Last night the Board of Trustees of the SDUHSD held two back-to-back Board Meetings, that ran from noon to nearly 10pm. That is a full day of meetings!
The first meeting was to educate the Board and the public on the District's finances and budget. Since this was strictly educational, no official action was taken.
Here are some things I learned that I found interesting.
Revenues to Fund the School District
Although there are minor but important exceptions, you should think of our revenues as a District coming from our local property taxes.
The State of California determines a minimum level of funding for a district, and if local property taxes don't allow for that level of funding, the state makes up the difference. However, if local property taxes provide for funding greater than the specified minimum, then the state does not provide "top off" revenues.
Our property taxes exceed the minimum threshold, so we do not get additional revenues from the State. This is called being a "basic aid" district. So, our revenues essentially come from our local property taxes.
Revenue Volatility
The minimum level of funding changes in a predictable manner. If you are not a Basic Aid school district, your revenues are fairly predictable. If property taxes fall in any given year, that means the state will pay more to the district to provide the minimum funding levels. If property taxes rise dramatically, the state will pay less to the the district. In either case, the district receives a predictable revenue stream.
However, in a school district that is Basic Aid (like SDUSHD), there is no "buffer" from the state to smooth out property tax fluctuations. If property taxes fall, the districts revenue will fall. If property taxes increase, the district's revenue will increase. The revenue received by Basic Aid districts, like SDUHSD, is more volatile than other districts, which can make it difficult to create a long-term plan and puts the district's finances at greater risk.
Operating Reserve
School districts report a cash balance at the end of each school year. The balance left "in the bank" at the end of the year is called the "Reserve". This is usually expressed as a percentage of the Districts revenues. Think of it as a "cushion" in case money gets tight.
For SDUHSD, this last year we had a reserve of about $14 million on a revenue base of about $150 million, so we have reserves of about 9.5%.
The average of all high school districts is about 15% reserves.
Our Board has adopted a policy of having a targeted reserve level of 10.5%, so we are below our target.
Given that our reserves are below our target level and are also below average in the state, and given that prior to this school year we were running a deficit of $3-$4 million per year, and also given that we are subject to all of the property tax volatility due to being a basic aid district, we are not in great financial shape when it comes to our operating budget. Our finance staff expressed concern over our low level of reserves and continued forecasted budget deficits several times during the meeting.
SDUHSD Revenue Forecast
The SDUHSD revenue for the next school year is expected to be about $160 million.
For a student population of a little over 13,000 students, that is about $12,000 per student.
There are about 125,000 voters in the SDUHSD, so our budget is about $1,300 per voter.
I'm not sure of the population of our district, but if it is about 210,000 people, our school budget is about $760 per person.
If there are about 80,000 households in our district, our school district revenues are about $2,000 per household.
SDUHSD Operating Expenses
About 86% of the total operating expenses of the District are labor expenses (salaries and benefits).
I was surprised to learn that the District does not negotiate retirement benefits directly with the Teachers Union. Teacher retirement benefits are determined by the Government of the State of California. We don't have local control over retirement benefits.
I will learn a lot more about our financial situation as we have additional budget meetings.
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The second Board meeting yesterday was a regularly scheduled Board meeting that lasted over six hours.
For such a long Board meeting, there wasn't much actually decided.
Closed Session
In closed session the Board met to discuss three items, anticipated litigation (2 cases), a property negotiation with the Boys and Girls Club, and upcoming labor negotiations.
Before entering into Closed Session, the Board is required to take public comments on the closed session agenda items. For what should be obvious reasons, the Board may want to keep certain litigation-related discussions confidential. However, this did not stop several of the commenters from speculating on what the "anticipated litigation" might be. "You better not be thinking about litigating the special election process" implied one commenter. Others also speculated on what the Board might be about to discuss, even though they had no information on the specifics of any legal case or even knew what we were going to discuss.
In turns out that the legal question was to consider if we wanted, as a District, to join a class action against the vaping company Juul for marketing their products to minors. The Board decided to join that lawsuit. I cannot comment on the other pending litigation, or on the various negotiations underway.
District Office Upgrades
There was a substantial amount of time spent discussing the proposed upgrades of the District Office building. In the end the Board approved a contract extension for the architects to create a detailed design and budget for site improvements. The actual work to be done and cost estimates will be decided at an upcoming meeting.
Superintendent
The Board approved the contract for interim superintendent Lucile Lynch, and approved a form of "request for proposal" (RFP) to solicit bids to assist in the search for a new superintendent.
Graduation
The Board reviewed graduation plans. Each of our high schools will have on-site graduations, with at least four tickets available for each student.
That was about it.
Except that as I left the building, someone jumped out of the bushes.