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Repercussions from the estimated $40 billion deficit facing the state of California are reverberating in the Mountain View-Los Altos Union High School District and the Los Altos School District, which administers the elementary and junior high schools.
The current impasse between Governor Arnold Schwarzenegger and factions in the Legislature complicates the situation for district schools. Although the districts know there will be cuts in the state’s allocation, they don’t know how extensive the downsizing will be. They anticipated major cuts for the 2009-2010 school year, but the message from Sacramento implies cuts during the current school year will also be necessary.
“The school districts are dealing with uncertainty,” said former U.S. Congressman Tom Campbell, who served as California finance director in 2004-2005. “They still don’t know how much to expect in midyear cuts.”
“We are in unprecedented, extraordinary times,” said Randy Kenyon, assistant superintendent for business services in the Los Altos School District. “We have had some times with deep cuts, but I think these are even worse – the economy keeps worsening every day.”
The Los Altos School District estimates it will need to cut expenditures approximately $1.4 million by the end of this school year, Kenyon said, and that may be only the beginning.
Both districts are addressing the problem in an effort to minimize the impact on the quality of education in their high-performing schools.
How the districts are funded
The single largest portion of funding for both districts comes from property-tax revenues.
To balance educational opportunities throughout the state in compliance with the 1971 Serrano v. Priest ruling by the
California Supreme Court, the state Legislature calculates a minimum revenue limit for each K-12 student. The state, in effect, guarantees that each district will receive at least that amount, determined by multiplying a preset amount per student by the average daily attendance. If local property taxes do not cover that amount, the state supplies the difference. In areas where property-tax collections exceed the statutory limit, as they do in both local districts, state law allows the districts to retain the excess – they are designated “basic aid” districts.
The high school district has been a basic-aid district for more than 10 years. Property-tax allocations in excess of the revenue limit constitute approximately 25 percent of the high school district’s budget.
The elementary and junior high district qualified as a basic-aid district this year based on the increase in property values over the past few years. Kenyon said it could take several years for the conversion to a basic-aid district to have a substantial impact. Currently it adds approximately $800,000 to the district’s bottom line.
The downside to being a basic-aid district is that local tax revenues tend to be more volatile than the fixed-rate state aid.
Joe White, associate superintendent for business services in the Mountain View-Los Altos Union High School District, said he expects property-tax revenue growth to slow down with the downturn in the economy. Currently annual growth is set at 7.9 percent. He said he anticipates it will decrease to 6 percent next year and perhaps fall to 5 percent the following year. Such a decrease means less money for district programs.
“I can’t see the light at the end of the tunnel unless they come up with something that will restimulate businesses so that the housing market grows,” White said. “Jobs are there, people are spending money at stores and restaurants.”
Kenyon said he expects the Los Altos School District to continue its basic-aid status and forecasts a more conservative property-tax growth rate of 4 percent.
The districts also receive money from the state in the form of categorical funds, based on categories such as students with disabilities or districts with low-income families. The programs can be voluntary or mandatory.
Federal funds, minimal returns from the California Lottery and local revenues constitute the remainder of the districts’ funds.
Lending a hand
Kenyon and White agreed that students in the local public schools benefit from generous community donations through the educational foundations that allow the districts to sustain the level of achievement the local schools have attained.
The Mountain View-Los Altos High School Foundation has pledged $700,000 this year in donations from parents and community members. The foundation’s contribution funds educational programs that foster student academic success, including tutorial centers, extended library hours and coordinators for the career centers.
“The experience that our students have here would be greatly affected if community support were taken away,” White said.
The Los Altos School District receives additional finances from the Los Altos Educational Foundation (LAEF) and a voter-approved parcel tax for education, currently at $597 per parcel. The combined funds account for nearly 25 percent of the district’s revenues.
Without community subsidies, the district could operate only one junior high school of approximately 1,000 students and four elementary schools of 800 students per campus, resulting in class sizes of 30 students or more in every grade. There would be no enrichment programs, no technology in classrooms and lower-paid, less-experienced teachers, Kenyon said.
LAEF raises funds to supplement the resources of the Los Altos School District for academic and enrichment programs and to improve the overall education of students. The foundation funds physical, art and technology education at the campuses in addition to class-size reduction.
LAEF pledged $1.92 million this year, in addition to a one-time grant of nearly $400,000 to protect the school libraries and other programs from severe cuts.
The parcel tax generates approximately $7 million for the Los Altos School District each year. Without the parcel tax, the district would not be able to continue its neighborhood schools or maintain small class sizes.
Both districts credit their communities with playing an important role in maintaining the quality of education for students.
Looking ahead
Although both school districts tightened their 2008-2009 budgets, which had to be finalized last summer, they are scrambling now to accommodate projected, but not yet quantified, midyear cuts for this year in addition to even more substantial reductions for the 2009-2010 school year.
Another complication for school district projections throughout the state is the requirement that if a district anticipates that it might have to lay off teachers next year, it must notify them by March 15.
The high school district recently created a budget advisory committee, scheduled to convene this month, White said. The committee will explore ways the district can cut corners to compensate for the smaller budget. The committee will also weigh the advantages and disadvantages of dipping into the district’s reserves.
“The problem with using a reserve is that it is incredibly difficult to build back up,” White said.
The high school’s reserve is approximately 7.5 percent of its budget. White said that if the district appropriates reserves to deal with the midyear cuts, it would have to replace the funds in the form of cuts down the line.
Kenyon said the Los Altos School District’s reserve fund must absorb any midyear cuts because the programs and teachers are already in place. Currently the district is trying to freeze spending and is taking an aggressive approach to looking at finances for next year and the long term.
The approximately $1.4 million withdrawn from the district’s reserves would need to be made up in additional cuts in the 2009-2010 budget, Kenyon said. Looking down the line, the deficit just continues to grow, he said, almost exponentially.
“You have to make cuts, look for other revenue sources and hope there is an economic turnaround,” Kenyon said. “But you can’t rely on hope.”
Of the programs in danger, Kenyon listed school library programs, advanced math programs, class sizes, junior-high electives and classroom aides. He said that all programs are fair game. The board will make the final decisions.
To raise additional income, the Los Altos School District Board voted to bring a parcel tax measure before voters in June.
“Clearly we need the parcel tax to avoid cutting programs,” Kenyon said. “I think that might be the key message for this parcel tax.”
To replace the funds the district might have to cut in the 2009-2010 budget, the proposed parcel tax would need to be approximately $120-$150 per household. The district is scheduled to sample the local voter base with a mail survey on the parcel tax this week.
Contact Traci Newell at
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