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The budget report attributes the deficit to a number of factors, including the lack of a cost of living adjustment. File photo
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San Marcos Unified projects nearly $30 million budget deficit

SAN MARCOS — The San Marcos Unified School District (SMUSD) held a governing board meeting on Tuesday, Dec. 15, to provide an overview of the district’s budget, which showed a projected budget deficit of nearly $30 million for Fiscal Year 2021-2022.

The presented interim budget showed projected deficits of roughly $15 million for 2020-2021, $26 million deficit for 2021-2022 and almost $35 million for 2022-2023.

Vincent Christakos, SMUSD’s interim chief business officer, presented these numbers to the board.

“The required reserve for economic uncertainties is $7.7 million, so we have enough to cover our required reserve, so that means we can make it through the current year, but if we look to next year… we end up with a $26 million deficit, which puts us in the hole $12 million. That can’t happen,” Christakos said.

He added that, according to state law, if the district remains in this deficit for too long, it may lose the authority to govern itself and be placed under the control of the State Superintendent of Education.

The budget report attributes the deficit to a decrease in expected revenue from Local Control Funding Formula (LCFF), the lack of a cost of living adjustment (COLA), as well as a decrease in supplemental revenue from high-risk students, as this population has gone down in recent years after it had been stable for the past 10 years. This combined with increased contributions to pensions has resulted in the district’s budget gap.

“In order to keep our ending balance stable, it would take about $30 million in budget adjustments or reductions,” Christakos said. “There’s a lot of work to do. It is possible. We have a lot of suggestions that could be implemented … and those obviously need to be reviewed.”

Gov. Gavin Newsom is expected to release the state budget in January, and there is speculation that there will be a reduction of deferrals, as well as the potential for a small COLA in 2021.

If there is a COLA, SMUSD’s $30 million deficit could be significantly less.

SMUSD’s fiscal future has been shakier since the start of the COVID-19 crisis. However, the district has been facing structural deficits since before the outbreak began.

The school district, which serves about 21,000 students in North County, narrowly avoided anticipated deficits for their 2018-19 school year but has shown a steady downward slide since then.

In fact, the district has been projecting a budget deficit since the 2017-2018 adopted budget.

Now, the San Diego County Office of Education is requiring SMUSD to submit a plan of how the district plans to reverse this trend of deficit spending by its second interim budget report.

The district said during the meeting that they have started working on a plan and they hope to present it to the board by January or February, before the second interim report in March.