JUN 7, 2017
Dear Team PUSD,
Congratulations to all of our graduates and promoting students, and congratulations to all of TeamPUSD for playing such a huge role in our students’ success. As our school year winds down, I wanted to take this opportunity to thank you for your hard work and dedication. I also wanted to provide you an update on PUSD’s budget now that our Finance Team has been able to determine what the Governor’s May revised budget means for our District.
On the surface, the Governor’s May revision was more favorable than his January proposed budget. The Governor’s revised budget now estimates state revenues have increased by $2.5 billion over three years (2015-2018). Some of that money comes to education; however, the Governor is still proposing to reduce the Proposition 98 minimum guarantee to fund education by $1.2 billion, as well as proposing the deferral of the one-time discretionary funds of $859 million that would have been provided to school districts in 2017-18 and instead won’t be provided until May 2019! Recently, Ron Bennett of School Services of California, provided District leaders with an in-depth explanation on the Governor’s May budget revision and its effect on all K-12 schools across the state. You can view the video here
As we have explained in previous communications, Poway is further disadvantaged because we are a low-funded district under the Local Control Funding Formula (LCFF), among the lowest in San Diego County, in fact. As a result, PUSD LCFF revenues, are anticipated to increase only about 2% per year over the next three years, while expenditures (including health and welfare, step and column, cost of fuel (new gas tax), operational costs, and STRS/PERS costs) will increase at a rate of 4% per year on average. For Example, for 2017-18 our projected expenditures are $368,181,846 while revenues are projected at $350,908,784. The District will have to dip into its reserves next year to balance our budget.
The state-mandated increases in employer contributions to STRS/PERS are making the most dramatic impact on school district’s budgets across California. Last year, PUSD paid approximately $3 million in STRS/PERS costs. This amount will increase each year and will double in four years time! While this is a benefit for all employees upon retirement, this was an unexpected and unplanned mandate that has districts struggling to financial obligations. An example of the effects can be seen at our neighboring districts who have had to issue hundreds of pink slips to their employees in order to balance their budget. At this point in PUSD’s budget cycle, in order to balance the budget, the Finance Department is proposing as much as $8 million in cuts for 2018-19 and $6 million in 2019-2020. Staff, program, and service reductions will be unavoidable unless State funding increases.
During the recession our District lost a great deal, and we have yet to fully recover. Since then, we have managed to do more with less, with an ongoing focus on our students and guidance from our Local Control Accountability Plan (LCAP). The LCFF funding we receive requires us to demonstrate measurable improvement in student performance and increases in academic programs that benefit students. We have implemented programs such as Xploration, Early Literacy training, and Response to Instruction and Intervention, and reclassified and increased the hours of LMRTs in our libraries. However, resources are constrained and we will have difficulty allocating funds for additional curricular resources, employee raises, or to modernize our facilities. These resource-allocation decisions will only grow more challenging in the years to come.
I would like to address the misconception that District managers are receiving raises. This is simply not true. Upon the hiring of any new employee, that employee is placed on a salary schedule, which includes step and column. The same applies for recent management hires and all other District employees. Any yearly increases in salary for all employees are based on the step and columns established by their respective salary schedules.
We must take a proactive, creative and collaborative approach to working our way out of this multi-year “deficit” scenario. This work we will need to accomplish together, with our staff, employee associations and our community. Assuredly, we will continue to balance our budgets while also maintaining our high-quality educational programs for Poway students. I am confident PUSD can and will do what is best for our students, staff, and stakeholders. The Board will adopt the final budget for 2017-18 at its June 29th meeting, where public comment is welcome.
You can continue to submit questions or suggestions via this email address: PUSDBudget@powayusd.com
Have a great summer. I hope you find time to recharge and refresh.
Marian Kim-Phelps, Ed.D.
MARCH 13, 2017
I wanted to provide you an update on PUSD’s latest budget report. Tuesday night, the Board of Education approved the Second Interim Budget Report which will be submitted to the County. It includes $5 million dollars in proposed
cuts in order to balance the budget. Those include: budget standards based on 2015-16 funding, suspending the adoption of textbooks, 10% department budget reductions, and reducing conference expenses, professional services, and other contracts.
Submitting a budget plan which includes proposed cuts by March 15th
is a required step to ensure the District remains in positive financial standing. Again, these cuts are in the proposal stage
only. Tuesday night’s power point is attached; for context and a more thorough explanation of the numbers, I encourage you to also view the Director of Finance, Joy Ramiro’s presentation to the Board at this link
. Scroll to 02:38:28.
I wanted to thank those members of #TeamPUSD who attended the board meeting to speak on the topic of the budget and proposed cuts. I agree with the speakers in saying that we need to work together on creative problem solving when it comes to balancing our budget. This Spring, the District will hold Budget Development Meetings to discuss further cuts and funding priorities for future budgets. You will be invited to attend to provide input and ideas.
During a recent Budget workshop for the Board of Education, Board members agreed on several priorities to guide future budget decisions. Those include:
- Maintain District focus on College and Career Readiness for each student
- First call on resources goes to school sites
- Maintain safe, attractive, and orderly learning environments and facilities
- Wherever possible retain staff and cut things
However, staff, program, and service reductions will be unavoidable in 2018-19 unless State funding increases.
The Governor’s May Revised Budget will provide a more accurate financial picture, but we need to be working proactively on a multi-year budget plan for our District.
You can continue to submit questions or suggestions via this email address: PUSDBudget@powayusd.com
. We are compiling a list of frequently asked questions based on your submissions so far.
-Dr. Mel Robertson, Acting Superintendent
FEBRUARY 14, 2017
I wanted to update you following my last communication regarding PUSD’s budget situation. I understand the concern and uncertainty that the last email may have caused for you, but I believe it is vital to keep you informed with all the facts as we receive them, as we move forward together.
For the past several weeks, District leaders have been meeting with principals, directors, and employee group leadership to discuss priorities in guiding our budget work. Individual school sites have been holding LCAP forums to gather input from stakeholders on funding priorities as well. Thank you for your hard work on this.
In the meantime, the Finance Department has been working around the clock to go over the budget with a fine-tooth comb, looking for any revisions that might reduce the amount of projected cuts. This includes unfilled positions and vacancies, unspent monies, and wherever else savings could be identified. As a result, at the February 14, 2017, board meeting, staff presented a revised budget report
with proposed cuts of $5 million for 2017-18 and $5 to $8.3 million for 2018-19
While this is still a significant amount of money, this is lower than what was first proposed ($7.5 million for 2017-18 and $17 million for 2018-19). We are hopeful that the Governor’s revised budget in May will even further decrease the amount of cuts we need to make. But for now, the District needs to move forward with a plan to present a balanced budget to the County by March 15, 2017.
That is why, in the attached presentation, you will also see a list of proposals to balance the budget. I want to emphasize that these are still in the proposal stage only. No decisions on cuts have been made, and all budget decisions are subject to Board approval. Our goal is to preserve positions for 2017-18. However, staff, program, and service reductions will be unavoidable in 2018-19 unless State funding increases.
In the meantime, we are asking any individuals who plan to retire or will remain on leave of absence, or intend to request a leave of absence to provide notice to the District as soon as possible
. This will provide a clearer picture to our Finance department as budget revisions continue. Keep in mind that this is an evolving process as we try to protect staffing levels, programs and services.
The Board of Education will explore these proposals and others at an upcoming Board of Education Budget Workshop. You can submit questions or suggestions via this email address: PUSDBudget@powayusd.com
FEBRUARY 1, 2017
This is an important, time-sensitive communication intended to share information about our current budget challenges. We appreciate your immediate attention and review. We want all stakeholders to be in the know as we move forward to collaboratively look at options to address PUSD’s fiscal deficit. As #TeamPUSD, we are all in this together and your participation in discussions is important. We hope to equip you with the following facts.
PUSD’s Budget History and Current Challenges
As an organization, Poway Unified has a long history of excellence, despite weathering the storm of the 2007-2011 recession. It was a difficult time for school districts throughout California and our organization was among those that went through extreme cuts. Everyone contributed and sacrificed, working together for the good of our District and keeping the focus on students. Beginning in 2014-15, as the state began to recover from its fiscal crisis, PUSD was finally able to begin to restore lost programs as well as salary and benefit compensation increases for employee groups. Attracting and retaining the highest quality employees is a priority for PUSD and is a commitment we continue to honor and value. Equally important to our mission is ensuring our programs for students are of the highest caliber as we work toward college and career readiness for all. We continue to be an award-winning District because of the hard work and commitment of our employees, students, and community, and our ability to provide a high level of support in the form of professional development, resources, and state-of-the-art learning environments. All of these items come at a cost.
In 2013-14 the state significantly changed the way schools are funded: PUSD is truly unique in our funding structure under this new LCFF (Local Control Funding Formula) and LCAP (Local Control Accountability Plan). Under this formula, Poway is considered a low-funded District. This means PUSD receives less money per student than most Districts in San Diego County. This presents some significant challenges to us as an organization.
The Potential Impact in Dollars
On January 10, 2017 Governor Jerry Brown released a budget proposal in which revenues did not meet previous projections. Included in the proposed budget is a reduction to school funding. While Proposition 98 still makes up the bulk of education funding, within the budget proposal there is a $506 million reduction in the minimum guarantee to schools. The passage of Proposition 55, the extension of temporary taxes to maintain current education funding, is canceled out by the more pessimistic revenue forecasts contained in the Governor's proposal. While this proposal will be revised in the Spring after the state collects taxes, school districts are required to start budgeting based on the numbers they receive from the Governor's proposed budget.
Based on this budget proposal, PUSD projects a reduction to our overall budget by as much as $24.5 million dollars over the next two years. That is, $7.5 million of ongoing cuts for the 2017-18 budget and another $17 million for 2018-19.
All of the District’s adopted budgets and presentation materials are publicly located on the PUSD website at: http://powayusd.com/en-US/Departments/Business-Support/Finance . Explaining the details of our District’s operating budget is not easy. Despite the challenge, we hope that you will take the time to review this document to help you understand the current status of PUSD’s budget and the challenges that are ahead as we collaborate with all stakeholders to address our fiscal bottom line.
What makes PUSD’s Funding Structure Unique?
Before implementation of the LCFF structure in 2013-14, PUSD was funded at the average level statewide on a per pupil basis (per ADA). When LCFF was implemented, PUSD fell to far below the average in comparison on a per ADA basis (see chart below). Of all the Unified districts in San Diego County, PUSD receives the third lowest funding per student due to having a low unduplicated pupil percentage (UPP) . The UPP counts students for additional funding based on these factors: low income status, foster youth status, and English Language Learner status. Districts with higher counts of students who qualify based on these factors receive more money through the LCFF. For example, if PUSD were funded at the rate of the highest district on the chart below, we would receive $224 million more. Our students may be lower funded, but they achieve much higher than the average. From the perspective of LCFF and LCAP, we are a success.
In addition to the low LCFF funding, money previously slated as “Categoricals” was cut and rolled into the District’s LCFF allocation. This allocation is supposed to cover big expense items such as: class size reduction, textbooks, Economic Impact Aid (EIA), and deferred maintenance. Basically, the state has determined that most of a school district's operating budget needs to fit within the LCFF. Additionally, items that were previously suspended have now been added back as requirements. No new funding has been provided, just the restored mandate. The District is trying to recover these monies, about $2.3 million, from the state. The District is also dealing with soaring costs that are beyond our control, including class size reductions, increased needs and enrollment in special education, facility and infrastructure improvements, as well as rising employer contributions for retirement. Many of these are also new requirements without any new funding.
It’s important to note that PUSD has engaged in significant efforts over the past few years to implement programs and resources designed to increase efficiency and reduce operational costs. These include but are not limited to: transportation, maintenance and operations, facilities, risk management, professional development, curriculum development, energy management and more. Our review of operating costs is always ongoing, as we work to maximize the opportunities within our major departments for savings.
As reviewed at the January 31, 2017 Board meeting, the District’s monthly budget revisions confirmed that if nothing else changes, the District will need to cut $7.5 million in 2017-18 and an additional $17 million in 2018-19 in order to balance the budget.
How is PUSD planning to address the fiscal challenges?
PUSD is looking at a number of options. This process is still in its early stages. The District will begin by looking at retirements, attrition, and not refilling positions that are vacated. Administrators are also looking at non-payroll cuts, including trimming supplies and department operating budgets, reductions in travel and conference attendance, and restructuring some programs, which may result in reduced services. The District's Local Control Accountability Plan (LCAP) process will continue, to gather input from stakeholders on funding priorities. The District will also be meeting with union leadership to review opportunities to meet these challenges. The County Office of Education requires the District to have a plan in place to address the deficit by March 15th. So this plan will be brought before the PUSD Board of Education during its March 7, 2017 meeting.
We continue to appreciate the collaborative relationships we have with PUSD’s employee organizations as we work together toward our overall goal of developing a plan of action that addresses our fiscal deficit, protects, preserves, and acknowledges the hard-working effort of our employees, and honors and maintains the success of our Poway Unified School District students.