Back in September, AUSD published its first Budget Summary for community members. The summary provided basic information about the cycle and elements of a school district’s budget, as well as specifics about the 2023-24 budget.
As we approach the Winter Break, we want to provide an update to that budget, which we published just a few months after the Board adopted it. Our intention in providing this update is threefold:
- To raise community awareness of changing conditions in the budgetary landscape
- To be transparent about some of the decisions our staff, in partnership with school communities, may need to make over the coming months
- To help the community understand the process by which we will make those decisions
Changing Budget Conditions
When the Board of Education adopted the 2023-24 budget last June, the state was projecting fairly high revenues for last year (2022). Typically, a prior year’s taxes don’t affect the current year’s budget very much. However, the extension of the deadline to submit 2022 taxes (from April 2023 to November 2023) created a unique challenge, and the complete revenue picture for 2022 is just now emerging.
To be specific, taxes collected for 2022 are significantly below the state’s expectations and, per the Legislative Analyst’s Report issued on December 7, 2023, the State of California is facing a $68 billion deficit for next year starting on July 1, 2024. To put that in perspective, the state’s entire budget is about $300 billion.
Since K-12 education is approximately 40% of the state budget, this reduction means that school districts across the state will face a significant budget challenge in 2024-25.
Specifically, while the projected Cost of Living Adjustment (COLA) for this year remains at 8.22%, the COLA for next year has dropped from 3.94% to 1.00%. And while the state projected a 3.29% COLA for 2025-26, we now don’t know what it will be.
How does that affect AUSD’s bottom line? The reduction of COLA from 3.94% to 1% in 2024-25 wipes away approximately $5 million from the school district’s revenue over the next three years (2023-24 through 2025-26). That is significant.
Parcel Tax Uncertainty
In addition, a measure to combine and renew our parcel taxes – Measure B1 and Measure A – is now on the March 2024 ballot. If that measure fails, we will have one more year of Measure B1 parcel tax revenue, but will need to identify $12.5 million in budget reductions by June 2024 for the 2025-2026 school year. While those cuts have not yet been specified, we do know that they would likely include a combination of reduced programs and services, lay-offs, salary rollbacks or freezes, and school consolidations or closures.
School districts need to submit a three-year budget to the county by June 30 of each year. Given the condensed timeline between the March 5 election and the budget deadline, we are planning on initiating public dialogues about educational and financial priorities after Winter Break in order to identify what cuts could or should be made in the event the parcel tax does not pass. We understand that talking about cuts can be painful. But we think the best approach is to be transparent and proactive about some of the challenges we are currently facing.
As a first step, we invite you to tune into the First Interim Budget Report that will be presented at the December 12 Board of Education meeting. This meeting begins at 6:30 pm and will be held both in person (at City Hall) and remotely via Teams. Please see the agenda for more information.
We’ll have further details when the governor releases his proposed budget on January 10. Over the next several months, however, we are committed to providing public updates on AUSD’s budget situation and projections on a regular basis, as well as providing opportunities for public engagement. Those updates will occur at Board meetings, in this AUSD newsletter, and via our website. We encourage you to review these updates and participate it whenever possible so that, as an educational community, we can partner on what may be some difficult decisions.