SAN MARCOSUNIFIED SCHOOL DISTRICT

Among the most important responsibilities of the Governing Board and Superintendent is to ensure the financial health of our district, and to inform the community when changes in district finances might meaningfully impact the educational services San Marcos Unified School District (SMUSD) provides.

Due to flattening state revenues, and dramatic increases in mandated costs, we are forecasting very difficult financial days ahead here at SMUSD, which we more fully explain below. As we enter these difficult financial times, we want you to be aware of our predicament, the circumstances that brought us here, and our path forward.

Overview: Recovering from Recession

In 2013, after years of devastating funding cuts to public education, the State overhauled its school financial system and enacted the Local Control Funding Formula (LCFF). The State sought to restore dollars lost during the Great Recession and enhance funding for vulnerable student populations.

With the long-awaited financial relief, our Governing Board made it a priority to restore and create important programs including:

• Providing support to elementary students through Intervention Specialists, additional Guidance Counselors at our high schools, and Social Workers across our sites;
• Increasing student access to digital devices, personalized digital curriculum resources, and other instructional resources including textbooks and equipment;
• Adding music teachers and expanding physical education at our elementary schools;
• Returning middle school sports opportunities for grades 6-8 students;
• Professional development to support our dedicated teachers and staff ensuring a smooth transition to our States new academic standards and assessments;
• Re-establishing a preparation period for middle school teachers; and
• Making investments in our employee salary and health benefits to remain competitive with other districts

How the States School Districts Are Funded

At the heart of the LCFF funding system is a formula that allocates financial resources to each district on a per-student basis. Under LCFF, nearly all California public schools receive an equal base grant per student, and additional resources for each student classified as an English language learner, low income, or foster youth. Community demographics now dictate the amount of funding a school

district receives, which, four years after the implementation of LCFF, has resulted in wide disparity in school funding from district to district. For example, during the 2016-17 school year, SMUSD received $716 less per student than the average of all unified school districts in San Diego County.

Source: San Diego County Office of Education

After enacting LCFF, the State raised the contribution districts must make for employee retirements, adding dramatically to our expenses. This factor coupled with rising costs of health care, transportation, utilities and more, has resulted in a fiscal outlook that requires us to reduce expenses. Unfortunately, as we look forward, the District will be unable to continue many of the initiatives which we have valued in the past.

Based on our understanding of projected revenues from the State and projected expenses for our current education and support programs, the SMUSD is facing a period where annual expenses will significantly outpace annual revenues. The following table illustrates that while expenses exceed revenues in 2016-17 by $3.8 million, this pattern would continue at least through 2019-20 when, if no budget adjustments were made, projected expenses would exceed projected revenues by more than $23 million.

We know these projections will change over time, as more information becomes available, and it is possible the State will increase funding greater than what is currently projected. However, we anticipate any additional funding will be insufficient to drastically impact the significant deficit spending.

At the October 17th Board meeting, the Governing Board heard a presentation on our current financial position and considered a partial list of areas being examined which, if implemented, could provide some budget relief. Among the areas discussed were the following:

• Reduction of District Office administration and support personnel;
• Adjust classroom staffing ratios throughout the District;
• Reduction or elimination of specific instructional and support programs;
• Reduction in professional development; and
• Reduction of school site administration and support personnel.

The Journey Ahead

So, what happens now? We are committed to working with staff and our bargaining unit leadership to determine remedies to our financial challenges.

The priority of our Governing Board is and has always been using our financial resources to provide a world-class education to all of our students and honoring the contributions of our teachers and staff through competitive compensation. This period of financial difficulty does nothing to change what we value and hold dear or in any way diminish our mission of engaging students...inspiring futures.

We will continue to discuss remedies to our budget shortfall at our regular board meetings. Updated information will also be available through our website.