The Saugus Union School District approved a budget on Tuesday that details increasing cost of retirements, potential deficit spending and a huge loss of previously expected state funding.
SUSD expects to end the 2018-19 school year with a spending deficit of $687,000, according to page 23 of the district’s executive budget summary. The spending deficit will jump to $3.8 million in 2019-20 and $890,000 in 2020-21.
The district’s ending fund balance at the beginning of the 2017 fiscal year was $13.8 million, the budget report reads, but at the end of the fiscal year — which is Saturday — the fund balance is estimated to have decreased by more than $2.6 million, leaving the district with a little more than $11.4 million in reserves.
“Though (the remaining balance) is positive for the district,” the report states, “increasing expenses, changes in [average daily attendance], variances in the cost of living adjustment and rising pension costs could eventually deplete the fund balance and reserves.”
District reserves will drop from 12 percent next year to 8 percent in 2020-21, according to the budget, which also predicts drastic increases to the State Teachers Retirement System and the Public Employee Retirement System funds, as well as the spending deficit.
Both of the retirement funds will see an estimated increase of at least $1 million prior to the 2020-21 school year, according to the report. “These escalating contributions have considerable financial impact on the district.”
The strain of retirement dues is only worsened by the recent changes to the state’s budget, Nick Heinlein, assistant superintendent of business, said at Tuesday’s governing board meeting.
“When we were building the budget, the theory was that we were going to have $344 per average daily attendance,” Heinlein said. “What we think is going to end up happening, is it will be $168 per average daily attendance, which is a net loss to the district of $1.7 million.”
As a result, the district will see a major drop in revenue with little to no dip in expenditures for the upcoming year, Heinlein said.
The latest updates will be provided in the 45-day budget revise that will be presented to the board sometime in August, Heinlein said on Tuesday.
He added, “The budget that is up for approval fully supports everything that is in the LCAP (local control and accountability plan).”