MVEA should be careful what they wish for. The current budget has added program and positions in search of student achievement. Any one who has followed State behavior toward schools over the last four years should remember, nothing structural has changed. Prop 98 is still the law, so the next recession still hits schools first. Parents, if your property values go down, so do teacher housing costs. Teachers don't leave for better compensation, they leave for lower costs of living. District's reserve behavior is designed to protect against year to year prop 98 revenue swings. Is that bad behavior? If so, we can be like other districts were and layoff 20% of teachers next time. Those so laid off will be those still down on the salary schedule. Always remember "basic aid" as to why PAUSD and MVLA are not valid comparisons. Also, that any change in salary also gets carried forward into pensions, the district's share of which will rise over the next 10 years, regardless of any prop 98 revenue decrease.

If the parents want more money for them, how about we charge the parents some money to pay for it?

@Hmm, it's probably a good idea to know what you are talking about before posting a comment. Where do you think the money comes from for teacher salaries? And have you heard about the parcel tax that MV residents passed a few years back, to "attract and retain" good teachers?

I think what the parents here are unhappy about is that the tax money they already paid is being held in reserve, in a greater amount than the teachers' union feels is necessary. These parents want their dollars used to up the low salaries of the teachers who are underpaid compared to similar school districts in this region.

The focus of this discussion should be how much reserve is really necessary to avoid layoffs the next time the state screws over school districts by cutting their funding. And now that's complicated by the new legislation requiring school districts to limit their reserves to far less than is adequate.

School finance is a lot more complicated than "the parents should just pay more."

Here's a "School Funding 101" from another school district in CA. Do a google search on "CA school funding" and you'll find tons of resources that attempt to explain the insanely convoluted way CA public schools are funded.

As I said above, the argument here is about how much reserve is enough? The teachers union and the superintendent have different ideas about this and the best answer is probably somewhere in the middle.



School Finance Terms Explained

School finance is a tough subject to understand, sometimes even by those who have been dealing with it directly for many years! There are a multitude of rules and regulations that change regularly, often without any clarification until long after changes are put in to place. There are a lot of phrases and terms that are strange to us since they don’t readily relate to our everyday lives. Because of that fact, we have put together this information on school finance and business terms to try to help make it a little bit clearer.

The Budget: The best way to approach a school district budget is to think of it like your own personal budget, usually figured on a monthly basis. You have your monthly bills and other expenses, as well as your paycheck(s) (school districts call this “revenue”) that come in and go out during the month. A school district budget covers an entire year (July 1 through June 30 of the following year- referred to as a Fiscal Year or “FY”), and has to account for all expected revenues and expenses for the entire year. As you might imagine, things may change significantly throughout the year. Expenses may be greater than anticipated, which means a school district has to dip into their Reserve for Economic Uncertainty (usually referred to simply as a “reserve”) to cover the additional expense, just like you would have to dip into your savings to cover an unexpected car or home repair. Revenues come in different forms; some money comes from the State, and some comes from local taxes. But in the case of the State, the revenue promised is frequently not paid, or often not paid on time. To top it off, frequently, the State has not even established its own budget when it requires that school districts have their budget completed and approved (under penalty of law)! It is very difficult to build a budget when the State has no idea how much they are going to allot to you as a school district.

These are things that each school district has to consider when building, approving, and living under a budget.

Cash Reserve: Just like in your own personal life, there is a big difference between your budget and cash on hand. You may have established a reasonable budget for the month, but your pay check is delayed for some reason. This is when you need to have cash on hand to cover the gap until your pay check comes in. So it is for a school district. The State makes payments on a schedule, but often times will unexpectedly delay these payments (or as has happened in recent years, eliminate a payment entirely!), which means that a school district has to have money in the bank to cover its expenses, like utilities and payroll. So just like in your own life, just because it’s in the budget, doesn’t mean that you will have the cash to cover it. But unlike in our personal life, a school district can’t just put it on a credit card. If a school district runs out of cash, then the State comes in and takes over the management of the school district – even if the district has a balanced budget! This is why it is important for a school district to have a “cash reserve” on hand to cover unexpected gaps in cash flow, just like it is important for all of us to have some form of cash to cover unexpected delays in payments.

Fund Balance: If at the end of your budget month, your expenses weren’t as high as you thought (perhaps your electric bill was only $30 rather than the $130 you had budgeted), you may have an extra $100 left over at the end of the month. In school finance terms, this would be called “Fund Balance”. Would you then save this extra money in your savings, or buy that new lawn mower you need? Or would you go out and buy a new motorcycle that has a $100 per month payment? Well, most of us would understand that since that $100 is only “one time” money, we would not go and add extra monthly expense to our already crowded budget. We would instead buy that replacement lawn mower we need, or better yet, put the money in savings to cover additional future expenses, such as when our electricity bill comes in at $230, and we had only budgeted $130.

General Fund: School district budgets are divided into many different pots of money called “funds”. These are similar to having different accounts – checking accounts, savings accounts, etc. The largest of all funds is called the General Fund. This is like your checking account, where most of the major expenses are paid from. It generally does not have a lot of restrictions, and can be used for many things; books, utilities, maintenance and repairs, and the largest expense in a school district; salaries. One of the big differences between your checking/savings accounts, though, is that many school district funds have restrictions on what districts can spend the money on. These are called Restricted funds and Categorical Funds, and usually hold money that comes from the State of Federal government for special programs, and can only be spent on those programs. School Districts are not allowed to move money from the restricted or categorical funds into the General Fund to cover general expenses.

Revenue: This is similar to your monthly paycheck(s) or any other money you receive in a month. Usually, you know what the amount is and can set your monthly budget accordingly. School districts used to be able to budget that way also; we pretty much knew how much money was going to come in and could build our budgets for the year. However, the last ten years have destroyed that model (even with the Prop 98 guarantee in place) and we’ve instead had to build our budgets without really knowing how much or when the money will come in. If you used to live on a solid paycheck, but now work only on commission, then you know how difficult that is.

Unfortunately, revenues have become even more difficult to budget. For example, let’s say that your employer hired you for $2,000 a month. You build your budget, and then buy a car or home with scheduled payments that fit within this budget. But then, within a few months, your employer started deducting 20% from your paycheck, because they couldn’t pay you the full amount. In school business, this is called a “deficit factor”, and has been applied at the 18-20% level to California school districts for the last six years! You would have to make some significant cuts to your budget, and this is exactly what school districts have had to do.

Now imagine this: Pretend your employer told you that you would get $2,000 for the month (your normal pay), but then told you that in the middle of the month they might take $700 of that away! (This is called a “mid-year cut” and has happened many times in school finance.) Now, add the caveat that you were not allowed to budget that way; you still had to budget as if you were going to spend that whole $2,000! ( As ridiculous as this seems, it actually happened in 2011.)

As you can see, it is very difficult to estimate just how much money will come and when it will come, which makes it very difficult to build an accurate budget for a school district.

“New” Revenue: This would be equivalent to additional money that may come from your employer in the form of a raise. A “raise” is different from a “bonus” in that a raise is an on-going increase in salary. (In a school district, a “bonus” would be equivalent to “one time money”.) You may chose to buy a new car and use some of your raise to cover the monthly car payment that you will now have. But hopefully, you won’t buy that car until you know for sure that the raise is coming through and you see it in your paycheck. A school district may also receive new revenue from the State, usually in the form of a Cost of Living Adjustment, or COLA. The COLAs given to state agencies (which includes school districts) must cover all expense increases, such as increases in utility costs, general operating expenses, etc., and salary increases. That’s why school districts must be very cautious when giving raises. These days, districts never know when the revenue may be cut or pulled back. And even though COLA’s are required by law to be given to school districts each year, these COLA’s have been negated through the use of the deficit factor, or in one particular instance, a negative COLA was actually assessed!

Reserve: This is the nickname for Reserve for Economic Uncertainty which is state budget requirement. (This is different from a “cash reserve”, and exists only as a number on the budget page.) It would be equivalent to you setting aside a certain amount of money in your budget each to cover any unforeseen expenses that may arise during your budget month. In the case of a school district, the State sets a low reserve requirement of 3%, but as we’ve seen over the last five years, 3% often does not cover the unforeseen expenses in a year. Most school districts in the state have learned from this and maintain at least a 10% reserve in their annual budgets.

Revenue Limit: This refers to a complicated formula that is, or more accurately was, used to determine the amount of money sent to a school district each year. It’s similar to your pay stub in that it takes a starting amount of money (similar to your pre-tax wages, but generated by taking the average daily attendance (ADA) of the district, and multiplying it by a per pupil dollar amount), and then adding and subtracting other amounts, which includes any COLA and the deficit factor. At the end of this calculation is the amount that you actually receive in your check, or as school districts call it, annual revenue. Some school districts, because they have a high tax base and get extra money from property taxes, don’t receive as much money from the State, and just receive a “basic apportionment” from the state. These are referred to as “Basic Aid” districts and usually have more money to spend on general fund expenses than do Revenue Limit districts.

Local Control Funding Formula, or LCFF: This is a new way of calculating annual revenue for school districts and was signed into law in summer 2013. It funds schools using different criteria than was used in the Revenue Limit calculations. Funding is still calculated using student data, but different student groups weigh more heavily in the formula. The difference between current funding and the level of funding targeted by the LCFF is called "the gap", and is promised to be paid down a little each year until in eight years time, schools are fully funded at the LCFF levels. However, this "gap" funding is still an unknown and the information regarding how all of this will be sorted out is still changing, which as you can imagine, has made developing a budget even more difficult. Though there are many groups making statements about how much money it will bring to school districts, nothing is known for sure, so school districts must be prudently cautious in spending money that, at the end of the day, may not be received.

Old Steve of Rex Manor is almost as well informed on school finance as the current chair of the PTOC (Parcel Tax Oversight Committee) Steve Sherman. That Steve, knows all about the Reserves that are, for instance, built into the PTOC, so that it can try to carry forward general teacher salary funding support, past the date that the Parcel (Property) Tax collects its last dollars. There is a very good study of this - and you can catch it (and Steve Sherman's official comments) on the minutes of the PTOC (and in their Budget related packets).

With "Old Steve" apparent expertise in school finance - I hope he volunteers to join Steve Sherman on the PTOC or apply to join the Bond Committee COC (many reappointments are coming up soon).

I wonder if "what?" of Cuesta Park is my neighbor! There are some very good citizens around (not unlike Steve Sherman and other PTOC's) who have obviously studied well the basics of "School Funding 101". Too bad the MVWSD Budget Task Force was closed down in 2010. Sad even?

Humm, as a School Board Member - I thought we were elected to set Public Policy. Not the Teachers - not the Administration. It might help if the Governance Team - would put items on the Agenda, and/or call Special Meetings to directly address these issues (as a legislative body). I guess some Team Members want to get home before 10 PM those two nights a month (and not work any Summer months!). That's just the way democracy is! Majorities!

The last "new articles" paragraph - both Ochoa and Mirza - are IN MY OPINION (is that perfectly clear Trustee Lambert :) both entirely correct. The Trustees had no meetings on these negotiations over the summer and there was not one CONFIDENTIAL email to the Trustees@mvwsd.org during this same time period on 'negotiations'. The first TWO Bd. meetings of this school year also did not have one Agenda Item (Closed) on negotiations.

You do indeed - get what you vote for (or elect - reelect). That's just the way democracy is!

Steven Nelson is an elected Trustee of the MVWSD (one of five) and he speaks publicly on public issues without the express permission of MVWSD Bd. President Bill Lambert. (frankly - I don't even ask permission)