Tracy Unified School District has its budget for 2020-21, but the district’s trustees granted their unanimous approval with the knowledge that they will have to revise the spending plan next time they meet in August.
That’s because the budget approved on Tuesday shows general fund spending — expected to be about $162 million — that is $11.9 million in excess of revenue, which is estimated to be about $150.1 million. The district’s general fund reserve of $39 million could absorb that kind of deficit for a couple of years. Should the economic slump attributed to the COVID-19 pandemic continue, however, larger deficits would be likely, and by the third year the general fund reserve would be depleted.
Casey Goodall, the district’s associate superintendent for business services, told the board of education that he doesn’t expect that will actually happen based on recent state budget talks, but the district still must pass a budget based on the information it has at the moment.
Gov. Gavin Newsom’s May revision to the state budget predicted that the Local Control Funding Formula, the primary allocation of state funding to local school districts, would see a 10% cut because of sales and property tax revenue declines attributed to COVID-19.
But on Monday, Newsom, Senate President Pro Tempore Toni G. Atkins and Assembly Speaker Anthony Rendon announced that they had reached a budget agreement that preserves funding for education, among other things.
Goodall told the board that even though the state budget is not official yet, the local school district needs to send its own budget to the San Joaquin County Office of Education by the June 30 deadline. The board will then approve a revised budget at its next meeting Aug. 11 based on what the state approves.
“It’s very likely that the governor now is going to do what he said,” Goodall told the board. “This will all come to naught, but you still need to approve that resolution and this budget to get the county to approve it in the short term, even though it’s all going to change within 45 days.”
Meanwhile, state leaders are still counting on uncertain federal aid from the $3 trillion Health and Economic Recovery Omnibus Emergency Solutions Act, which passed the U.S. House of Representatives on June 3 on a partisan vote, with Democrats in support and Republicans opposed. The U.S. Senate has yet to consider the bill.
Goodall told the board that, were the state to adopt a budget similar to the May revision, the district would have to revise its budget accordingly by the end of the year to avoid drawing on its reserves.
With a general fund balance of $39 million to start the 2020-21 fiscal year, the district could absorb an $11.9 million deficit this year, but that quickly becomes unsustainable. Goodall’s projections, using the same state budget assumptions from this year’s May revision, show a $12.9 million deficit for 2021-22 and an $18.8 million deficit for 2022-23.
“Putting that in the context of the governor now saying he’s going to approve the legislature’s proposed budget, everything I’m asking the board to do tonight seems abstract and ridiculous,” Goodall told the board. “In fact, we are required to adopt a budget based on the governor’s May revise, even though he’s now publicly stating that’s not what he’s going to approve.”
TUSD Superintendent Brian Stephens said that, while the budget adopted on Tuesday showed the district drawing on its reserves, his goal was to maintain a general fund balance well above the state-mandated 3% of total spending. He also stressed that the budget passed Tuesday would be replaced Aug. 11.
“Once Gov. Newsom signs the budget agreed on by the Senate and Assembly, that budget goes away,” Stephens said. “We don’t expect to draw down on the reserve like that at all.”
With state officials referring to their spending plan as a “no-cut budget,” the superintendent expects Tracy Unified will be made whole, though he doesn’t know yet if it will equal the $11.9 million deficit, or be a couple of million dollars more or less.
“I don’t know if it makes up for it, but it will get us close,” Stephens said.
More than 150 jobs were up for elimination in TUSD when it seemed the state would not maintain full funding to school districts. Last week, the district put off those layoffs on the promise of the state passing a no-cut budget for education.
The school board still approved the elimination of some jobs on Tuesday. Tammy Jalique, the district’s associate superintendent for human resources, told the board that all 26 — including paraeducators, bus drivers and custodians — were vacant positions. In some cases, the employee had retired, and in others, people were promoted or reassigned. All but seven were part-time jobs.