OCEANSIDE — In its new budget, approved June 23, Oceanside Unified School District forecasted needing to cut an additional 5% of expenditures in order to maintain operating reserves, with cuts deepening to 35% after two years.
North County districts, which all recently adopted their annual budgets, took a generally dim view of their fiscal futures, anticipating shortfalls across the board. Coastal districts in Carlsbad, Encinitas, Solana Beach and Del Mar planned to keep deficit spending level at roughly 5% or less, measured by change in fund balance as a proportion of expenditures.
But four districts in Oceanside, San Marcos, Vista and Escondido projected steady downward slides. Nosing past San Marcos Unified, Oceanside Unified has the grimmest outlook, projecting a 17.3% deficit in FY 2022-23.
These four North County districts together educate more than 83,000 students, according to Ed-Data, an online education data warehouse.
School officials say the situation isn’t so dire as all this red ink suggests. Districts drafted their budgets assuming huge coronavirus-induced funding cuts from the state, which a deal last week between the governor and state legislature since averted.
“Districts now have 45 days to revise their adopted budget. This revision will show the deficits eliminated or greatly reduced,” Mike Simonson, chief business official for the San Diego County Office of Education, said in a June 26 email.
Due to the uncertainty from COVID-19, “one simply cannot lend much credence to those out-year [forecasted] numbers,” Mike Blessing, Oceanside Unified’s school board president, said in a June 24 email. “But it is an exercise that the state and the county board of education make us go through every year. … We are on solid ground going forward for the coming fiscal school year, all things considered.”
Though Oceanside Unified, along with Vista Unified and San Marcos Unified, faced structural deficits before COVID-19, according to 2018 and 2019 reports from the Fiscal Crisis and Management Assistance Team (FCMAT), a state agency.
For Oceanside, FCMAT identified several underlying internal problems, especially related to enrollment, which largely determines districts’ funding. These problems included not reducing staffing in tandem with falling enrollment, maintaining more facilities than the shrinking student population requires, and inaccurately budgeting for staff.
Oceanside’s average daily attendance fell 13% over the last 10 years, according to Ed-Data.
“Like many districts in California, we are deficit spending due to a number of reasons,” namely, pension and healthcare costs, Oceanside Unified spokesman Matthew Jennings said in a June 29 email.
Oceanside’s cost containment measures include evaluating whether to refill positions opened due to retirement or attrition, consolidating alternative education programs at one location, and an ongoing process of determining how best to unload surplus properties, he said.
While shrinking districts can reduce staffing to some extent, ultimately fixed costs can’t decline in direct proportion to the number of students, said Mike Simonson, county education office deputy superintendent, in a June 29 interview.
State funding imbalances play a bigger role in Oceanside and other districts’ financial straits.
Simonson described California’s education funding system this way: First, the state assigns each school district a funding target, based mostly on the student population.
Second, toward meeting that target, each district gets a share of countywide property tax revenues, according to a state-prescribed formula.
Finally, for most districts, state aid makes up the difference. But some wealthier districts, including in North County coastal cities, meet or even exceed their targets just through their share of property taxes.
“That creates … a massive discrepancy,” Simonson said. “Property tax is a much more stable funding source than what makes up the majority of state funding, which is personal income tax. We’re seeing right now with the coronavirus just how big of swing that can be.”
Moreover, while the state doesn’t increase aid in tandem with inflation, he says rising property taxes help revenues keep pace with expenditure growth in districts that don’t require state aid.
“Declining enrollment, the rising cost of special education, and the increased contributions to pensions — those three things over the last 10 years really have proven to be too much for many of our state-funded districts to handle without making reductions,” he said.
Other than Blessing, Oceanside’s school board didn’t respond to a request for comment. Nor did San Diego County Board of Education Trustees Paulette Donnellon and Rick Shea, whose trustee areas include North County’s school districts.