To understand school finance means understanding what goes into the beginning balances. You may know that schools operate within a fiscal year, which means July 1 through June 30th make up the school budget year. This is important for a number of reasons, including how to understand the ending fund balance of the previous fiscal year and the starting balance of a new fiscal year. School starts in August; however, the fiscal year starts July 1st. For PUSD, last year’s budget ended 6/30/23, and the new 7/1/23 adopted budget started with approximately $2.7M based on information available at the time the budget was adopted. Because new, more updated, information is available in August after the State passes it's budget and in September after the district has paid all outstanding bills for the prior year, the final “after closing” budget shared with the Board in September showed approximately $3.5M as a starting balance for the 2023-2024 school year, including a deficit of about $80K left over from the previous school year. This budget is as accurate as it gets, reflecting all of the 2022-2023 bills paid, carryover funds, and budgeted expenses for the new school year.
I have received several questions regarding this $3.5M amount, and specifically why PUSD’s compensation offer is only 2% for 2023-2024, when there is $3.5M to start the school year with. In the chart above, please take a look at the “After Closing" column, which shows a beginning balance of $3,549,277 for the 2023-2024 school year. Below is a breakdown of what the $3.5M includes:
$788,858 - Restricted - These are unspent funds with legal restrictions on how they can be used, including the following breakdown:
$118,000.00 - ELOP (Extended Learning Opportunity Program) State Grant, restricted after school programs and can only be spent on this restricted state program
$136,500.00 - Antibias Education Grant Program, a State grant restricted to DEIB work, including staffing and professional development
$76,500.00 - State Lottery funds, restricted for use on curriculum
$42,300.00 - State Kitchen infrastructure grant, restricted for use on our school kitchen equipment and training in order to support the state’s required free meal program for all students.
$147,000.00 - Routine Restricted Maintenance account, restricted for facilities and maintenance including staffing, equipment and repairs. This fund is also a requirement to receive state facilities grant funding.
$136,000.00 - Makers grant to fund the high school Robotics program.
$37,000.00 - Educator Effectiveness State Grant, restricted to funding programs and staff for addressing learning loss funds due to COVID; PUSD has used these funds for our intervention teachers (called Multi Tiered Support System - MTSS) throughout the district. These funds and positions end this school year.
$18,700.00 - State Preschool Grant, restricted for use in our special education preschool program.
$8,000.00 - A-G State grant, restricted to high school programs that lead to A-G course completion
$44,258.00 - Revolving Cash
$22,400.00 - State Grant to develop Ethnic Studies Course
$2,200.00 - Classified Employees Professional Development Grant
$540,392 - Set-Aside for Carryover - These funds were collected for specific purposes during 2022-23 but were not fully spent. They will be incorporated into the 2023-24 budget by First Interim, but in September, were still newly identified and had not been budgeted yet, including the following breakdown:
$64,864.39 - PMS Program 2022-23 Carryover (e.g., proceeds from the Fall Musical, etc.)
$91,881.21 - PHS Program 2022-23 Carryover (e.g., proceeds from the Fall Play, Musical, etc.)
$79,255.14 - Parent Club Fundraising 2022-23 Carryover for Beach, Havens, WW, PMS, PHS, MHS
$21,979.69 - Field Trip Donations 2022-23 Carryover for Tri Schools
$15,179.07 - Turkey Trot 2022-23 Carryover for Athletics
$15,294.76 - Fall Festival/Wellness Center 2022-23 Carryover
$7,308.42 - ALPS Donation 2022-23 Carryover
$6,402.04 - Makers Donation 2022-23 Carryover
$236.98 - Silicon Valley Math Initiative 2022-23 Carryover
$39.05 - Contest Program
$84,363.07 - PEF 2022-23 Grant Carryover for Positions
$91,645.97 - PEF Site Supply Grant Carryover for Beach, Havens, WW, PMS, PHS, MHS
$61,942.21 - Prior Year Spring Fling funds for STEAM and Reading Support - Educational Services
$121,000 - Hold for Spring Fling:
These funds are proceeds from the May 2023 Spring Fling fundraising that will be split over two years to fund additional hours for elementary counselors and for library aides to keep the library open at lunch.
$177,000 - Hold for CSEA Measure H Funds:
These funds are allocated for compensation for CSEA staff. These funds have already been negotiated and allocated to CSEA compensation.
$1,418,962 - Hold for Economic Uncertainty:
All school districts are required to hold a 3% reserve fund for economic uncertainty. Indeed, many school districts hold a higher reserve fund for economic uncertainty, which makes good sense. Consider what happened last year when the state decided to offer school districts funds for the Arts and then later “clawed back” those funds. Because PUSD had budgeted those funds (as had all school districts), this “claw back” of funds forced PUSD to submit a “qualified” budget to the County, which means we were not able to immediately meet our 3% State reserve requirement last spring. Holding a greater reserve makes good fiscal sense, and is typically a goal for school districts in order to ensure fiscal solvency.
When you add up the amounts above, you can see that $422,300 is what is left over. I have also received several questions about why staff are paid after everything else, and if we can explore the idea of a zero-based budgeting process. In fact, we look at budgeting for staff first, which makes sense considering the fact that most of our budget is made up of people. Regarding compensation, this is why we are proposing a multi-year offer of 9% over three years. And yes, it is possible to explore zero-based budgeting; however, I can share that I have experience in zero-based budgeting in a previous district, and it made little difference. The idea of starting from zero and justifying every expenditure seems sensible, particularly when there is significant waste in the budget. In PUSD’s case, my observation has been that we spend every penny on programs (and our staff make up most of our program costs), right up to the edge of our budget. We have so much: reading specialists, math intervention, extra teachers for PE, Art, Music, and the library. We also have a robust counseling program and an amazing athletics program. These are all wonderful programs and people. Please also remember that we made significant reductions to the budget last year in the amount of over $2M (see slide 23 HERE), and given our declining enrollment, we may have to make additional reductions in order to make more room for staff compensation in the years ahead.
In the end, the beginning fund balance may seem like a lot of money, but when you analyze where the money is going, it goes right back into staff and programs. We offer a wonderful educational experience to our students; let’s not lose sight of our students in our desire to improve staff compensation. We can and should provide both, but it will likely take thoughtful decision-making now in order to make room for increased compensation in the years ahead.
