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Pajaro Schools Expect Boost in State Funding as Enrollment Begins Decline
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Pajaro Schools Expect Boost in State Funding as Enrollment Begins Decline
By Michael Thomas
During the past decade, the County’s largest school district has been spared the financial challenges resulting from declining enrollment. Spurred by growth in Watsonville, Pajaro Valley Unified School District’s student enrollment grew until last year. And while significant cuts have been suffered during the past two years because the State has reduced public school funding, Pajaro trustees have been spared some of the pain other district leaders have faced in balancing spending plans.
But next year, the District will lose about 100 of its 18,000 students, forcing administrators to reduce teaching staff by 10 to 15 full-time positions.
In another year, that could have meant a budget crisis. Not this year. In June, the Governor’s proposed State budget calls for a boost in revenue for all California districts in June, increasing the base rate paid per student day. Current estimates suggest that should mean about $6 million more for Pajaro Schools.
Board President Sharon Gray, who represents the communities of La Selva Beach and Rio Del Mar, said she’s not expecting the District to make any cuts to programs and services other than teacher layoffs.
“They are budgeting for those lost students and it is looking good,” she said.
She said that enrollment declined slightly last year and by a larger number this year, potentially signaling a new era for the County’s largest unified school district.
“With the condition that our District is in, it means…that we don’t have to scramble to build schools for kids like we had to do for a while,” she said.
The $6 million will help the District’s nearly $145 million budget keep pace with inflation and employee salary increases.
For the moment, District administrators don’t see much more enrollment decline in the near future. Mary Hart, Director of Finance for the District, said the outlook for the next three years is stable. Her office completed a mandatory three-year outlook report on Mar. 15.
Governor’s Proposals Adds up to $6 Million
The Governor’s proposal for a 5.18 percent Cost of Living Adjustment works out to $4.9 million in increased revenue, based on current enrollment levels. The Governor also proposed to offer some “equalization” money next year, which aims to correct inequities between school districts. For PVUSD, his proposal would result in an $876,000 boost next year. The District may get another $200,000 more in new money for “deficit reduction.”
“We should be in good shape,” Hart said.
The final impact of the State budget won’t be settled until the Governor’s office works out a deal with State legislators, a process that frequently stretches into the summer months. That means school officials have to finalize their budgets before getting an exact estimate of the State budget’s impact. However, in most years, the Governor’s proposal for schools doesn’t get worse. Next year, it may even improve since the COLA is linked to Department of Commerce figures that haven’t been finalized yet.
It could go as high as 5.8 percent.
For the current school year, the COLA increase was 4.23 percent. For PVUSD, that made possible 3.25 percent raises for virtually all employees. Those contracts are just now being wrapped up after months of debate. The raises are retroactive to the start of the fiscal year last July.
As a result, the actual impact of next year’s budget proposals on teachers’ paychecks won’t be known for months.
Benefits To Cost More
As a result of new Federal standard for reporting of retirement obligations, Pajaro officials have estimated that current retirement health care benefits are going to cost the District more in the future. According to an actuarial study the District conducted, they’ll need about $17 million over the next 30 years to pay for retirees’ benefits.
As a result, the District must start socking away quite a bit more money every year.
“It’s about $1.7 million annually,” Hart said.
District officials are working on a plan to deal with the potential shortfall, and they expect to work out the details by the end of the fiscal year. According to Hart, the impact of the $1.7 million would be spread out across the district.
“It would be coming from any fund that has employees with health benefits. Food service would pay their portion … so it would come from all across the District,” she said.
In spite of the new rule on financing of retirement benefits, Board President Gray said the District will offer an attractive retirement package next year, something akin to the “golden handshake retirement bonus.”
“The insurance company said we were in such good shape that we could look at this,” Gray said.
The bonuses are paid with one-time money, but they help the District achieve teaching staff reductions through the retirement of the District’s highest paid teachers.
Last time the District offered a “golden handshake” bonus, about 75 teachers retired, which is twice the number that retire in a normal year, Gray explained.
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