As schools starts up this week following the dormant summer months, Los Altos School District's board of trustees will be ringing in the new school year with a round of spending cuts.
Employee wages and benefits are among the top reasons why expenses blew up by an additional $890,000 since the 2019-20 budget was originally adopted in June, turning the previously balanced budget into $100,000 in deficit spending, according to a district staff report.
The red ink comes despite higher-than-expected property tax growth that generated $166,000 in extra money and cuts made to professional development and new library and instructional materials. Another round of spending cuts are planned at a future date, with a goal of bringing down annual spending by $370,000.
The changes to the 2019-20 budget, reviewed and passed by the board on Monday, Aug. 12, mark the latest update in a lengthy battle to keep the Los Altos School District solvent. The district's financial position has weakened over the years despite the strong local and state economy, with costs rising faster than revenue and more than $8 million in deficit spending since 2014, according to a report by the district's Citizens' Advisory Committee on Finance.
The committee added that the lengthy economic recovery since 2011 is bound to turn into a recession at some point in the near future, which would make matters worse. Absent a plan to get the budget back on track, the report found the district's reserve fund could dry up by the 2021-22 school year without even a single pay raise for its employees.
The tight budget is caused by numerous factors, including the fact that a big portion of the district's funding -- parcel tax revenue and contributions from the district's education foundation -- is flat and doesn't rise with increasing costs. Another worrying trend, according to the committee, is that the district is spending a growing portion of its budget on non-academic costs, repairing and maintaining aging classrooms and school facilities that haven't been updated in more than a decade.
The budget has been so tight that district teachers agreed in May to not receive a salary increase for the 2018-19 school year, which would have been mostly retroactive, foregoing the pay raise in exchange for a guaranteed 2.5% salary bump in the following 2019-20 school year. Classified employees agreed to a similar arrangement for a 2% pay raise, ratcheting up staffing costs by an annual $897,200.
One of the solutions is to start using bond funds. Los Altos School District voters passed the $150 million Measure N bond in 2014, which has sat dormant for years pending plans for a new school. The district's Budget Review Committee (BRC) recommended using $10 million of the money for upgrading and repairing aging facilities to replace deferred maintenance costs coming out of the annual operating budget. The recommendations also call for using $2.8 million in bond money to pay off debts on capital leases, which will save $800,000 in interest costs through 2029.
Outside of using money from Measure N, the committee recommended several small spending reductions for public relations and communications ($25,000), school color copiers ($75,000) and leaving vacant a technology specialist position ($60,000), which could further bring down the district's costs. The BRC is also seeking to cut a virtual reality-based education program created by the local tech company zSpace for $35,000 in annual savings.
Board member Bryan Johnson said he wanted some type of post mortem for why zSpace was getting axed, and whether it was because it was too expensive or somehow failed to meet expectations.
As of Monday night, it was clear that the district may not be able to part ways with its tech specialist after all -- at least not yet. Assistant Superintendent Randy Kenyon said the district has relied on having one staff member managing technology and providing tech support at each school, and that dissolving one of the positions likely means completely revamping the way the district handles its technology staffing.
"I would say right now this item is probably not going to happen," Kenyon said. "We're probably not going to be able to cut this position, at least not for this year."
Some of the BRC recommendations, like $85,000 in cuts to professional development and $50,000 in reduced spending on instructional materials, have already been wrapped into the adopted budget and saved the district $150,000 this year. The full list of recommended cuts amount to $370,000 in cuts to the district's operating budget, which district officials see as necessary following the pay raises for the 2019-20 school year.