district plans to bring back potential solutions for the Board’s consideration, but in the meantime the district must adhere to the statutory timelines regarding these reductions.
According to Education Code Sections 44949(a) and 44955, if a school district identifies a program or service that should be reduced or discontinued for the following school year, the district must notify affected employees by March 15 of the current school year that their services will be eliminated at the end of the current school year.
If the district finds an alternate funding source for the instructors, it would be able to rescind the layoff, said Cradduck.
Epstein said this should be a priority for the district to find funding, so that the instructors can continue for the following school year.
“It really is a sobering moment when you realize that the impact of the foundation giving is immense on our district, and down 30% is a significant amount,” said Epstein.
Epstein pointed to the look of disappointment he said he could see in fellow Board members as the resolution was discussed, noting that he is hopeful for a resolution going forward in the funding shortage.
First published in the March 14 print issue of the Outlook Valley Sun.
