Despite student enrollment taking a hit this last academic year, Pleasanton Unified School District's budget outlook has improved considerably after the COVID-19 pandemic first began, staff reported to the Board of Trustees last week.
Recently declining case rates coupled with stimulus funding invigorated the state's economy more than anticipated and make the state's economic projections for fiscal year 2021-22 look promising, staff said at the board's June 10 regular meeting.
A year ago, PUSD was facing a potential decrease of 10% in its Local Control Funding Formula (LCFF) but ultimately saw no increase to their LCFF entitlement. Instead, a variety of one-time funds from state and federal resources were received to help manage and support on-site teaching and learning during the pandemic.
Because the economic recovery has exceeded expectations so far, Gov. Gavin Newsom included a 5.07% cost-of-living adjustment (COLA) in his May revise budget, along with one-time pandemic-related funds and multiple proposed new initiatives and grants. While the larger COLA is favorable for the district, staff said ongoing expenditure increases and declining enrollment "will erode into the additional LCFF funding."
Enrollment declined by more than 400 students in fall 2020, compared to one year before, and PUSD lost about 400 more students this year. Staff said most of the current enrollment reductions may be because of the pandemic, but there are indications the district may lose an additional 200-400 students for the 2021-22 school year.
Completed last year, the district's latest demographic report also showed an enrollment decline to 14,200 students, down from about 14,400. Each loss of 100 students equates to about $1 million in reduced LCFF revenues, which staff said could also lead to layoffs.
Assistant superintendent of business services Ahmad Sheikholeslami told the board, "For every hundred students that would go down, we're projecting to right size by four FTE (full-time employees), and that's a placeholder."
"We'd have to see exactly where enrollment is, where the tightening and right-sizing needs to happen, how much capacity do we have, is it at the elementaries, is it in the middle schools or high schools, but just to make sure that we're being true to our budget planning," Sheikholeslami said. "If you're going down enrollment, you need to be making corresponding adjustments in staff and if you don't do that, then you'll get to a point where, again, it's going to be too late, the cuts are going to be harder and harder to make."
Trustee Mark Miller then asked whether FTE reductions could help cover the district's average daily attendance reduction.
"That's part of the challenge; we're going to have to look deeper across the board with our staffing," Sheikholeslami replied.
The district hopes students will return and help them capture that loss of revenue, and staff noted that enrollment in transitional kindergarten through fifth grade shows "classes are transferring pretty much at their current levels as they matriculate up, though TK through first grade "are much softer than in previous years."
Trustee Joan Laursen said, "Because we have to notice certificated staff by March 15 for the following year, this would mean that any of our existing certificated staff will be employed next year, even if we're engaged in right-sizing, it would come in the form of not replacing people who retire, leave early. Could you talk a little bit about how that would happen in the first year, in the near year?"
Assistant superintendent of human resources Julio Hernandez confirmed 42 staff members are on temporary status this year "if we were to get into a crisis point, that we could unfortunately let go."
The recently formed Virtual Academy could help boost enrollment by retaining and attracting students, and staff recommended evaluating initial costs for the program to support the district's long-term goal.
The 24-page report and accompanying budget documents show the district budget satisfying the 3% reserve requirement from the current fiscal year through 2024. The district's general fund reserve including the unappropriated balance is 6.58% for 2021-22, 5.65% in 2022-23 and 5.19% the following year. Total proposed revenue for the district in 2021-22 is $180,278,313, with about $32.5 million in restricted revenues.
General fund expenditures in the next year are expected to run around $185,819,744, with approximately $63 million in restricted expenditures. The majority of district expenditures -- about 84% -- are allocated to personnel. Staff said a net $5.5 million of deficit spending is planned "partially as a result of carryover restricted funds from 2020-21 and ongoing increases in the unrestricted expenditures."