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Budget clouds on horizon
$12M jump for MUSD blunted by retirement costs, other factors
schools
Manteca Unified students at an Ag Venture program earlier this school year. - photo by Bulletin file photo

Manteca Unified stands to receive $12 million in additional funding from the state for the upcoming 2018-2019 school year but may have limited wriggle room — if any — to fund new ongoing initiatives.
Governor Jerry Brown’s proposed state budget commits $3 billion to bridge the remaining 3 percent gap to complete full funding of the Local Control Funding Formula (LCFF), the landmark school funding law that essentially restores all spending power losses local districts incurred in 2008 when the Great Recession hit.
The $12 million is just over 5 percent of the $252 million budget the district will be working with. It reflects 100 percent funding of Manteca Unified under the LCFF as well as a 2.5 percent cost of living increase. While the $12 million will be built into state funding for the district going forward into future years, no additional funding is on the horizon except for cost of living adjustments.
“We’re good for next (school) year,” Manteca Unified Director of Business Services Jacqui Breitenbucher noted, adding that won’t be the case in subsequent years.
That’s because of a number of things.
uThe district is committed to annual  step raises — in addition to negotiated raises — that will cost $2.2 million next year.
uNow that the district has full funding under the LCFF they can no longer shift money from categorical programs to help balance the general fund as state law allowed when there was a gap between the targeted funding and actual LCFF funding. That means a chunk of the $12 million will be needed to make categorical programs whole and willl not be available for general fund uses.
uThe district is required by state law to earmark revenue in such a manner they have a balanced budget not just for the upcoming school year but two and three years out as well
uEscalating retirement contributions for the California State Teachers Retirement and the California Public Employees Retirement System that weren’t an issue 10 years ago are not provided for in the LCFF funding that is now maxed out except for cost of living increases.
Manteca Unified in 2016-2017 contributed 13.88 cents for every dollar it paid a teacher who elected to be covered by CalPERS or the California Public Employees Retirement System. The cost was 12.58 cents on every dollar of salary for a teacher enrolled in STRS, or the California State Teachers Retirement System.
In real numbers the district last year paid $39.4 million to staff covered by CalPERS with an additional $5.4 million going into the retirement fund. For STRS the salaries come to $167.8 million with the district’s share of the retirement contributions costing $21.1 million.
Manteca’s STRS contribution is at 14.43 percent for the current school year. It will go up to 16.28 percent for the 2018-2019 school year, and 18.13 percent by the 2019-2020 school year.
 As for CalPERS it will go from 15.8 percent to 18.7 percent in 2018-2019, and 21.6 percent in 2019-2020.
By 2019-2020 Manteca Unified will be paying $40.4 million toward retirement costs as opposed to the $26.5 million they are paying this year. That represents a jump of $13.9 million.
Meanwhile, overall salaries are projected to go from $207.2 million this year to $215.3 million by 2019-2020. That represents a jump of $8.1 million.
Putting pressure on the district’s general fund is the fact the state continues not to fully fund special education and transportation.
Special education, as an example, pulls $30 million from the general fund while the state only funds $1.2 million of the district’s annual $6 million cost for home-to-school transportation.
Basically the state budget news for K-12 education is considered good news; it is not without its downside.
“The full funding (combined with the loss of flexibility with categorical programs and rising retirement costs) is bringing some districts to their knees this (upcoming school) year,” Manteca Unified Superintendent Jason Messer.
While that is not the case for the 2018-2018 school year for Manteca Unified, Messer cautioned there are financial clouds on the horizon.
It is why the Manteca Unified School Board is working with other districts through the California School Funding Coalition to address funding concerns driven primarily by retirement costs and how education is funded.
Against that background, Messer noted California is the only large state that ties its school funding to tax revenue sources that swing with the economy tapping into the pocketbooks of the state’s wealthiest taxpayers. When the economy is on a roll and they’re making money, taxes flow into Sacramento to fund schools. If the economy is in a recession and their profits or oncome are down, tax revenue drops accordingly.
Another wild card centers around how many wealthier Californians opted to pay 2018 property taxes property prior to Dec. 31 so they could take advantage of the federal tax deduction before it was capped at $10,000 starting this year. It could mean a sizeable one-time hit in the 2018-2019 fiscal year from education funding derived from property taxes. The property taxes paid early would go to the state for the current budget year.
Messer also noted the fact Brown is termed out in November means a new governor and possibly a new approach with how the state spends its money. He noted not only is Brown’s philosophy on education funding a known quantity but he has consistently delivered on what he has said he would do.
That has allowed districts to enjoy relative budget certainty when they put together spending plans.
To contact Dennis Wyatt, email dwyatt@mantecabulletin.com