Hart district: Budget forecast could lead to tough talks in new year 

The William S. Hart Union High School District office
The William S. Hart Union High School District office
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William S. Hart Union High School District officials took a long, hard look at their spending plan for the fiscal year Wednesday following the state’s issuance of its updated budget picture. 

Barring improvement, the district is looking to deficit-spend from its reserves over the next five years to the tune of tens of millions of dollars. 

While staffing reductions were not part of Wednesday’s public budget discussion, officials referred to difficult “internal discussions” under way intended to avoid any difficult cuts and avoid future plans with deficit spending. 

One slide about halfway through the presentation portended an ominous message about classrooms to the nearly empty boardroom: In a slightly larger font on the bottom of one slide, the text read: “We will need to continue to align our staffing with current enrollment on an annual basis.” 

Ralph Peschek, CFO for the area’s junior high and high school district, spent more than an hour explaining and answering questions about “significant developments” in the state’s fiscal forecast that could impact just about every program the state funds, including academic ones. 

While the process for review was part of normal district procedures, the budget talk was longer than normal at this stage because the state’s revenue picture is nothing like the status quo of the last few years — largely because there’s no boost from federal COVID-19 funding. 

The Legislative Analyst’s Office reported recently the 2022-23 fiscal year ended $26 billion below projections, and that the three-year picture ending in 2024-25 could have the state in a $68 billion hole, which would have widespread ramifications for money the district would get from the state. Statewide, Proposition 98 money, which is supposed to guarantee an allocation for educational spending, could decrease by $19 billion, Peschek said. 

A strong stock performance could provide some relief, but that’s where the state’s next budget revision might provide some clarity. But based on the current forecast, it would likely take extraordinary measures from state lawmakers to avoid schools making cuts. 

During the talk, board members also asked about everything from “revenue reminders,” or notes sent out by the Franchise Tax Board on the school district’s behalf about the importance of paying a property tax bill on time to various attendance programs. 

Both provided funding sources that can have significant impacts for local campuses. Property tax revenues support local schools and the state funds school districts’ funding formula based on how many students are in class, which is calculated as average daily attendance, or ADA. 

Oluwadara Falodun, the governing board’s student member, said at Golden Valley High a campuswide challenge that rewards the winning student with a Chick-Fil-A lunch for avoiding absences has become a popular and strong motivator. 

The district also has seen the anticipated cost-of-living-adjustment the state is expecting to be able to provide decrease from 4% to about 1%, which Peschek referred to as a significant problem for school districts statewide. That would equal a reduction of about $7 million for the district. 

The recently passed Proposition 28, which guarantees a percentage of the budget for arts and music education, didn’t also come with a funding mechanism, Peschek said, meaning it’s likely that school districts will receive less than their budgeted amounts. 

While the school celebrated attendance gains, which can generate real revenue, the district’s student population forecast, which is an even more significant figure, continues to be one of several areas of concern, according to district officials. 

The district’s data projects fewer students for at least the next four years. When asked to go back and review the accuracy of the district’s historical projections, Peschek said analysts found their forecasts on student population data were generally accurate within about 1% of variance.  

The current picture includes Castaic High at half enrollment and three of the district’s feeder middle schools have enrollments below 1,000.  

Declining enrollment numbers, which are a big part of a school district’s funding, are a problem for every local district.  

The district’s current forecast calls for its reserves, much of which comes from restricted funding sources earmarked for specific programs, and deficit spending to the tune of $26 million to $30 million each year over the next five years, unless the picture improves. 

A school official familiar with the situation, speaking on background, said the district was already looking at ways it might be able to avoid staffing reductions if the deficit picture doesn’t improve. One idea that’s already been floated to teachers includes a cash incentive if any of them notify the district early of a pending retirement plan, among other ideas. There could be adjustments to class sizes, and program evaluations, too.  

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