Lake Tahoe Unified School District has a budget problem
Lake Tahoe Unified School District does not have a budget crisis but it does have a budget problem.
That was the takeaway Tuesday at the LTUSD Board of Education meeting during a presentation on the 2019-20 budget.
The district is looking at another operating deficit that is expected to draw down its general fund reserves closer to the state mandated minimum.
Put simply, explained Terri Ryland with Ryland School Business Consulting, costs are outpacing available revenue — a fact that led Ryland to urge caution when it comes to spending.
Superintendent James Tarwater provided a blunt assessment of the situation: there are many people seeking money but the district doesn’t have it.
That reality was made clear in May when the El Dorado County Office of Education, which oversees LTUSD and other districts in the county, issued a warning ahead of the board’s consideration of a renewable energy and sustainability plan.
The plan called for borrowing money that could then be paid back with cost savings over time.
In a letter the county office warned that if LTUSD moved forward with the plan then the county would place additional financial oversight on the district.
“Based on our review of your 2018-2019 second interim budget report and multi-year projection and in consideration of the recent collective bargaining agreements approved on May 14, 2019, it is our opinion that the district cannot afford to move forward with this plan,” wrote Robbie Montalbano, deputy superintendent with the El Dorado County Office of Education.
Budgetary problems are neither new in LTUSD nor are they unique to the district.
Across California, school districts are struggling to balance their budgets amid steadily rising costs, particularly stemming from pension obligations.
The situation is perhaps most dire in Sacramento City Unified School District, which must cut $34 million in expenses over the next two years, the Sacramento Bee reported. The district narrowly avoided a possible state takeover last month.
In December the board received the first update on the 2018-19 budget, which found that since adoption of the budget in June 2018 general fund revenues had increased by $800,000 and expenses increased by $2.5 million.
Earlier this year at its second update on the 2018-19 budget, the district decided to make $1 million in cost reductions aimed at eliminating its ongoing deficit issue, according to Ryland’s budget presentation.
After reaching bargaining agreements with various labor organizations earlier this year, the district determined it needed to make another $1.8 million in reductions over the next two years.
It aims to do so with cost saving measures, including a hiring freeze on vacant positions in the district.
LTUSD, like many employers, spends the bulk of its money on personnel. In the 2019-20 budget, 87% of the district’s $43.7 million total general fund expenditures will go to salaries and benefits.
While the salary increases approved earlier this year will, as Ryland noted, exacerbate the budget issue, restricted expenditures on certificated and classified employees are actually estimated to decrease in 2019-20 due to unfilled positions, according to a budget document.
In her presentation, Ryland also stated that shortfalls in funding for the special education program continue to grow annually, further drawing down the general fund — the primary fund for district operations. The 2019-20 budget calls for transferring $1.8 million from the general fund in order to support the special education program.
In total the 2019-20 budget includes a deficit of $200,670. That would reduce the total general fund balance to a little less than $1.99 million, which is closer to the 3% emergency reserve mandated by the state.
A multi-year projection estimates that margin will become even slimmer in 2020-21 with only a $155,353 cushion between the total fund balance and the required reserve amount.
The projection shows a slight rebound in 2021-22 with the elimination of deficit spending, but Ryland said the budgetary process creates many unknowns for the year ahead, let alone one or two years out.
The 2019-20 budget will come back before the school board for approval at its June 25 meeting.