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District Budget 101

Structural Deficit Graph, Second Interim, March 2020
Dec. 11, 2019
Dear Staff and the Twin Rivers School Community,
Funding for public schools just took another hit. Five months ago, the California Department of Finance (DOF) projected a 3.0 percent cost of living adjustment (COLA) to the Local Control Funding Formula (LCFF) for public school districts. Imagine our disappointment and frustration to learn school districts will not get that 3.0 percent after all. A new Legislative Analyst’s Office (LAO) report now indicates a much lower COLA of 1.79 percent for the 2020- 21 school year, a loss of revenue for ALL public schools, including Twin Rivers. This will impact our district as we deal with rising operational costs and declining enrollment.
What does this mean?
Due to the lower COLA, our 2020-21 $3.8 million budget deficit has grown to $6.7 million. To be clear, we are facing a greater financial challenge to identify an additional $2.9 million in reductions, along with the $3.8 million we have reported to you and our stakeholders.
Budget planning shouldn’t be a painful process for schools. All we want is adequate LCFF funding for our schools, not less. That’s the message I hope the entire Twin Rivers school community has for our lawmakers in Sacramento.
As you know, we have been vigilant over the past two fiscal years identifying $16.9 million in reductions from a $300 million budget—$7.2 million in 2018-19 and $9.7 million in 2019-20. Through all the painful decisions, TR students remained our number one priority. We remain laser-focused on classrooms and programs that have a positive impact on student achievement and keep students actively engaged and in school. Yes, we have more agonizing decisions ahead, including possible school consolidations/closures. We have hosted six informational community meetings on the issue, outlining the District Administration’s Recommendation and getting valuable feedback from our stakeholders. Please note that the Board of Trustees has not made any decision on the issue. However, a Board vote could come in January 2020.
We will have more information about the budget in January when the Governor releases his budget. No matter what comes our way, we will get through it together. Our shared commitment to continuous improvement and your unique ability to inspire students and instill hope will make all the difference as we move forward.
Best regards,
Steve Martinez, Ed.D.
Twin Rivers Unified
August 2019
Dear Twin Rivers School Community,

To ensure the fiscal health of our district, we have taken a number of decisive steps to make sure that our limited funds are serving students and taking care of our employees. We have implemented $16.9 million in budget reductions since the 2018 school year—$7.2 million in 2018-19 and $9.7 million for 2019-20.  
Unfortunately, that is not enough to eliminate the District’s long-standing structural deficit. Ongoing expenses continue to outpace current revenue sources (federal, state and local) and now, in this fiscally challenging environment, we must identify an additional $3.8 million in reductions for the 2020-21 school year.
There is no question we have a difficult road ahead of us. Planning for and finalizing school budgets is a multi-step process spanning several months. We can assure you that any proposed budget will support our Strategic Framework, designed to improve outcomes for all students and ensure the District operates efficiently and effectively. Whatever the budget outcome, it will not hamper our ability to serve students now and in the future.  
We will keep you updated at each step in the process and encourage you to attend school board meetings and stay in touch with your school leadership team so you are aware of what is going on. To provide understanding and context regarding our structural deficit, we have developed the following questions and answers.  

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What is the status of the District’s budget?
We are spending more than the state is giving (deficit spending) and need to cut $3.8 million from our operating costs for the 2020-21 school year to have a balanced budget. It is a structural deficit because our ongoing expenses continue to exceed our revenue.  

How did this happen?
Several factors contributed to the structural deficit, including rising operational costs and declining enrollment. We are down 465 students since 2017-18, and the projection is that we will lose another 285 students this school year. State funding is based on average daily attendance and declining enrollment leads to lower state funding levels. Declining enrollment is not a new issue. Shifting demographics, migration to other parts of the country and growing school options for families are contributing factors to declining enrollment.

Are District finances audited? 
Yes. We are required by law to have an annual independent audit of the district’s financial records. In addition, the Sacramento County Office of Education reviews our annual budget as part of its legal responsibility for fiscal oversight of county school districts.

What has the District done to address the deficit?   
The good news is we have taken proactive measures to reduce expenses over the past few years that have the least impact on students. They include:
  • $7.2 million in budget reductions in 2018-19
  • $9.7 million in budget reductions in 2019-20
A total of $16.9 million in savings over a two-year period!  Savings include:
  • $4.5 million – by closing 56 general fund positions through the Early Retirement Incentive Program (ERIP)
  • $1.6 million through department reductions 
Now we need to identify an additional $3.8 million in savings for the 2020-21 school year.  
What does this mean for my child?  
The 2020-21 fiscal year presents significant challenges.Our primary responsibility is to provide the best education possible for the students we serve, and we have worked incredibly hard to ensure that every student in every classroom in every school receives high quality instruction and support. Our schools remain strong and our commitment to excellence in teaching and learning continues. However, there is a strong possibility we may close/consolidate some of our schools as we move forward.      

Why is that even on the table?     
The bottom line is Twin Rivers Unified has 46 TK-12 schools for approximately 25,700 students—too many schools for the number of students we are currently educating when compared to other districts. In addition, the District has no uniform grade configuration—everything from TK-2, TK-4, TK-6, TK-8, 5-8, 7-8, 7-12 and 9-12 to name a few. At current enrollment levels and operating so many different configurations, we have under-enrolled schools. Students are not concentrated on campuses in a way that allows the district to utilize staff efficiently and offer consistent and robust educational programming across all school sites. A uniform grade configuration will enable the district to save in ongoing expenses. 

The District has a Student Housing Committee looking at all options to cope with the fiscal realities of declining enrollment and ensuring the best possible academic outcomes for all students. The committee will recommend whether or not there will be a uniform configuration, such as K-6, 7-8 and 9-12. The Board would have to approve any changes to grade-span configurations or school closings. 

How would a reconfiguration of our schools save money?
Savings would result from the reduction of staff and lowered building operation costs. 

Is the District trying to solve a financial problem or an educational one?
Both. The ultimate goal is to deliver the best education possible for all students. To accomplish this, the District’s resources need to be used efficiently. The challenge is to ensure that all students are in the optimal grade-span model to facilitate their academic success. The financial challenge is to eliminate a significant deficit and pursue ways to operate more effectively.

What are the savings and costs typically experienced through school closings?

A 2011 Pew analysis of six major districts nationwide found that the average annual savings in the years immediately following closures were under $1 million per building. Long-term in Twin Rivers: an estimated $500,000 annually per school.

Looking ahead
Changes are never easy, and we will not make any decisions without a great deal of deliberation and engagement from our teachers, staff, students and the community. We invite you to get involved. You can find more information on the Student Housing Committee, including meetings, Here