Although the Cupertino Union School District’s Board of Education passed a budget for next school year less than two weeks ago, the school funding landscape has already changed substantially at the state level.
In its budget, Cupertino was bracing for a 10% cut to the base funding it receives from the state, which makes up three-quarters of the district’s revenue. Gov. Gavin Newsom and the State Legislature have since reached an agreement that averts the 10% cut. However, the deal also removes a cost-of-living increase and defers some of the state’s payments to schools, creating cash flow problems for districts.
Cupertino Chief Operations Officer Jeff Bowman said the district always knew there were going to be changes at the state level, just not precisely what those changes would be.
“It’s always a moving target with the budget,” Bowman said. “This is the greatest moving target we’ve ever faced.”
State officials have been scrambling to fill a $54 billion budget hole caused by the pandemic’s economic impact. In his May budget revision, Newsom proposed cutting the base funding the state provides school districts by 10%, a suggestion that legislators pushed back on.
Although board president Lori Cunningham said the new compromise is better than the governor’s original proposal, she added that it’s hard to be enthusiastic about a budget that still doesn’t provide sufficient funding for school districts.
“If I gave the governor an F for his budget, maybe I give the state a D for their budget now,” Cunningham said.
In particular, she said the state isn’t adequately responding to the increased costs districts are facing because of the pandemic. As next school year approaches, schools are expecting increased costs for personal protective equipment, ramped up cleaning and potentially needing more staff to meet health requirements.
Cunningham added that the use of deferrals to delay paying districts is a “budgeting gimmick” that allows the state to meet its budget obligations, while often forcing school districts to borrow money in the short term to cover costs.
District officials are still in the process of assessing how the state budget deal will impact CUSD. The plan is to bring a budget update to the board either at the end of this month or in August, Bowman said.
The district was already facing millions of dollars in cuts, which only grew when the pandemic hit. The budget the district’s board unanimously passed June 18 incorporated nearly $5 million in cuts. That included $3.47 million in reductions the district was already planning, unrelated to COVID-19. The financial impact of the pandemic caused the district to trim an additional $600,000, plus another $800,000 in one-time cuts to departmental budgets.
Some teaching positions were reduced as enrollment declined, but class sizes aren’t increasing. A variety of positions were also eliminated or had their hours reduced, including secretaries, district-level managers and instructional coaches, who help train teachers.
“We’re trying to keep it away from the classroom,” Bowman said. “But indirectly you’re impacting the classroom when you start cutting all these amazing people that surround our students and provide support.”
Administrators are working to determine exactly what the state deal means for the district, but Bowman said not having a 10% state funding cut will make a “huge difference.”
Some planned reductions may now be avoidable, but many are likely to remain and the district will have to make more cuts in the coming years, amid declining enrollment, Bowman said.
The district’s student population has dropped by nearly 2,500 from a peak of 19,194 in 2013. Because state funding is based on enrollment, fewer students means less revenue. The district is projecting another drop of 700 students next school year.
With the state no longer planning a 10% across-the-board cut, Bowman said the district will likely use the added revenue to replenish reserves and increase the fund balance for future years. In the budget passed last month, Cupertino was projecting a nearly $12 million deficit in the 2024-2025 school year, which Bowman said he now hopes can be eliminated.
Regardless of the pandemic’s course, the district expects to make deeper cuts in future years, in an attempt to put the district on stable financial footing in the long term. That could include increasing class sizes, having one principal cover multiple schools or closing school sites altogether.
“We’re at that last layer outside the classroom. We’re already shaved as close to the classroom as we can get,” Cunningham said. “Unfortunately, what we’re looking at next year is those cuts that start directly impacting our classroom.”