WATSONVILLE—The Pajaro Valley Unified School District Board of Trustees on March 10 approved a second interim budget report that shows an improved outlook from two months ago, when projections showed the district would be unable to meet expenses over the next three years.
That placed the district in a qualified budget status, which required it to develop a fiscal stabilization plan. Worsening numbers could have meant a negative budget, under which school districts could face oversight by county or state officials.
But thanks to a 3.84% cost of living adjustment (COLA) over the next three years—meaning $5.8 million for the district—the trustees approved a positive budget certification.
The second interim budget report was based on financial activity from June 2020–Jan. 31, 2021.
The numbers are an improvement from last year, when state officials predicted no COLA increases, said PVUSD Chief Business Officer Clint Rucker.
Gov. Gavin Newsom’s budget update in January provided $4.6 billion to help school districts with learning during Covid-19 restrictions. Included in those funds were $2 billion to help schools reopen.
The district is also in line to receive two separate one-time infusions of money from the Elementary and Secondary School Emergency Relief (ESSER) fund. The first—roughly $16 million—is expected in June and must be spent by the end of 2023.
The second will come from the America Rescue Plan, President Joe Biden’s $1.9 trillion stimulus package created to help the country recover from the effects of the pandemic. Rucker estimated the district’s share at around $36 million.
However, the district’s overall budgetary picture was not all rosy. The $5.8 million increased COLA for the 2020-21 and 2021-22 school year is barely enough to cover expected increases to health and welfare costs, estimated at $5.6 million, Rucker said.
An expected 1.28% COLA in 2022-23 won’t pay for the expected 4% increases to health and welfare costs next year and the year after benefits increase, Rucker said.
“That’s huge,” he said. “That hits us pretty hard.”
Rucker also said that the district has worked to reduce its deficit spending, from around $16 million in 2017-18 school year to nearly zero in 2021-22. But that number is expected to jump up to more than $4 million the following school year because of declining enrollment, Rucker said.
According to Rucker, enrollment is expected to drop from 17,585 presently to 16,793 next year, meaning that the district loses per-pupil funding for 794 students.
