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TUSD plans for budget cuts

When Gov. Gavin Newsom released his revised California budget proposal in May amid plummeting state revenues resulting from COVID-19 economic shutdowns, public education was listed as one of four prioritized areas. Still, a 10 percent reduction — $6.5 billion — to the Local Control Funding Formula has forced Turlock Unified School District to make cuts.

The May Revision assumes the state will see a $41.2 billion loss in revenue compared to January estimates, but according to TUSD Assistant Superintendent of Finance and Accountability Marjorie Bettencourt, there are still uncertainties that could bring more changes to the budget in the coming months. When presenting TUSD’s 2020-21 Tentative Budget to the Board of Trustees on Tuesday, she pointed out the district could still receive state or federal funding, the state budget could change as the economy reopens and new expenses to open schools safely during the pandemic could affect expenditures.

“It lies in the Governor’s hands at the end of the day and we’re just in an unknown spot right now,” Bettencourt told the Board.

The LCFF accounts for approximately 83 percent of TUSD’s General Fund revenue. The District’s total LCFF entitlement in the 2020-21 Tentative Budget totals $128,389,156 — an $11 million decrease in funding than was anticipated in January. While the District spends a majority (85 percent) of its funds on personnel costs, like salary and benefits, the 10 percent cuts to the tentative budget didn’t come from that category. Instead, cuts were made at all sites in all categories outside of personnel costs, such as books, supplies and other services.

In addition, the District has frozen hiring during the coronavirus pandemic.

Although the State Teacher Retirement System (STRS) and the Public Employees Retirement System (PERS) employer contribution increased approximately $2 million for TUSD in 2019-20, the May Revise proposed to buy down the employer’s contribution to the pension programs for 2020-21 and 2021-22, reducing the employer eight contribution rates approximately two percent from January’s estimates in each system for the next two years. Additionally, this budget includes the recognition of the State’s ongoing contribution to STRS on behalf of the TK-12 education. For 2020-21, $7,617,191 is included as an expense to pension contribution and corresponding credit to revenue.

“This was the first time I’ve ever been able to show you the (pension) chart with slight dip,” Bettencourt said. “That’s one big positive that came out of the May Revise.”

The total TUSD General Fund Revenue is $161,687,854. General Fund expenditures for the 2020-21 school year are estimated at $176,243,967. The State requires at least a three percent reserve level for a district of TUSD’s size. These requirements have not been adjusted during the present COVID-19 pandemic. A three percent reserve represents less than two weeks of payroll for TUSD. Board policy states that five percent is the District’s minimum reserve level. The Government Finance Officers Association recommends reserves, at a minimum, equal to two months of average General Fund operating expenditures, or about 17 percent. Reserves are one-time funds that cannot support on-going expenditures. The District’s 2020-21 Unrestricted General Fund reserves are projected to be $10,343,101 equating to 5.87 percent. Given the current circumstances surrounding COVID-19, the District says it is highly likely they will not meet the minimum reserve level in 2021-22 and 2022-23.