One factor is that the district, which in the past decade has seen a 30 percent growth in enrollment, believes student numbers will remain flat for the next three or four years. A demographer had previously projected the district might see an additional 150 students over that same period, but enrollment was down for the current school year, and a new study shows growth leveling out.
Unlike most California school districts, the Menlo Park district receives very little additional funding when enrollment grows. Because of high local property tax revenues, the district is considered community-funded and receives almost all its funding from local sources. Districts with lower property tax revenues get money from the state that increases with enrollment.
The Menlo district's budget for 2018-19 shows total revenues of $51.2 million, with 86 percent of that coming from property taxes, parcel taxes and donations from the Menlo Park-Atherton Education Foundation.
The district's budget shows $51.5 million in spending, with 88.7 percent going to salaries and benefits. The district plans to increase the number of employees by the equivalent of 2.78 people. The budget includes a previously negotiated 3 percent salary increase for all employees except management, who have a 1.5 percent increase factored in.
In an attempt to keep the state's pension systems out of bankruptcy, since 2014 California has required increasing pension payments from employers and employees in the systems, with the contributions doubling over seven years. The budget report says the amount of the district's budget going toward benefits — including pension costs, health and welfare, and retiree benefits — has increased by 8 percent, or $3.2 million, since 2013-14.
While the district's budget shows more spending than revenues, the totals do not include the use of one-time revenues of over $1 million from the state, grants and other sources. With those funds included, the district will see a small surplus of about $88,000 for the year, a report on the budget says.
That surplus could increase to about $350,000 if the one-time funds for schools that Gov. Jerry Brown has included in his budget are approved by the Legislature, the report says. The district didn't include those funds in its projections, however, because in past years the Legislature has changed the governor's allocations.
The three-year budget projections indicate that the district will be able to retain reserve levels above 15 percent of the operating budget through the 2020-21 fiscal year. The three-year projections show the district starting the 2018-19 fiscal year with a fund balance of $13.5 million, dropping to $10.9 million by the beginning of the 2022-23 fiscal year.
School board President Terry Thygesen said she was "breathing a sigh of relief, because it could have been a lot worse." However, she said, the district is not "fully funded" and she wants the school board to have a discussion about what that term might mean. "How far are we from what we need and want to do the job?" she asked.
"I don't think we're anywhere close to ideal," she said.
Board member David Ackerman, a retired district principal, said he agreed. The district has fewer resources than it did in the past, he said. Classroom teachers take on half the physical education programs and art teachers have less time to spend with each class of students, he said. "We've just gotten used to those things and we've shrunk those programs," he said.
But board member Caroline Lucas, a teacher at the Las Lomitas Elementary School District's La Entrada Middle School, said things have also been worse. "I remember when I taught all the PE, and all the art, and all the science," she said.
This district is "increasing our staff at a time when we're not increasing our students," she said. "I'm not sure ... that we can continue to dream as we once did, especially with the escalating pension costs."
Sheikholeslami warned that is important to remember that the robust economy is not likely to continue indefinitely. "We are in an unprecedented growth period," he said. "We need to protect ourselves" from a recession, he added.
The district was scheduled to give final approval to the budget at a Tuesday, June 12, meeting.
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