As expected, the 2020/2021 budget was brought back to the Yucaipa-Calimesa Joint Unified School District board of education last week for revisions within 45 days of its approval in June.
When Eric Vreeman, assistant superintendent of Business Services, presented the district’s roughly $70 million budget in June before the start of the new fiscal year July 1, he called it a “placeholder budget.”
The reason for that is because there are always adjustments to the budget given that exact spending from the previous school year, which affects the starting balance, is not known until the unaudited actuals are reported in September. However, the COVID-19 pandemic and a late state budget revision June 22 made for a few more local adjustments.
“I mentioned that within 45 days of the state adopting the final budget, I would bring information back to you,” Vreeman said at the regularly scheduled July 28 meeting. “That is what we are doing this evening, talking a little bit about what was in that final document, what we know and what we don’t know.”
“This is more of a final budget,” Vreeman said, continuing, “though as you know, budgets change every day. We know more information than we did a month ago.”
As reported when the board approved the budget in June, the district will receive the same funding from the state for the 2020/2021 school year as it did for the 2019/2020 school year. There will also be no cost of living, or COLA, increase. It will remain the same or “flat,” as Vreeman called it.
“I shared with you in June, that if the governor’s budget had gone through as proposed, we would have had a $13.4 million budget deficit in our out year, by the third year,” Vreeman said, referring to the budget needing to be approved for the current year plus two years out. “That $13.4 million has changed to $3.3 million. We are still in deficit, but not nearly as large a deficit.”
At the June meeting, the projected deficit was $2,428,000. Continued declining enrollment is one of the main reasons the district is operating in an annual deficit. However, with a beginning balance projected at $8.8 million, the district is able to absorb the $3.3 million deficit.
“We still are in a deficit because of declining enrollment, but we are cautiously optimistic that we are in a better place today,” Vreeman said.
Vreeman was also optimistic the district would be able to cover deferrals from the state with interfund borrowing and not have to use outside sources to cover monthly payroll as was discussed as a possibility at the June meeting.
“One of the ways to balance the state budget is to defer money to the school districts for coming up years. For example, in the (state) budget agreement, the money we would have received in March and April and May in this upcoming 20/21, we will not receive until October, September and August,” he said in June.
If the district borrows from outside sources, it would have to pay interest, Vreeman said. If it can use interfund borrowing, there is no interest, however.
“We think we can interfund borrow and make payroll this year,” he said.
The next step for the 2020/2021 budget will be Vreeman’s report on the unaudited actuals for the 2019/2020 school year in September.
“In September,” he said, “we will have those numbers exact. The budget is exact one time a year in September.”
“We need to look at a budget reduction plan for 2021/2022,” he said, continuing. “We will need to work on that moving forward. One of the things also is we are monitoring enrollment and attendance. We do that daily.”
Other risk factors the district is monitoring, Vreeman said, is its sources of revenue. Vreeman explained the district’s revenue is based on three major factors – income tax, sales tax and corporate tax.
“If people are unemployed, the income tax might not be there. If people don’t have the funds for sales to buy things, the sales tax could be down,” he said. “We really have to keep an eye on this.”
Board president Patty Ingram asked Vreeman if the approximate $8 million the district received for COVID-19 relief was part of the 2020/2021 budget.
“The guidance we received is you could use that $8 million to plug a budget deficit. What we learned is there are restrictions,” he said in reply. “That money was pulled out. It is not part of $3 million deficit.”
He went on to explain the funds could only be used for COVID-19 relief. Among the things mentioned the funds are going toward are cleaning supplies and resources for distance learning.
The new school year begins Thursday, Aug. 13, with distance learning in YCJUSD as San Bernardino County and Riverside County are both on the state’s monitoring list.