Madera Unified School District board members gather for a meeting in March. MUSD Chief Financial Officer Arelis Garcia laid out a plan that will get the district through the next school year without major disruptions, but she is not taking bets on the two years following.
This year ok; next two — uncertain
Madera Unified appears to be riding out the fiscal storm brought on by the COVID-19 pandemic, at least for the 2020-2021 school year. At a special board meeting Tuesday evening, Chief Financial Officer Arelis Garcia laid out a plan that will get MUSD through the next school year without major disruptions, but she is not taking bets on the two years following.
To get through 2020-2021 will require some belt tightening to the tune of more than $20 million.
At the top of the list of reductions is the elimination of 56 positions for teachers on special assignment and reassigning them to the classroom, saving $5 million. Additional savings would come from elimination of year-round substitute teachers, $1.4 million; eliminating the After School programs at five sites, $920,000; and withholding $10 million in general fund money from the building fund.
One area of concern over which the district has no control is something called “cash deferrals.” This occurs when the state establishes the district’s monthly allotment and then says, “You will get it, but not when you were scheduled to get it.” Basically, the state gives the district an IOU.
According to Garcia, the district can expect this to happen in 2021, when the state will begin deferring payments to the district by five months. After Jan. 2021, the district will not receive its next monthly allotment until July 2021.
According to Garcia, Madera Unified has a couple of options to pay its bills over that five-month period. The district’s healthy reserves would allow it to cover expenses for two of those months. In addition, it could take out a short-term cash loan called a TRAN (Tax and Revenue Anticipation Note). The interest on such a loan for Madera Unified would be in the neighborhood of $100,000.
Garcia informed the board that there would be no cost-of-living increases in income from the state in 2021, and she is not planning on any for the next two years after that.
Garcia’s preliminary budget proposal anticipates the district’s income for 2020-2021 to be $288.6 million. Of that amount, $75 million is restricted to specific uses. For instance, Madera Unified will receive $20 million in “COVID-19 Relief Funds, but this money can only be spent for items that would mitigate the impact of the pandemic on local schools by enhancing distance learning, social distancing, WiFi networking, personal protective equipment, and cleaning, sanitizing, and disinfecting operations.
The budget proposal sets the district’s expenses at $264.6 million, $218.6 million of which is for salaries and benefits and $26 million for special education. It also includes setting aside $500,000 in start-up funds for MadTEC, the new concurrent enrollment middle school, and $1.4 million for Matilda Torres High School.
Given the data presented by Garcia, it becomes plain that the current financial instability makes maintaining adequate reserves imperative. She has set the district’s reserve for 2020-2021 at 15 percent, 2021-2022 at 10 percent, and 2022-2023 at 2 percent.
If Garcia’s preliminary budget proposal is adopted by the board and submitted to the County Superintendent of Schools, it will receive a “qualified” certification, which means, even by exercising prudence, there is some doubt the district can remain solvent over the next three years under present circumstances.
Garcia’s parting words to the board Tuesday were, “My recommendation as the CFO is to maintain the conservative approach since the economy is very unpredictable at this time.”