In any given year, Tracy Unified School District Superintendent Brian Stephens can see budget shortfalls on the horizon.
Stephens expected another year of cutbacks as the student population in TUSD shrank again, and revenue from the state was expected to be reduced along with it.
Then, last week, when California Gov. Gavin Newsom announced the May revision of the state budget plan, Stephens learned that he had to brace his school district for budget cuts well in excess of anything it could absorb in a normal year, including layoffs of as many as 100 teachers and staff.
As state revenues decrease and spending to counter the COVID-19 threat increases, schools statewide can expect to see their 2020-21 state funding reduced. Last year, the state put about $103.4 billion toward K-12 education, including about $58.8 billion worth of general fund money. Newsom’s May budget revision sees a likely spending plan of about $99.7 billion, with the general fund contribution reduced to $47.7 billion and with other income, including federal COVID-19 relief money, only beginning to compensate for the difference.
The district’s $172.3 million in expected general fund spending is supported by $161.6 million in total revenues. The difference, about $10.7 million worth of one-time expenditures, such as $3 million for new textbooks, ends up being paid for through transfers from other district funds.
Newsom’s May budget revision showed that the single biggest general fund revenue stream for districts like TUSD, the Local Control Funding Formula, will be decreased by 10% statewide. In 2019-20, it provided $142.6 million for TUSD.
Stephens said that declining enrollment, combined with increased pension costs and increased costs for special education, makes every cut more painful than the one that came before it, and that 10% decrease in the Local Control Funding Formula represents substantial cuts.
“All of the easy stuff is gone. Not that any of this is easy or good, but this $14.2 million, the majority of this could be in personnel. That’s all that’s left,” he said.
At this point in the budget process, Stephens wants to get out in front of the bad news. That way, when he releases the spending plan for 2020-21, which he expects to do in the week before the TUSD Board of Education’s June 23 meeting, the trustees won’t be shocked by what they see.
He has yet to draft the district’s budget for next year, but by the June 9 meeting of the board, he expects to have a clear idea of what needs to be cut to attain a balanced budget. He was already looking at about $11.7 million worth of cuts even before COVID-19 hit. After losing 10% of the Local Control Funding Formula funding from the state, Stephens expects to see a revenue shortfall of about $26 million for the 2020-21 fiscal year.
The biggest part of the spending plan is personnel, with more than $138.4 million going toward salaries and employee benefits.
“We’ve postponed buying textbooks for the next year, for future years, so we can save money. Frankly, at this stage, 80% or more of our budget is personnel. So when you lose $26 million basically over this year, we’re going to have a lot of layoffs. I think we’re going to have over 100 layoffs,” Stephens said. “The problem is there are so many good people and they don’t deserve this. If the federal government comes through with a bailout, who knows if it’s going to get to our level?”
Stephens added that he’s still compelled to look at other possible budget cuts before notifying district employees that they could be out of a job.
“I think everything is on the table,” he said. “All sports are on the table. Home to school transportation are issues that have to be considered, for reduction or elimination.”
Tracy Unified School District, which listed an average daily attendance of 13,953 in its 2019-20 budget, has seen a steady decline of about 250 to 300 students each year for the past 12 years. The budget also lists the full-time equivalent of 1,384 staff members, including 701 teachers, 535 classified employees, and nearly 148 people in management or supervisory positions.
Stephens said that in most years there are staff cutbacks in proportion to the loss of students, but they tend not to involve layoffs.
“Usually what happens is our retirees sort of equal what we have to cut, but now this year that won’t be the case. My guess is, given the ability, that we will exceed the number of retirees with the layoffs that we’re going to have,” he said. “Unfortunately, this COVID-19-influenced recession has taken that to a different level.”
He noted that a struggling economy for any reason always translates to less money for schools, something he’s had to consider as TUSD’s superintendent since 2014 and previously as the assistant superintendent for business at Northern Humboldt Union High School District in the late 2000s.
“The difference was, you could see the decline was coming, and you could budget for it,” he said. “This was a cliff that we fell off of. This was out of the blue. If you had told me three months ago that I’d be sitting here today talking about the cuts we’re talking about, I would have thought, you don’t know what you’re talking about. You’re crazy.”
This fiscal crisis hit suddenly.
“The economy is shut down. In California, remember, most of our revenue for state government comes from state income tax, capital gains tax. So when the economy is going good, like it was three or four months ago, our tax revenues were increasing, it was good times for California,” he said. “But just like in the Great Recession, or in the recession back in the early 2000s, when the economy tanked, unemployment goes up, capital gains isn’t great, revenues go down.”
Now districts have to plan for a new school year amid uncertainty of what campus life will look like when classes begin again in August.
Three probable scenarios for the fall are opening schools as usual, staggering students’ schedules so that classrooms are less crowded, and continuing distance learning. Most likely, the answer will be a combination of the three.
Distance learning on a large scale was rolled out this spring in response to COVID-19, but Stephens hopes to open campuses again, pending word from state and county officials.
“I’ve had a lot of emails from parents who don’t want distance learning. They want their kids in school,” he said. “I’ve received some very strongly worded emails from parents saying, please educate my kid, because I’ve got a job or I run a business, or something along those lines.”
The district also discovered that distance learning is appropriate in some cases. Even before COVID-19, the district had prepared an online charter school, the Tracy Independent Study Charter School, which is highlighted on the district website’s home page. Sign-ups begin June 1.
“We just posted it here Thursday and we got a bunch of phone calls from people who are interested,” Stephens said, acknowledging that other K-12 districts and colleges have developed successful online instructional programs while Tracy Unified is just getting started.
“It’s taken them years to get there,” he added. “I don’t know that it’s fair to expect a classroom teacher who has been here 30 years teaching it face to face, who maybe isn’t the most tech-savvy person, to expect them to be as fluent in the context of using technology, as somebody who has used it more often.”
The response to COVID-19 has also shown which teachers will be most likely to adapt to online instruction.
“There are teachers who are far more comfortable now than when they started,” Stephens said. “We’re talking about, when we come back to the school year, training our teachers on how to do a better job with distance learning.”