Pandemic exacerbates Cupertino’s budget woes

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Megan V. Winslow/Town Crier
The Cupertino Union School District rents office space on South Mary Avenue in Sunnyvale for a district office. In an effort to cut costs, administrators plan to stop leasing the space and instead disperse staff among a few sites the district already owns.

Largely dependent on state funding, the Cupertino Union School District faces uncertainty about what the coronavirus pandemic could mean for an already grim budget outlook.

If state tax revenue is hit hard by the pandemic, schools may suffer deep funding cuts. Because of the way school funding is determined in California, Cupertino relies on per-student dollars from the state, unlike some other local districts that are largely funded through local property tax revenue.

“Every economist is predicting we’re heading into a recession,” Board of Education President Lori Cunningham said. “The question now becomes: How big is that recession going to be and how much of it will education be asked to bear?”

Even before confronting the pandemic’s long-term economic impact, the district is already experiencing the immediate costs of the crisis.

First came the cost of cleaning supplies, gloves and masks, as well as overtime for custodial staff, said Jeff Bowman, the district’s budget director. Once school closures took effect, the district lost revenue from after-school programs that pay to use district facilities.

If more employees need to take a leave of absence to care for themselves or family members, that also could cost the district. And if sheltering in place means staff don’t use up their vacation time, that will have to be paid out, Bowman said.

Providing free meals for students during the crisis is resulting in an approximately $20,000 daily loss for the district, even after accounting for federal and state reimbursements. Typically, students who pay for their meals help cover the overhead costs of running the problem. However, with schools closed, the district is giving free meals to any student in the district.

The district also purchased Wi-Fi hotspots to connect students who previously lacked reliable home internet access.

All told, Bowman estimates the district is looking at a $1.4 million to $1.5 million hit from the direct costs of the pandemic. That’s after taking into account the nearly $300,000 the district received from the state to help cover costs.

It is possible that the district may see some cost savings, such as decreased utility bills from not operating school sites. However, Bowman said that won’t entirely offset the costs.

The district has long been in a precarious financial position, with nearly $3.5 million in cuts already planned for next school year before the pandemic hit. More cuts may now be necessary.

The district is looking to reduce the money allocated to school sites, as well as department budgets. Administrators also plan to stop leasing land for a district office and instead disperse staff among a few sites the district already owns. Currently, the district rents office space on South Mary Avenue in Sunnyvale. The office transition was already in the works, but the pandemic pushed the timeline up. According to Bowman, the goal is now to complete the move by December.

Looking ahead

Despite the immediate costs the district faces, the greater uncertainty lies in what the economic fallout could mean for the state’s budget, according to Bowman. Unlike some other local districts, Cupertino Union relies largely on state funding.

California calculates a base funding level for each district based on attendance numbers. If a school district’s local property tax revenue is lower than the base amount, the state fills in the gap. However, if a district has excess property tax revenue, it gets to keep it.

Cupertino’s property taxes don’t hit the base level, so the state provides the missing funding. The lack of additional property taxes means that Cupertino ends up with less money per pupil than many other local districts.

If the state reduces how much money it allocates districts for each student, that could dramatically affect the Cupertino’s budget, Bowman said.

The state Department of Finance released an update last week estimating that in light of the pandemic, California will incur a $54.3 billion budget deficit. The expected decline in revenue would cause $18.3 billion in funding cuts for K-12 schools and community colleges.

Later this month, Gov. Gavin Newsom is expected to release a May budget revision. In the revision, Bowman said districts typically receive detailed guidance on the budget outlook, including the likely amount of the per-student allocation. Each July, the governor typically releases another update, once the state budget has been adopted.

According to Cunningham, one of the biggest causes for concern is whether the state will provide a cost-of-living adjustment. The district relies on that money to help cover the increase in salary costs that occurs each year, she said.

In a presentation to the Board of Education last week, Bowman laid out potential areas where the district could save money. The possibilities include closing schools, increasing class sizes and having one principal cover two schools.

The cuts were already being considered before the pandemic to help address long-term funding issues in the district, but they may be needed more than ever in light of the current crisis. However, Bowman stressed that no action has been taken and that these are currently just options being considered.

Said Cunningham, “The bottom line is we’re very unlikely to achieve the kinds of cuts we are likely facing with any one solution.”

Update: This article was updated from the version in the March 13 print edition to reflect more precise information about the funding of the district's meal program.

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