District officials project deficit spending through 2026-27 school year
The term “living document” was used multiple times at Wednesday’s William S. Hart Union High School District governing board meeting in reference to the projected budgets for the district over the next three years that could include deficit spending and cost-cutting measures that may include layoffs.
In short, the district is projected to spend more than $21.3 million from its reserve fund for this school year, followed by nearly $16.5 million in 2024-25, more than $13.3 million in 2025-26 and more than $15.1 million in 2026-27. That equates to more than $66.3 million in reserve spending over the next three and a half school years.
And, that plan projects about $21 million in savings via “reductions in force” — in other words, cutting personnel costs, potentially via layoffs. Superintendent Mike Kuhlman said the board would have to take further action before any reduction in force is implemented.
Board member Bob Jensen, who represents Trustee Area No. 2, continually used the “living document” term whenever those numbers were brought up as they can change over time based on new data.
The board approved this fiscal stabilization plan on Wednesday, with board member Cherise Moore, who represents Trustee Area No. 3, being the lone board member to vote against it. The district was tasked with creating such a plan by the Los Angeles County Office of Education in October due to declining enrollment and attendance numbers resulting in a projected loss of revenue.
Moore questioned the beginning fund balance of just more than $116 million that was provided in the first interim report in December that was adjusted to just more than $115 million in the plan presented on Wednesday. Her point was that, given that the fiscal year has already started, the beginning fund balance should be the same.
Ralph Peschek, the district’s assistant superintendent of business services, said he would go over the numbers once again to ensure accuracy, but that a plan had to submitted to the county by Jan. 31, ahead of the district’s next scheduled board meeting on Feb. 7.
“It doesn’t really answer my question, and only for that reason, I’m not going to be able to vote on it right now,” Moore said. “But I trust that the work will happen.”
While the district approved spending from its reserves, the fiscal stability plan actually improves the financial outlook for the next three school years. The first interim report projected deficit spending of more than $26.2 million for this school year followed by $28 million next year, just under $28 million in 2025-26 and more than $30 million in 2026-27. In total, that would be just under $112.5 million in reserve spending over that time period, or nearly double what the new plan calls for.
The plan as presented on Wednesday would see the district attempt to meet its goal through the following:
- $3.1 million in revenue increases via increased district property lease income and updates to civic center fees that would more accurately reflect operating costs.
- As-yet unspecified reductions in force to the tune of $21.3 million, as well as not filling otherwise open positions.
- Reducing general fund expenditures by $10.8 million, including a flat rate for legal services, reductions in travel and professional development, and moving eligible positions to be paid for using grant money.
- A sweep of available funds to decrease expenditures by $2.7 million.
- Reductions in programs to save $8 million.
In discussing the plan, Peschek reiterated that some of the details remain to be determined and are subject to how the projections play out.
“Staff has identified … potential layoffs, or reductions in force, which we certainly hope to address through attrition, of $21.3 million,” Peschek said.
Peschek also wanted to make sure that everyone understood that the reductions in spending were due to a decrease in state funding through the projected cost-of-living adjustment and a decrease in enrollment.
The COLA was initially presented as 3.94%, but LACOE directed school districts to expect that number to drop to 1% in October. Gov. Gavin Newsom’s January budget update decreased the COLA even more to 0.76%, which was used to create the financial stability plan.
Peschek said the change in COLA equates to a projected $27 million decrease in funding over the next three years.
The “living document” term was brought up once again here, as the COLA could go up should the state’s budget increase in any of the next three years.
In terms of enrollment, the district is down 1,824 students since the 2018-19 school year, with 361 students leaving the district between the 2022-23 school year and the current one. Another 43 students left between the end of the fall semester and the beginning of the spring semester.
With Peschek’s number of $12,500 in state funding per student, Kuhlman said the district has essentially lost $4.5 million since the 2022-23 school year and $25 million since the 2018-19 school year.
Moore asked if the district knows where those students end up going. Collyn Nielsen, the district’s assistant superintendent of human resources, said the district has been looking into that, but the broader issue is people leaving the state of California entirely.
“There’s been a population decline in the state of California overall, and that decline happens all year round,” Nielsen said. “We have taken a look at some of the landing spots for where the students are leaving us for, and some of them are (Opportunities for Learning), Mission View. They move, they’ve gone to either out of state or other districts outside of the Santa Clarita Valley.”
Mission View and Opportunities for Learning are both independent public charter schools.
Kuhlman added that with feeder districts for the Hart district, such as the Sulphur Springs Union School District, also seeing declines in enrollment or simply no change, an increase in enrollment is unlikely in the near future.
Board President Linda Storli was optimistic that with 2,000 new homes being built in Santa Clarita that enrollment numbers could go up should families with children move into them.
“I think this is going to come back,” Storli said. “Someone’s going to buy those homes. If not, builders probably shouldn’t be building them.”
Average daily attendance was also brought up as school districts across the state receive funding for every day that a student attends class. The district’s three-year average prior to the COVID-19 pandemic was an attendance rate of 95.7%. That number has dropped to an average of 92.99% in the three years since.
Peschek noted that average daily attendance has spiked by at least 1% for every school in the district for this school year, except for Valencia High School, which is at 0.95%, though numbers are still down compared to pre-pandemic levels.
“It’s excellent to see those increases are maintaining because that’s how we’re funded,” Peschek said.
He added that just because attendance has increased this year does not mean more funding for this year, but that the state could be incentivized to provide more funding over the next three years should average daily attendance stay positive.
One way that the district is looking to increase attendance for the next school year is to have Friday, Nov. 1, be a day off for students while moving the first day of school from Tuesday, Aug. 13 to Monday, Aug. 12.
Nielsen said this was done because other districts have taken the day after Halloween off and that the Hart district has noticed a drop in attendance for that day in prior school years, whether due to taking care of younger siblings or taking vacations.
“I think that’s an excellent idea,” Storli said. “I think that starting school on Tuesday or Wednesday of the week never did make sense. Start school on Monday and then we take the advantage of taking the Nov. 1 off and, hopefully, by the fourth they come back to school.”
The board did approve a financial gain for the district on Wednesday via a one-time grant that would see the district receive just short of $12.9 million. Those funds would be used for the following:
- Obtaining standards-aligned professional development and instructional materials
- for specified subject areas.
- Obtaining professional development and instructional materials for improving school climate.
- Developing diverse, culturally relevant and multilingual school library book collections.
- Operational costs, including retirement and health care cost increases.
- COVID-19-related costs necessary to keep pupils and staff safe and schools open for in-person instruction.
