Lodi USD Budget Update

Based on the May Revision of the State Budget, below is the most current information available to us at this time. 

The Governor’s May Revision paints a bleak picture of funding for school districts. One might conclude from partially reading the May Revision proposal that current year (2019-2020) and next year (2020-2021) Cost of Living Adjustments (COLAs) were maintained; however, the May Revise reality is that LCFF revenues will not increase but rather suffer severe reductions of 8 percent per year for several years. In addition, state categorical funds are likely to be cut by 50 percent. Categorical funds are used for programs such as Career Technical Education (CTE) and the After School program at many of our schools.

Should Lodi USD maintain 2019-2020 expenditure levels, these proposed revenue cuts will cause the District’s Fund 01 (‘General Fund’) Ending Fund Balance to decline by more than $26,000,000 versus revenue received (including the deferral of the June funds to July) in the 2019-2020 school year. The District’s Ending Fund Balance would drop from $62,000,000+ to $36,000,000 in one year’s time under this scenario. This occurs in spite of the addition of $6,200,000 of one-time CARES funding and an increase of ~$2,200,000 in the District’s AB602 (Special Education) funding. California school districts are also hoping that the Governor will follow through on promises to use the state’s $4.4 billion in CARES funding to help reduce some of the severity of the proposed cuts but no further information on that specific funding mechanism is available at this time.

The May Revise does nothing to soften the blows in future years either. The deep cuts proposed in the 2020-2021 school year carry forward into the 2021-2022 and 2022-2023 school years, except without any proposed CARES Act-type funding offset. Due to the Lodi USD Board of Education's outstanding fiscal management, the District could possibly maintain its current programs in the 2020-2021 school year. The Board has indicated that keeping services for students in place, which in turn keeps staff employed, is the main priority for the 2020-2021 school year. However, planning would need to begin for substantial reductions in the 2021-2022 school year.

Given the May Revise proposal, Lodi USD would need to cut at least $26,000,000+ for the 2021-2022 year and borrow $10,000,000 from its own Debt Service Fund (Fund 56) in order to maintain positive certification. Districts that do not maintain positive certification are in jeopardy of a state take over, which eliminates local control. Even with this level of cuts and borrowing, the District would still need to cut further in the 2022-2023 school year, should there be no improvement in the school funding picture. For point of reference, should the District maintain its current programs in 2020-2021, a total of $37,500,000 in future years would be required to stabilize the decline in the District’s Ending Fund Balances at roughly 10 percent of all expenditures.

Business Services will continually provide budget updates to the Lodi USD Board of Education leading to and through the June 16, 2020 Budget presentation.

 

 

 

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