School districts across the state are facing a year in which funding could be well below what they have been used to in the years since the COVID-19 pandemic.
With COVID relief funding no longer in place, along with a $28 billion shortfall for 2024-25 that was outlined in Gov. Gavin Newsom’s May Revise and a 1.07% cost-of-living adjustment that comes 7% short of what school districts got in 2023-24, many districts are expecting less revenue while needing to make many of the same expenditures.
According to Ralph Peschek, assistant superintendent of business services for the William S. Hart Union High School District, the state budget shortfall was initially projected to be $45 billion after 2022-23 tax collections came in $26 billion below what officials were forecasting. He added that the governor and the Legislature have identified approximately $17 billion in cuts elsewhere in the state budget to reduce that shortfall.
On Wednesday, the Hart district’s governing board approved a 2024-25 budget that calls for $308.5 million in revenues, nearly 4% less than last year, and $340.3 million in expenditures, a nearly 5% increase.
The district is projecting to be deficit spending over the next three years. District staff is estimating that the unrestricted ending fund balance after this year will be $82.9 million, followed by $61 million in 2024-25, $38.6 million in 2025-26 and $13 million in 2026-27.
For the restricted ending fund, the same pattern can be seen. It is estimated to be at $29.2 million after this year before dropping to $9.7 million after 2026-27.
Peschek said the district had already adapted the reduced COLA into its multi-year projections in December, meaning there are few adjustments that will need to be made moving forward, unless “something catastrophic happens.”
“When it has happened in the past, practice is that we will come back to the board should we need to at any future date for any adjustments if it’s drastic enough that we cannot address it at first or second interim,” Peschek said.
Board member Joe Messina said the district will have to deal with the aftermath of any future cuts that the state deems necessary, with the state likely not being blamed for any problems at the local level. Instead, as was the case when teachers were demanding more pay earlier this year before settling on 2% salary increases and 2% one-time payments, he said the district would be blamed for either hiding money if there ends up being a surplus or mismanaging it if there is a larger deficit than projected.
“Budgeting in the state of California is an adventure every year because things are changing every quarter,” Peschek said. “At every critical reporting period, something is going to be a little different … The budget as presented today is correct based on all assumptions as presented to us. But in a week, it could be wrong.”
