District Board Lays Plan to Move Forward Utilizing Reserves in Fund 40

Posted by: District 1 year, 3 months ago

District Board Lays Plan to Move Forward Utilizing Reserves in Fund 40

CUSD - Fund 40

Plan to Move Forward

With each new school year comes review of budget matters. The school board met on September 13 to discuss how Fund 40 will be allocated this year and decide on the best direction to take with CUSD’s future budget funding to reach the funding status known as Basic Aid.

 

What is Fund 40?

Fund 40 is also known as the Special Reserve for Capital Outlay. Up until the dissolution of Redevelopment Agencies in California in 2013, a modest amount of local property tax funds went into Fund 40 for facility and technology uses, rather than getting swept up by the State of California.  Now, those same funds (approximately $2.3 million in 2016-17) still flow to the school district, but the expenses are no longer restricted to facility and technology uses. 

 

How will Fund 40 be used this school year?

For the 2015-16 school year, monies in Fund 40 were used for "hard" facility and technology expenses—for example playground structures, computers or wiring infrastructure. At the September 13th meeting it was decided that new post-Redevelopment dissolution funds, or the 2% Pass-Through funds, would be directed straight into CUSD's General Fund for ongoing expenses to supplement the State revenues received by the District.

 

Without the decision to use the 2% Pass-Through funds in this way, CUSD would have a projected budget shortfall of $1.6 million in 2016-17, $2.7 million in 2017-18, and $3.3 million in 2018-19. By putting more of this year’s funds into the General Fund, it allows CUSD to stay on budget for the school year. The expense budget for CUSD has increased faster than the revenue coming in—mostly due to factors like state-mandated increases to retirement plans for employees (STRS and PERS), and increases in health insurance and utility costs.

 

What is the future plan for CUSD’s revenue and spending?

Moving forward, the focus will be on reaching Basic Aid status. CUSD is currently wrestling with the best path to get from its current position, facing deficit spending, to the point of becoming a Basic Aid district. This designation would mean local property taxes contribute more to the school district than the State of California would. We'll know sometime later this year, after a Sacramento Superior Court ruling, if CUSD will reach Basic Aid status as soon as the 2023-24 school year (instead of the current projection of 2035-36). How much the District will benefit by reaching Basic Aid status will be dependent on increases in property values (i.e. assessed valuations) in future years, but by keeping local property taxes local instead of sending them to Sacramento, the board is hoping for a substantial benefit.

 

Our main budgetary challenge is being able to pay our employees total compensation that is equivalent to neighboring districts in order to attract and retain the best educators and staff for our students.  The board will continue to work on the best “Bridge to Basic Aid” plan and prepare for union negotiations for the 2017-18 school year.