The William S. Hart Union High School District governing board certified its first interim financial report with a positive certification, but the report projected the district would have higher expenditures and slightly less revenues in the current and subsequent two years.
“We have before you the first interim report for the 2022-23 school year,” said Ralph Peschek, assistant superintendent of business services for the Hart district. “The first interim report is a snapshot of district revenues and expenditure projections as of Oct. 31.”
According to Peschek, the report is the first time the governing board and members of the public can see the impact of updates from the district’s adopted June budget. At the start of his report, he explained the district currently has a health fund balance carried over from the 2021-22 school year, which includes a mixture of state funding, federal funding, one-time and ongoing funding.
The district has an estimated fund balance of approximately $80.4 million, and the first interim report does not include consideration of any estimated increases to expenditures from agreements with bargaining units.
The district is estimated to see approximately $295.4 million in revenues and $309.9 million in expenditures, according to the report.
“Our overall revenues are closing in very close to almost $300 million a year in revenues for the district,” Peschek said. “The overwhelming majority of that comes from the state of California with some smaller funds coming from federal and local taxes, and other collections.”
Approximately 80% of the district’s expenditures are spent on salary and benefits for employees.
“These numbers change at different times of the year based on which reporting cycle we are in,” Peschek said.
The governor’s proposed January budget and the May revise budget are two of those important reporting cycles that impact the district’s budget. Peschek emphasized the percentages in the numbers can change multiple times.
Governing board members pointed out that the report indicated the district had higher expenditures over revenues.
“We are projecting a deficit spending. I would remind the board that we are still spending some of that federal one-time money,” Peschek said. “If you look at the two out years…our budget looks pretty stable year over year.”
“The deficit numbers that we’re looking at our quite small,” he added.
Current projections indicate the district might see a decline of approximately $14 million. The 2023-24 beginning fund balance is projected to be at approximately $80.3 million. Peschek described the decline as a reflection of one-time COVID-19 funds being used up completely, as directed by state or federal agencies.
“Every time we talk about doom and gloom, all of a sudden we get bailed out or something happens,” said Joe Messina, who represents Trustee Area No. 5. “It’s almost like me constantly spending, overspending, overspending and hoping that the bonus that I get at the end of the year will cover what I’ve been spending too much on all year long.”
“It makes me really uneasy,” he added.
Messina believed that things are not going to get better after reading various articles. He added that economists are talking about 2023 being even worse, people losing jobs, etc.
“I’m not trying to paint doom and gloom. I’m just trying to paint a little reality,” he said.
Cherise Moore, who represents Trustee Area No. 3, said she was not surprised with the report because she had already seen it alongside Bob Jensen, who represents Trustee Area No. 2, as they both sit on the finance committee.
“I just want to make sure everybody understands that these are projections, these are estimates, the budget is always changing and there are things that are in the budget that we have to have in there,” Moore said.
She emphasized that last year the district had estimated somewhere between a $20 million to $40 million decline in the 2022-23 beginning fund, but ultimately there was $40 million that came in from state funding.
“We’re looking at these numbers. It’s important because what we see here today is an estimate, a best guess,” Moore said. “I anticipate these numbers will change again, quite dramatically sooner rather than later.”
The governing board voted to certify its first interim financial report.
