William S. Hart Union High School District officials said they’re starting the budget process earlier this year in anticipation of a multimillion-dollar deficit that’s projected out over the next several years.
Using its own conservative enrollment-projection estimates and ones from the district’s contracted demographer, Davis Demographics, the district expects to have anywhere from 18,884 students according to its estimate versus 19,648 from Davis.
The 764-student gap, about 4% of the Hart district’s estimate, is not an insignificant amount when you consider it equates to a roughly $9.5 million difference for the district based on the state’s funding formula, which provides the district with about $12,500 per student.
The district is working to be as transparent as possible in terms of where its funding goes, said Ralph Peschek, assistant superintendent of business services. He added that the district considers all of the programs identified in its strategic plan as essential in terms of cost.
“But just as everyone else in the community has experienced, the district has also experienced increased pressures, costs associated with running the district,” he said, “which, as I noted in my presentation (Oct. 10), puts us in a position of having to do more with less.”
The “less” was enough to trigger a letter of concern Friday from the L.A. County Office of Education, which states it has a responsibility to “assist districts to maintain fiscal stability through a pro-active approach,” under the state’s Education Code.
The district’s final adopted budget for 2023-24, which was supposed to have a more than $17 million deficit, is now projected to have a deficit of $12.2 million, representing 5.37% of the general fund.
“The district is also projecting operating deficits of $17.12 million or 7.33%, and $26.99 million or 11.32%, for 2024-25 and 2025-26, respectively,” according to the letter. “As a result of projected deficits, the Unrestricted General Fund is projected to decrease from a beginning balance of $66.86 million in 2023-24 to an ending balance of $10.55 million in 2025-26, a decline of approximately $56.31 million, or 84.22% over three years.”
For the Hart district, the problem of a lower number of overall students has been compounded by those students missing school more often, a problem that traditionally wasn’t an issue for the Hart district, according to Peschek. However, data shared Monday in a phone interview with Peschek and Brittany Kruczynski, the district’s director of fiscal services, indicate how it’s become an acute concern.
Traditionally, the Hart district was at about 96% in terms of the percentage of enrolled kids who showed up to class each day. Since 2019-20, the attendance figure slipped about 2.7%, but 93.3% means another multimillion-dollar hit.
“If we’re looking at it strictly from an ADA (average daily attendance) perspective, we did start seeing … that our significant decline was really associated with COVID,” Kruczynski said.
“It would be the equivalent of if 556 kids left the district,” she added. With the district receiving approximately $12,500 on average per student, the absences mean about a $7 million loss for the district.
An L.A. County Office of Education official said Monday that last week’s letter was within the county superintendent’s oversight authority.
It is “standard practice” when “cumulative deficit spending exceeds 50% of the districts’ Unrestricted General Fund balance, and ending reserves are not sufficient to sustain the existing level of deficit spending beyond the third year out,” according to an email from Van Nguyen, a public information officer for LACOE.
“This specific correspondence was issued to the district to reiterate the request made in the adopted budget approval letter, clarify the expectation to submit the plan to our office and establish a specific due date on the request,” she added.
The letter asks for a report back on the district’s budget situation by Dec. 15.
Peschek said he couldn’t speak for the county’s education office, but he took the letter to mean LACOE wanted to see the district moving toward fiscal stability and what steps were being taken to address the deficits based on its analysis of the district’s budget.
To that end, he said the district was engaging in a task force he mentioned at the Hart district’s Oct. 10 meeting, which is looking at ways the district can undertake outreach with parents to explain the significance behind attendance.
The district is also going through to evaluate its costs, he said.
“Has there been incremental growth expenditures that are outside the norm for inflation,” he said, adding since the district can’t generate revenue the way a business can, managing cost is critical.
And the task force has already started to yield results, he said, with a pair of campuses already reporting an increase of about 2% in its campuswide attendance rate.
“And that’s something that can help us make up some of this lost ground,” he said.