Welcome to the February 2017 edition of the Superintendent’s quarterly Road Show Advance Newsletter. This month, we discuss how economic and political forces in Sacramento and Washington, D.C., might affect the district’s 2017-18 budget.
We begin with a recap of the Governor’s state budget rollout last month. At the local level, LEUSD’s annual budget is the backbone of our student-centered educational programs and services. The Governor’s proposed budget sets expectations for school district budgets state wide. The district’s budget development parallels the state budget process, so that a balanced budget is delivered to LEUSD’s Board and adopted before July 1, the start of the 2017-18 fiscal year.
While some 2017-18 budgetary impacts have been foreseen—namely, an increase in the district’s CalSTRS and CalPERS pension contributions—the Governor’s proposed budget decreases one-time ADA revenue from $214 to $48 per student. ADA is state revenue paid to school districts for students average daily attendance. Such a reduction in ADA is significantly lower than LEUSD’s revenue projections for 2017-18. For example, LEUSD’s projected revenue of $194 million would be closer to $188 million under the Governor’s proposed budget, resulting in a projected shortfall of nearly $5.9 million.
Any projected revenue shortfall caused by a reduction in one-time monies makes balancing the budget more difficult. Absorbing significant new costs further stresses the budgetary process. The district has anticipated a significant increase in the employer pension contributions for CalPERS and CalSTRS. In 2017-18, CalPERS will increase by 2.9% to 14.43%; also, CalSTRS will increase 2%, for a contribution of 15.80%. The Governor has pledged a slight education budget increase to cover the cost of COLA, which represents about $2.7 million in new revenues for LEUSD. The retirement cost escalation amounts to over $3.1 million, a cost that is greater than new revenues pledged by the Governor for 2017-18. In light of these facts, labor bargaining unit talks have begun in earnest as we prioritize our budget needs.
There’s more. As California lawmakers brace for a legal showdown on the issues of Federal immigration and health care reform, the impact to local schools is uncertain. Economic repercussions could be significant if reforms put state and educational coffers in jeopardy of losing Federal funding or ADA. The result of this uncertainty is maintaining existing educational programs and preparing for a rainy day—precisely what the Governor is recommending at the state budget level.
So far, we have been discussing falling operating revenues and a neutral budget for 2017-18. The bright side of 2017-18 will be the start of our Measure V Bond program projects this summer.
Passed in November by a 66.74% majority of voters, Measure V will fund a total $105 million bond program over the next 30 years. In June of this year, the first round of Measure V capital improvement projects and technology upgrades will get underway at every school.
The district wide 2017 summer project list includes installation of shade structures, marquees, playground upgrades, artificial turf, High School athletic field refurbishments, security and safety enhancements, technology for classrooms, deferred maintenance replacement-repair projects, and special projects (e.g., elementary classrooms at select sites). Additional improvements are planned beyond this summer. Measure V Bond proceeds from the initial series must be expended within three years of issuance.
From the FY 2017-18 budget to Measure V projects starting this summer, 2017 is filled with anticipation, so be prepared!
Dr. Doug Kimberly