Although the school district pension liability continues to rise, eating up an increasing amount of the district’s budget, Santa Clara Unified School District’s finance director Mark Allgire said the district is “covering all its costs.”
Estimated average daily attendance for the district, according to the budget, is 14,728, which as a basic aid district, helps determine the district’s funding levels. As one of less than 100 Basic Aid districts, property taxes—40 percent of them—fund SCUSD schools. If property tax revenue falls short of the school’s need based on the average daily attendance, the state fills the funding gap.
The budget—approved by the school board last month—shows that the district plans to pay out just over $12 million more than last year for pension liability, additional employees and salary increases. Of that money, $1.45 million will go toward hiring additional certified staff, $4.75 million will fund raises for special education teachers, $3.1 million is scheduled raises for employees—called “step-and-column” increases. Pension liability for CalSters and CalPers increased by $2.68 million.
“The district is financially healthy, well-managed, and we are spending our property taxes for services that ultimately help students,” said Allgire.
Allgire said he estimates a 5 percent increase in tax revenue that would go to the district, amounting to $14.9 million. However, the district is spending all that money year-to-year, and if the increase in property tax dips below that estimate, the district could be in trouble.
He also estimates that the district will see an 8 percent increase in ongoing money from the dissolution of redevelopment agencies (RDA), which would amount to another $2.6 million. Because of the expiration of parcel taxes, the district must now pay for the programs funded by those taxes with regular property tax revenue. One-time RDA money is not accounted for until it is received.
Allgire said the district works hard to use one-time money on programs that are just that—one-time. Those costs, if they are to be ongoing, are then rolled into the budget in subsequent years. Every dollar used on one-time programs is a dollar that cannot be used on something else, Allgire said.
“I have been doing this 35 years, and I have never found out a way to spend a dollar more than once,” he said.
Although the district has had significant one-time money from the sales of former RDA property and carry-over money from previous years, and it is likely to receive a significant amount of money from both those sources again—around $15 million from carry-over alone—it has a $2.1 million deficit this year.
Despite the deficit, Allgire said the district can sustain a “reasonable amount of deficit spending for a limited period” but that he is not “overly concerned.”
“If the deficit spending is ongoing, you can’t fix it with one-time money,” he said.
Should the district have no carry-over or one-time money, which it very likely will, the general fund balance—including the $2.1 deficit spending—will stand at $53 million.
The biggest concern, Allgire said, for the district is the rate of property tax increase. If property tax takes a dip, “something has to give,” Allgire said.
The final budget report, including carry-overs and one-time money, will come before the board Sept. 15.
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