New schools to take toll on MUSD budget
Having passed the mid-point in the 2018-2019 school year, and finding itself in the middle of negotiations with its employee unions, Madera Unified is taking a close look at its money situation.
In accordance with state law, the district has compiled the second interim report on its finances, which includes a required look at projected income for the next three years. That report was given to the MUSD school board at its regular meeting on March 12 by Chief Financial Officer Arelis Garcia.
According to Garcia, while MUSD finances appear healthy this year, new school construction and openings will take a toll on the district’s future reserves.
Garcia has projected an ending balance of $45.5 million (13.87 percent) for the current school year and a $46 million ending balance (14.67 percent) for 2019-2020. California state law requires that school districts must have at least a 3 percent reserve, and Madera Unified board policy dictates that a 10 percent reserve must be maintained.
According to Garcia, beginning in 2020-2021 the district’s ending balance will begin to decline, primarily due to the construction and opening of Matilda Torres High School and the new concurrent enrollment middle school.
Garcia’s report indicates that in 2020-2021 the ending balance will fall to $41.6 million (12.39 percent), and in 2021-2022 it will drop to $37.8 million (10.77 percent). In 2022-2023, the ending balance will decrease even further to $37.7 million (10.61 percent).
The opening of Matilda Torres High School will cost the district $4,970,000. The principal for the school will come on board in 2019-2020 at a cost of $170,000. When the school opens the following year, 19 certificated employees will cost $1,800,000, and 23 classified employees will cost $1,850,000. The operations budget will reach $500,000, while it is estimated that the utilities will hit $650,000.
Opening the concurrent enrollment middle school in 2019-2020 will cost the district $2,408,000. The principal’s salary and benefits will be $158,000 while the cost of 18 teachers will reach $1,600,000.
Five classified employees will cost $400,000, and the operations budget will take another $100,000. Utilities will run in the neighborhood of $150,000.
Garcia reported that the district’s income for the current school year will be $265.6 million. Of that amount, $55.6 million is restricted, meaning that the state or federal government has earmarked those funds for certain expenditures, and the district has no discretion on how they are used.
The district’s expenditures for the year will reach $271.2 million. Eighty-two percent ($196.7 million) of that amount will be for salaries and benefits. Materials will cost $24.7 million and the cost of services will run 26.2 million.
The bulk of the district’s budget ($220 million) comes from the state in the form of a “Local Control Funding Formula” (LCFF). Under this plan, each school district receives a base figure for each child according to average daily attendance. In addition, districts receive supplemental income based on three factors: the number of students from low-income families; the number of English language learners; and the number of students from foster homes. These numbers must be unduplicated, that is, a student may not be counted from more than one category.
In making her report, Garcia cited several factors that could be challenging in the future. She said the governor’s May revision of the state budget is always a matter of concern. She also pointed out that current employee negotiations could alter the year’s ending balance was well as annual increases in the step/column schedule for employee salaries.
The annual increases in employee retirement costs and health insurance could change the financial picture as well.
Currently Madera Unified pays $17,200 per employee for health insurance coverage. The contract with the employee unions also carries a three percent “escalator clause.” Accordingly, the district contribution to the cost of employee health benefits increases by three percent every year, whether there is an increase in health insurance costs or not.
This provision is one of the major points that has prevented the district and the teachers union from reaching agreement in the current negotiations. The district is seeking to put a cap on its health care contributions, and the union is pushing for a continuation of the escalator clause.