Expenditures continue to outpace revenues for the Menlo Park City School District, but the district will remain financially stable until at least the 2021-22 fiscal year, according to a district staff report.
The multiyear budget indicates continued deficit spending will lead to a dip below the school board's policy of holding at least 15% of total annual spending in reserves by fiscal year 2022-23, the report states. For the 2019-20 budget, approved by the school board at its June 11 meeting, the district is able to hold 20.5% of its total annual spending in reserves.
The 2019-20 fiscal year budget projects an operating deficit of $801,907. The district has increased spending on professional development, educational initiatives and targeted staffing to meet its educational goals, according to the staff report.
The school board has had preliminary discussions about pursuing another parcel tax to go on the November 2020 ballot to help with this deficit spending, said Chief Business and Operations Officer Ahmad Sheikholeslami. The district's Measure X, a seven-year parcel tax with an initial rate of $360 per parcel, passed in 2017.
Added to the district's three other parcel taxes, which have no expiration date, total district parcel taxes are about $1,086.82 per parcel for the 2018-19 fiscal year.
Concerns about deficit spending come on the heels of the school board's approval of a teacher compensation philosophy earlier this year, which will require "additional funds that are not part of the current budget planning," according to the staff report. The philosophy is part of the district's efforts to hire and retain the "most qualified and exceptional teachers and staff" given that the district is located in an area of "extreme" high cost of living and has a budget dependent on local revenue sources, according to the district.
Superintendent Erik Burmeister has begun exploring how the district can increase its revenues through endowments, additional community giving and parcel taxes to meet the goals in the philosophy, according to the staff report.
"The district is in a healthy position as it looks at its future compensation philosophy," Sheikholeslami said.
Unlike most California school districts, the Menlo Park district (along with the Las Lomitas, Woodside Elementary and Portola Valley districts) receives very little additional funding when enrollment grows. Because of high local property tax revenues, these school districts are considered community-funded districts and receive almost all their funding from local sources. Districts with lower property tax revenues get money from the state that increases with enrollment.
The district has not settled salary negotiations with its two bargaining units and unrepresented employees for the 2019-20 fiscal year, according to the staff report. The budget includes a 2.6% annual increase as a placeholder for pay bumps, movement of employees on the salary schedule, and savings from retirements and resignations.
The 2019-20 annual budget includes total expenditures of $54.4 million, with 88.4% going to salaries and benefits. The district plans to increase its number of employees by the equivalent of 3.86 people.
The district's budget for 2019-20 projects total revenues of $53.6 million, with 86% of revenues coming from property taxes, parcel taxes and donations from the Menlo Park-Atherton Education Foundation.