The Mountain View Whisman School District is forecasting budget deficits in the coming years, though district officials are basing those less-than-sunny expectations on conservative revenue projections.

The school district's 2023-24 budget expects that it will run $4.6 million in the red next school year, followed by $5.8 million and $7.9 million deficits in each of the two following years. That's assuming the assessed value of properties within the district increases by 3% each year, which is substantially lower than growth in recent years.

Mountain View Whisman's main source of revenue is local property taxes, which are calculated based on assessed values.

While the district is projecting 3% annual assessed value growth, that figure has been over 5% every year for the past decade, according to a chart included in the district's budget. Most years, assessed value growth has been near 10% or higher.

The district also projected 3% growth for last school year, but as of June it's estimated that assessed values actually increased 8.79%, according to Chief Business Officer Rebecca Westover.

Westover told the Voice that the district still projects 3% growth for the coming three years because it's important for the district to be conservative in its budget estimates.

"The risk of us overestimating is too great because then it pushes us into cuts, so we tend to be very conservative when it comes to our (assessed value) growth," Westover said.

Superintendent Ayindé Rudolph added that the impact of inflation and fears of a recession make budgeting conservatively particularly important.

The predicted deficit spending means the school district would need to dip into its reserve fund, dropping it to 29% of total expenses. That number drops to 23.5% the following year and 16.3% in 2025-26. That's below the amount that the school board called for in a 2018 resolution, which stated that a "balanced general fund" would be considered one with the reserve level of 17-20% in the third year.

Mountain View Whisman's school board voted to adopt the budget at a June 15 meeting. The budget forecasts $107 million in revenue next school year, with $111.7 million in expenses.

The document doesn't include potential revenue that Gov. Gavin Newsom proposed for schools because the state budget wasn't finalized when Mountain View Whisman approved its budget.

According to a presentation the school board received last month, the district also expects to see "significant changes" in its first interim report, which the board is expected to adopt each year by Dec. 15. That's when the district will incorporate certain funds that got rolled over from last school year, including one-time pandemic funding.

The budget assumes that the district will receive $5.6 million each year as part of an agreement with the city of Mountain View to share property tax revenue generated north of Highway 101. The Shoreline area is a special tax district where the vast majority of property tax dollars flow into a separate government entity (operated by the city) instead of local schools. In recent years, the city has agreed to share a portion of those tax dollars with local school districts, with an update to the agreement reached in May.

Negotiations over a longer-term agreement are ongoing, with Mountain View Whisman pushing the city to give it the full tax rate allocation that it would receive if the special district didn't exist. The city, on the other hand, points to various needs in the Shoreline area that it says require funding from the tax district.

On the expense side, the 2023-24 budget includes a 4% raise for teachers and school staff next school year. That's based on a multi-year agreement that the district reached with its teachers union in 2022.

The deal ends at the end of next school year, so the budget doesn't include any raises in the following two school years. It does include automatic pay increases that teachers receive based on the length of time they've worked in the district and their education level.

The budget also assumes increased staffing, with the equivalent of 39 additional full-time staff members included for a total cost of $5.7 million, which covers both salaries and benefits. The district expects to see its student body grow, Westover said.

The district is also increasing its contract with the Community Health Awareness Council (CHAC) for mental health services from $624,000 to $939,000. The jump is because of increased student mental health needs, as well as generally rising costs, Westover and Rudolph said.

The district also expects to see higher costs to implement transitional kindergarten. The state is rolling out a requirement for districts to offer transitional kindergarten, with the age eligibility expanding each year until all 4-year-olds are included by the 2025-26 school year. The district doesn't receive additional funding to meet this requirement, Westover said.