The Mountain View Los Altos Union High School District is preparing for state budget cuts next school year, but currently it looks like the lost revenue will be more than made up for with property tax growth.
The district’s board of trustees unanimously approved the budget June 15, in accordance with a state law requiring that districts adopt their budgets by the end of June. However, state budget negotiations are ongoing and there could still be changes.
“We build a budget on the latest information we have, knowing that’s going to change,” Associate Superintendent of Business Services Mike Mathiesen said. “We just have to be positioned and prepared to change with it.”
Currently, MVLA is planning for a 10% reduction in unrestricted state funding, known as “minimum state aid,” which dates back to the Great Recession. That’s in line with Gov. Gavin Newsom’s May revision to his budget proposal, however the legislature has pushed back against the proposed cuts.
Because MVLA is largely funded through local property taxes rather than state dollars, the 10% cut only works out to approximately $300,000 out of an over $100 million budget.
Mathiesen said the lost revenue won’t lead to any lost programs and is expected to be offset by property tax growth. However, the math could change if the state decides to make deeper cuts.
“That could stay at 10%, that could get deeper if the state has to make deeper cuts … it could improve if the legislature’s version of the budget goes through,” Mathiesen said.
The state also gives MVLA money from various other sources, such as lottery revenue. The district is budgeting for those funds to remain flat.
However, local property taxes make up the lion’s share of MVLA’s funding, accounting for 82% of total revenue. Property tax collections are expected to jump 7% next school year. Overall revenue growth for the district is projected to be 3.4%.
There is uncertainty around how the coronavirus pandemic will impact property taxes. According to Mathiesen, next year’s numbers appear relatively secure, but the following year’s are more of a question mark. Currently, MVLA is assuming 3% property tax growth in the 2021-2022 school year and 1% the year after that.
There’s typically a lag before school districts feel the impact of a recession, because of the time it takes to hit tax revenue.
In terms of enrollment, MVLA expects to see growth continue. Over the past decade, the district has seen its population grow by roughly 1,000. Next year, about 90 more students are expected, rising from 4,549 to 4,640 pupils districtwide.
That’s consistent with registration numbers so far, Mathiesen said, but he added that numbers won’t be nailed down until school starts. There are some students who didn’t log on for online learning, and Mathiesen said it’s possible the families may have moved out of the area. On the other hand, the economic uncertainty also could lead to some parents opting to send their kids to public school rather than a private alternative.
One area that’s expecting to see funding cuts is the Adult School. The budget includes a 12% reduction in the block grant the Adult School receives from the state, which makes up the vast majority of its funding. That means a cut of around $380,000.
Currently, Mathiesen said the worst-case plan is to use a combination of deficit spending and reserves to cover the difference. Although it is late to make staffing changes, he said the school may see if there are vacant positions they can leave open or one-time expenses, such as equipment purchases, that could be cut. However, no program reductions are planned.
MVLA is also budgeting for a 50% cut in state funding for the Career Technical Education incentive grant program, which is used to support classes including engineering and computer science. Although 50% is a large cut, that only works out to approximately $125,000.
Mathiesen said MVLA officials will be looking to find other pots of money to tap, such as the site allocation each principal is given. The district hadn’t been using the grant to pay salaries, but rather for things such as supplies and teacher training.
“We want to still support those programs because they’re valuable and they’re growing,” Mathiesen said. “We want to try to stay away from cutting them to such a degree that it diminishes that growth.”
As MVLA tracks state budget deliberations and what property tax collections ultimately look like, there is a possibility the budget could be amended. However, Mathiesen said that unless something drastic changes, an amended budget is unlikely. Instead, district officials will make the fixes in December when they pass the first interim report.
“Right now, as we talk today, it’s a healthy budget that maintains our fiscal stability for next year and the years (following),” he said. “We’re being ever watchful in preparation of needing to adjust if necessary.”
To read about the Cupertino Union School District’s budget, see next week’s paper.