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.)
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.
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.
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.
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.