Get ready for a Manteca Unified School District spending slowdown.
With expenses outpacing revenue Manteca Unified School District Superintendent Jason Messer has advised the school board “it’s time to tap the budget brakes.”
“We won’t be able to balance next fiscal year’s budget without deficit spending,” Messer said. “That is not necessarily a bad thing since that is what we have reserves for.”
But what can be bad is if the district doesn’t curb its spending to match revenue in the next few years given reserves are meant only as a short-term solution to deliver a balanced budget. Deficit spending doesn’t mean a district doesn’t have a balanced budget. It’s a state that reflects that in a 12-month budget period more money is going out than is coming in.
The biggest hits the school district that currently has a $245 million general fund budget is facing potentially are:
uUncertainty how the Trump Administration may change programs that provide $13.2 million in federal dollars — or 5.4 percent of the school district’s general fund budget — for specific programs. The $.5.4 million excludes nutritional services.
uGov. Jerry Brown’s projection made in January of a $2 billion state budget deficit in the fiscal year starting July 1.
uGrowing retirement funding shortfalls for teachers that could require the district to increase its contributions to pension funds by $13.9 million or 50 percent over the next three years. During the same time teacher salaries are only expected to increase $8 million.
uThe potential of a recession.
uThe impacts of growth.
School districts — unlike cities and counties — are mandated by the state to have balanced budgets for three years. That mans the upcoming fiscal year and the two fiscal years that follow.
Fluctuations to federal funds would not directly impact the classroom as they are designated specifically for Title I grants for educating disadvantages children, Native Indian education, and migrant education, some special education, and bilingual education. It even includes JROTC funding.
But as Messer pointed out the federal government has basically decreed that some of the educational objectives they help fund are civil rights. That means the district could be forced to dip into other funding sources that support he general classroom to satisfy federal mandates.
Then there are political realties. Congress could opt to defund bilingual education where the overwhelming share of federal funds goes to California, Texas, Florida, and New York.
“The big unknowns are the politics,” Messer said. “It is a concern every time there is a new president. This time around it is more unsettled.”
The governor’s January budget — if it holds — would provide $3.1 billion more for K-12 education for the 2017-2018 school year bringing state expenditures to $52.1 billion out of an overall spending projection off $122.5 billion. That would take per student spending by the state from the current $14,822 to $15,616.
The increase for Manteca Unified — plus virtually every other of the state’s 1,000 school districts — could be wiped out by losses in federal funds plus the need to increase retirement contributions.
Many educators have been warning that the retirement funding situation is likely to get to the point where it will impact the ability of schools to maintain staffing levels. The most likely scenario in such cases is not replacing 100 percent of staff lost to retirement for other reasons should retirement funding bumps starting cutting into the financial bones of general funds.
Manteca Unified is currently contributing 13.88 cents for every dollar it pays a teacher who elected to be covered by CalPERS or the California Public Employees Retirement System. The cost is 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 this year will pay $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 Unified projected the current 12.58 percent STRS contribution would ratchet up to 14.43 percent for the 2017-2018 school year, 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 13.88 percent this year to 15.8 percent in 2017-2018, 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.
The dollar cost of the district funding retirement costs will increase almost 70 percent more than what teachers will be paid.
To contact Dennis Wyatt, email email@example.com