Coronavirus likely to have ‘brutal’ budgetary fallout for school districts

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The coronavirus pandemic is likely to cause a huge budgetary problem for California school districts. The problem is no one knows for sure how bad things could end up. 

School districts in California get most of their funding from the state, through something called the Local Control Funding Formula. The state gives each district the same level of base funding per student, depending on grade level, and it can grant more depending on levels of high-need populations like low-income students, students in foster care and English learners. 

That formula mostly leaves school budgets at the mercy of the state and facing plummeting tax revenue due to an economy that has essentially been left dead in the water due to the coronavirus pandemic. It’s nowhere near clear what the state budget, and school budgets by extension, will look like in a few months.

Lori Ordway-Peck, assistant superintendent for business support services for Temecula Valley Unified School District, explained what the pandemic situation means for local schools.

“Basically, we are in a position where we are looking at our 2021 budget as being a pretty negative outlook in general,” Ordway-Peck said. “In education, as the economy goes, so goes school district budgets.”

Ordinarily, she said, TVUSD and other districts across the state would be looking to Gov. Gavin Newsom’s initial budget proposal in January for an indication of how to draft their budgets for the following year. But the economic free-fall caused by the pandemic did not start to happen until mid-March, so there’s no longer any way for districts to plan their budgets for the next fiscal year, which would normally be approved in June.

“So with California looking at reduced income and the nation looking at reduced income, if nothing else, Prop. 98’s formula will result in lower income for us next year,” Ordway-Peck. “To what degree and how will that affect us next year, we have nothing specific to go on.”

Districts will mainly have to look toward the governor’s May budget revision, which is set to come out Thursday, May 14, for guidance on what the coming year could look like.

Ordway-Peck said the district has seen some clues to indicate that the May revision may indicate what’s called a “workload-only” budget for districts, “which basically means that everything kind of rolls over as-is, no new programs, nothing for growth,” she said.

But even that won’t be much of an indication because the deadline for filing income taxes has been delayed, the state will not know its revenue until much later than usual.

“The state’s not really in position to know what income it will have, really, until the end of summer,” Ordway-Peck said. “So, in May, where they normally do have income taxes and the normally already know … the May revise (this year) is at best theoretical, and we probably won’t really know what funding the state can stand behind until August, and that’s well into our operating year.”

So what could happen if districts are forced to enact midyear budget cuts?

Ordway-Peck described that possibility as “brutal.”

While districts typically go first for hiring freezes and travel cancellations when befallen by tough economic times, labor costs make up the vast majority of district budgets, so it’s not difficult to see who could bear the biggest burden of sudden budget cuts.

Will Fritz can be reached by email at wfritz@reedermedia.com.