New Haven Unified School District

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Budget FAQ's

Budget Frequently Asked Questions

 

As many in our community know, the District has a structural fiscal deficit. That is, our total expenses exceed our total income. Funds received in Cost of Living Adjustment (COLA) do not fully cover the District’s increased mandated costs and revenue loss from declining enrollment. The District will be heavily relying on its unrestricted ending balance from 2018-2019 in order to meet its increasing fiscal obligations for this year and the upcoming years.  Furthermore, this ending balance cannot be used in its entirety to cover district expenses because it includes the district’s mandatory reserves. (For more information about our budget please visit the Budget Information tab on our website.)

 

Does the district have a budget problem: Yes & No (but ultimately yes).
    1. Yes: We have a structural deficit, which means we are spending more money than we receive. The District will spend approximately $13,000,000 more than we receive during the 2019-20 school year and approximately $8,000,000 more per year than we receive in 2020-21 and 2021-22. 
    2. No: Our reserves can carry us through 2019-20 and 2020-21 without making any cuts.
    3. Problem: If we don’t address this structural deficit now, we will be unable to make the cuts necessary in 2021-22. 
      1. 2019-20: 3.5 million in reductions were made in this year’s budget
      2. 2020-21: 2.6 million cuts need to be made (at least) 
      3. 2021-22: 2.5 million in cuts need to be made (at least)

The Governor says he is giving more money to schools this year, so why do we need to make cuts?
    1. The Governor has increased spending on schools this year. Unfortunately it is not keeping pace with increasing “fixed costs” such as increasing contributions to State retirement programs, salary step and column costs, and increases in costs for mandated programs such as Special Education.
    2. The average district in CA will receive $82 per student less than is required to educate that student. In the NHUSD, our fixed costs are higher so we will receive $224 per student less than we will spend on our students.
    3. EdSource estimates that we need to spend 39% more than we do to “provide an adequate education” for our students. EdSource estimates that 905 of the State’s 940 districts are in a similar situation.
    4. Changes in how the State funds schools and/or new local revenue sources, such as a parcel tax, are necessary to ensure we have adequate funding. 

What is COLA and how is it applied to the District budget?

Cost of Living Adjustment (COLA) is an increase in funding for schools from the state government to compensate for inflation. In the years when the state is able to fund it, the COLA is applied to Local Control Funding Formula (LCFF) sources and selected state categorical funds. 

 


No, there is no specific law that requires COLA to go straight to employees' salary increases. However, the District and its employee groups enter into salary negotiations to discuss and to reach agreements on various articles including salaries.


What is the intended use of COLA?

There is no requirement to use COLA for anything in particular. It is strictly up to the local agency to determine its use. It is meant to provide additional revenue for school district to be used to cover any uncontrollable cost increases including but not limited to increases in pension (STRS/PERS) contribution, special education costs, utilities, supplies, step and column increases, statutory employee benefits, and required textbook adoptions. COLA could also be used to rebuild the District's reserve, to designate other one-time needs or for emergency (unplanned) expenditures. It’s important to note that in recent years the statutory COLA has not been high enough to cover the cost of these increasing expenditures.


Didn’t the district receive a cost of living adjustment (COLA) increase?
Yes. That was factored into the budget calculations and we still need to make cuts. Unfortunately, the Governor’s preliminary budget released in January projects a lower COLA. This means that the district will need to make another $400,000 in reductions if the COLA doesn’t change before the state adopts its budget in June.
    • What we did receive in COLA is embedded in our budget and we are still projected to spend $224 more per student than we receive in 2020-21. 


Doesn’t the district receive money to reduce class sizes?

Yes and no. When the state changed over to the current local control funding formula (LCFF) in 2014, it rolled several funding streams into the LCFF base including money that was previously designated to reduce class sizes. However, the State left it up to local districts to decide how that money would be used. The NHUSD district had existing class size language in 2009 and the decision was made to keep using that language. So no money was set aside out of the LCFF base in 2009 to reduce class sizes beyond the contractually prescribed class size ratios. Since that time, any money spent to lower class sizes comes directly from general fund sources. For example, if the district decided to lower class sizes for 2020-21, there would need to be a corresponding budget cut coming from a different part of the budget - there is no additional money to lower class sizes. 


What about declining enrollment?
    1. It is estimated that the State will continue to lose students through 2027-28 and beyond. 
    2. Most districts in our region of Alameda County are projected to continue to decline in enrollment.
    3. This will require us to continue to “right size” in order to adjust to fewer students.
    4. District efforts to attract students to our district through “marketing” the great things that are happening in the district and by providing programs that our community wants can help offset this loss of students. 

The District adopted a new 3 year strategic plan with goals aimed at improving student achievement and at providing socio emotional support. Won’t these budget cuts make it more difficult to achieve these goals?

Yes. Budget cuts impact programs, services, and people. This makes having a clear, actionable strategic plan even more important. It is important to be very intentional about recognizing how cuts will affect these goals, which we have done in our recommended budget reductions presented to the board in January. The strategic plan goals will be used to help staff and the community prioritize our budget, build our local control accountability plan, and identify reductions moving forward. 


It looks like the District has a surplus of over $14 million in ending balance.
    1. What will this money be used for? The short answer is that we will be using this balance to help balance the budget in 2020-21 and 2021-22. Without it, we would need to make significantly more cuts. It is keeping us financially solvent. 
    2. Why do we need budget reductions? With LCFF now capped, meaning the only new revenue we can expect to receive is in the form of COLA, we will need all the help we can get. In this COLA-only environment, the revenue loss due to our enrollment decline and cost increases for STRS/PERS alone eat up the COLA adjustment we may receive. If no reductions are implemented or if there are no new revenues received or generated, this ending balance of $14 million will be negative $1.8 million by end of 2021/22, which is not sufficient in meeting the reserve requirements thus creating a budget shortfall of $8.0 million.