District will have to dip into general and reserve funds to fund salary increase, bolster budget ahead of deficit spending
Despite projections of deficit spending in 2021-22 and in the following two years, the Healdsburg Unified School District (HUSD) is providing a total salary increase of 7.5% for all certificated, classified and management district staff starting July 1, 2021.
According to the district budget report, the board approved salary increase is made possible by HUSD general funds and special reserve funds.
“This allows the district to maintain competitive salaries to retain and attract quality employees while still maintaining the state required 3% reserve for economic uncertainties in the current year and two subsequent years,” according to the HUSD school board agenda packet.
The 7.5% increase is on top of a 6.50% compensation increase that was negotiated for all employees for July 1, 2020.
The 2021-22 HUSD agreements with the Healdsburg Area Teachers’ Association (HATA) and the California School Employees Association (CSEA) include contingency language that allows for an additional 1% ongoing salary increase if the 2020-21 unaudited actuals budget as presented to the school board in September of 2021 report an ending reserve percentage of 25% or higher for the 2020-2021 fiscal year.
“There was a one-time bonus of 2% last year, so all said and done when you consider all the various forms of raises and compensations, it’s around 16% over the last two years,” HUSD Superintendent Chris Vanden Heuvel said during the salary discussion at the June 23 school board meeting.
Vanden Heuvel and school board president Aracely Romo-Flores said after such a difficult and unpredictable year, all district employees deserve this raise for their perseverance and hard work. Vanden Heuvel noted that classified staff were the ones who made sure school sites were meticulously cleaned in order to keep employees and students safe and were the ones who fed the community while the district was shut down due to COVID-19.
“I really appreciate our teachers and I think we all do as a board and I think this is a testament to how much we appreciate and value our teachers. On behalf of the board, I want to thank all of our teachers for all of the amazing work they do regularly, but especially with this last year that was such a heavy lift for everyone and I just want to thank you for putting the needs of our students and families first and for all the work that you’ve done to support our students,” Romo-Flores said.
She said she’s also especially thankful for the district’s classified staff and for all of their work.
HATA President Robin Doherty thanked the board for the salary increase and said the teachers are “very happy about it.”
Budget breakdown
According to the budget report, the district is expected to deficit spend in the 2021-22 fiscal year and in subsequent years, however, this occurrence wasn’t unexpected as staffing costs increase and since no cost reduction initiatives were put in place.
Through the year the deficit gap is expected to narrow as more information about revenues becomes available. “The district anticipates needing to bring money in from Fund 17 during 2021-22,” according to the district budget report provided by Debbie Odetto, the district’s director of business services. “The district understands that on-going deficit spending is not sustainable, and will continue to proactively work to make sure that does not happen every year.”
Fund 17 is the district’s general fund reserves fund. Funds can be used for other than capital outlay projects, and it functions generally as an extension of the general fund. District reserves seem to be pretty stable, for now. The school board mandated reserve level is 13.33% and the district 2020-21 levels are at 17.81%.
Based on the latest expenditure and revenue information, the district estimates that reserve levels will be at 9.57% by the end of 2021-22 and at 6.08% by the end of 2022-23.
“Although this is less than the 13.33% board mandated reserve, it is well above the 3% (state) required reserve,” the agenda packet states, adding that reserve levels will be revisited when the unaudited actuals of the budget are presented to the school board in September.
Revenue
As a basic aid district, HUSD receives the bulk of its revenue from local property taxes instead of receiving funding based on student attendance.
According to Sonoma County Treasurer-Tax Collector’s estimates, a reduction of $404,917 in property tax revenue is anticipated for 2021-22 due to the Kincade Fire.
The district also receives revenue from funds from the dissolution of the Healdsburg Redevelopment Agency. For 2020-21, the district is receiving $3.4 million. The district received $2.8 million in 2018-19 and $3.2 million in 2019-20.
State revenue based on the Local Control Funding Formula will be around $1,012,698. For 2020-21, the district has received $25,462 in revenue, down from $66,409.
Expenditures
The district budget and its expenditures is in part informed by the Local Control and Accountability Plan (LCAP). A key component of the LCAP is that it defines how much a district must spend on certain student populations, low-income students, English learners and foster youth.
The budget report states that the supplemental amount the district must spend in 2021-22 is $1,339,331.
In terms of other expenditures, not only are increased salary expenditures putting a strain on the budget, but an increase in employee benefits are also impacting the budget.
STRS (California State Teachers’ Retirement System) rates increased again to 16.92%, while PERS (California Public Employees Retirement System) increased to 22.91%. The State Unemployment Insurance rate also increased from 0.05% to 1.23%.
In terms of costs relating to school materials, supplies and services, the 2021-22 budget includes additional costs for waste disposal and water and with the severe drought in Healdsburg, water-related expenses may continue to rise.
The contribution to special education is budgeted at $3.2 million for 2021-22 with a 1.5% increase for 2022-23. According to the agenda packet, this means that the district’s special education program costs $3.2 million more than what the district receives in revenues to run the program.
To view the budget report in its entirety, click here and click on the 6-23-21 board packet, or view the school board agenda packet PDF in the sidebar.
