Following the passage of the Measure B parcel tax in November 2021, along with about $2 million in budget cuts over the 2021-22 and 2022-23 years, the district is "now in a better financial position which is sustainable barring any other pandemic or worldwide catastrophic events like the war between Russia and Ukraine," according to the budget. The document notes that these events drove up the price of gasoline and food supplies from those countries.
The parcel tax is expected to generate about $10.9 million during the 2022-23 fiscal year. It brought in about $9.1 million in the prior fiscal year.
The school board has a policy of holding at least 15% of total annual spending in reserves. Reserves remain at a little under 18%.
The district made a commitment to paying teachers more in 2019 with salaries and benefits making up about 90% of the operating expenses.
Little change in enrollment
The district will continue to monitor future enrollment growth as people move into new housing developments around El Camino Real.
The budget assumes about 2,730 students in the next school year, a slight increase from the 2021-22 school year when there were about 2,716 students enrolled. Because enrollment is essentially flat in the district, there won't be any significant staffing increases, according to the district.
Other districts across the Bay Area, including neighboring districts, are experiencing declining enrollment.
As a community funded (or basic aid) school district, the district's revenue is largely untethered from enrollment growth. Additional students will require more staff to be hired, costing more but without a commensurate increase in funding to the district.
Community funded districts are not included in the governor's budget funding for transitional kindergarten (TK), which requires districts to offer the program starting with the 2022-23 school year.
The Menlo Park district projects it will enroll about 38 TK students during the coming school year.
The State Teachers' Retirement System (STRS) for credentialed personnel and the Public Employees' Retirement System (PERS) for non-credentialed personnel are putting strain on the budget.
The employer contribution for teachers had previously held steady at 8.25% of certificated salaries. The employer contribution was raised from 8.25% to 19.1% over the course of seven years, ratcheting up due to new state requirements starting in fiscal year 2014-15.
During the pandemic the governor provided relief to the schools by bringing down the unfunded liability. In June, Gov. Gavin Newsom offered some relief in a $3.6 billion flexible block grant that can be used for operational costs, including pension payments.
CalPERS employer rates are projected to decrease from the current rate of 25.3% in 2022-23 to 25.2% in the following year and 24.6% in 2024-25.
Due to high inflation (5% in April), the district continues to monitor the changes as it affects the budget for books, materials, supplies and other services.
In addition to high inflation, Gov. Newsom noted that capital gains income (including profits from stock market investments) are at historical highs (roughly 9.7% of total general fund revenues in 2021-22) and are likely to revert back to norms closer to 5.5% in the future.
"With current stock market volatility and declines, some loss of capital gains revenue seems likely in the near future and may complicate the task of balancing budgets," according to the district's budget document. "As the district evaluates its long-term goals, it requires collaboration, creative thinking and additional funds that are not part of the current budget planning like TK funding. Revenue forecasts model is based on continued steady growth of property tax based on the latest trend and the global economy."
This story contains 651 words.
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