Escalating Expenses and Flat State Revenue
Brent Stephens, Ed.D., Superintendent
As Superintendent of Berkeley Unified School District (BUSD), I am committed to sharing clear information regarding the District’s funding, our growing expenses, and the District budget. Our shared understanding drives critical conversations we must hold in community as we strive to meet our promise of Excellence, Equity, Engagement, and Enrichment for all of our students. At our recent Town Hall on October 10th, and in our annual orientation for District committees on October 17th, I provided an overview of the state funding challenges ahead of the District. Below is a summary of the key state funding issues we face.
State Funding Challenges
Public school funding from the State of California, by far the District’s largest source of funding representing 67% of our revenue, has flattened, while mandated costs continue to rise. Whether managing your own family’s budget, or that of a large organization such as our District, anyone can understand that bringing in a flat income while expenses continue to grow is not fiscally sustainable. This is also true for our District. Without an increased commitment at the State level, our District, and every other District in California, is approaching a financial precipice.
More locally, Berkeley isn’t alone in this state funding challenge. Fourteen out of 18 Alameda County school districts are operating at deficit spending levels this year. This means they are relying on financial reserves to make ends meet as their costs eclipse their funding. BUSD has avoided deficit spending to date by slashing $3.8M from the District’s budget. Most of these cuts, which began in 2017, were made at the administrative level, minimizing the direct impact to our students, but the effects are still felt in our ability to deliver services. Even with these cuts, without significant funding changes, BUSD is likely to move to unsustainable deficit spending in a matter of only a few years. I join the Berkeley community and our educators in asserting that this is not acceptable.
What Happened to State Education Funding?
To better understand where the District is today, it’s helpful to look at how we got here. In 1978, Proposition 13 amended the State Constitution to roll back property taxes and restrict the level of annual increases of these taxes. This shifted school funding profoundly, tying it to the roller coaster of state revenue. Funding subsequently rode the booms and busts that took place in the state economy. While there were good times, there were also bad times, and rarely could a school district survive for a period of more than three or four years before another round of budget cutting took place.
Education funding changed temporarily in 2013 when the state enacted the Local Control Funding Formula (LCFF). For a period of five years, California began to invest more in public schools, setting as a target the restoration of funding to 2007 levels (with an adjustment for inflation). Last year the State achieved its LCFF funding targets and school districts are now existing on only very modest annual adjustments. This means we are essentially in the same situation that existed prior to the LCFF, and we are operating in a structural deficit as our state-provided revenue can’t keep pace with our expenses.
This chart shows that increases in funding for schools has now reached the targets established in 2013, and that the annual increases in funding are expected to slow considerably.
As the District’s state revenue flattens, we continue to experience cost increases across multiple sectors including energy, transportation, Special Education and the required District contribution to employee retirement.
To illustrate this point, I’d like to draw your attention to our current best thinking about the increases in state revenue we are expecting for the 2020-2021 school year. Of the $2.4M in additional revenue that we expect to receive, nearly all of this money must be budgeted to cover mandated increases in retirement contributions, increasing Special Education costs, and regularly occurring “step and column” (small percentage) increases as BUSD employees move up the salary schedule. In effect, this new money is already spent.
| Increase in LCFF Base Funding | 2020-2021 |
| $2.4M | |
| Anticipated Increased Costs for 2020-2021 | |
| Step and Column Increases | – $0.8M |
| STRS Increases | -$0.6M |
| PERS Increases | -$0.4M |
| Increased Special Education Services | -$0.5M |
| Balance | $0.1M |
For the reasons I outlined above, this is why the District is engaged in important public conversations about raising local revenue to combat the effect of inadequate state funding and cost of living in the Bay Area on our educators. These conversations are being held at Board Meetings, Town Hall Meetings, and in contract negotiations with the Berkeley Federation of Teachers that began during the last academic year. This is why three important measures in support of Berkeley schools are planned for the March 2020 Ballot.
Over the next few weeks I’ll be sharing more about the funding challenges faced by the District and provide additional detail about two of our most rapidly rising expenses: Special Education and retirement plan funding. It’s also important to understand that much of the District’s funding is restricted, which means it has to be used for specified purposes, in keeping with local, state or federal legislation. In my next budget message, I’ll explain more about this. As members of the BUSD community I urge you to stay informed and engaged in these important conversations and invite your participation at upcoming School Board meetings.
