The failure of a May 4 parcel tax has Cupertino Union School District officials looking under every proverbial rock for funding as the district faces long-term declining enrollment and the possibility of school closures.
The board received an update on the 2021-2022 budget’s status at a May 26 informational meeting, as well as a five-year projection through the 2025-2026 year. The board is set to hold a public hearing June 3 and consider budget adoption.
In discussing the coming year’s budget last week, Jeff Bowman, the district’s chief operations officer, took note of the state’s prosperous budget for this year – a $100 billion surplus – that promises more funding for CUSD than anticipated.
“Certainly, the budget looks a lot better,” Bowman said, considering last year’s projected $54 million state budget deficit.
He also noted possible benefits from a “mega” cost-of-living adjustment (“mega” meaning last year’s and this year’s revenues combined because the district did not receive a cost-of-living adjustment in the 2020-2021 year), grants and one-time federal and state funds. On the other hand, the district stands to lose funding through state unemployment insurance, pension funds and the additional costs that come with reopening the campuses.
“There’s great money coming in, but there’s also money going out,” Bowman said.
In the red
District officials reviewed some sobering spreadsheets. The district faces a $1.4 million deficit for the 2021-2022 year. The current parcel tax, providing $8.5 million annually, is set to expire after the 2022-2023 year. The numbers drop even more in the red when factoring in a 2% salary increase for teachers – an action board members appear to favor to retain quality instructors.
Also concerning to the board were district reserves dropping as low as 7% beginning in 2023-2024 – best practices call for reserves between 10% and 15%.
“I would rather make cuts in other areas in order to generate the funds to be able to at least maintain 8% over these five years,” said district board member Phyllis Vogel.
The board discussed a “revenue enhancements” category that projected $4.7 million in 2021-2022, raised through facilities leases and other uses of district assets. Included in the discussion was a question about generating revenue from the sale of the Montebello School property in the Cupertino foothills, annexed into the district in 2009.
Board President Jerry Liu also suggested the district talk with real estate professionals and others outside school circles about maximizing income from properties in the heart of Silicon Valley.
The sprawling district, which extends from Los Altos to San Jose, has consistently ranked among the lowest funded per student. Officials anticipate that a transition to basic aid status next year will allow the district to begin taking advantage of the high property-tax revenues of the area to bolster the budget and its reserves.
Officials in the district, which has approximately 600 students from Los Altos, hoped a $398 annual parcel tax, Measure A, would have addressed the district’s fiscal concerns. But while the measure received support from a majority of voters, it fell far short of the two-thirds approval required to pass.
CUSD projects a loss of more than 2,100 students over five years, forcing district officials to face the eventual question of school closures. It costs the district roughly $500,000 annually to operate a campus.
CUSD’s declining enrollment reflects a statewide trend. The state lost 160,000 K-12 students in 2020-2021.