The Del Mar Union School District board is anticipating a small budget surplus for its 2017-18 budget. At its May 24 meeting, Assistant Superintendent of Business Services Cathy Birks said the district is projecting revenues of $55.7 million and expenditures of $55.6 million, with an ending fund balance of reserves of $11.2 million, above the state-mandated 3 percent for economic uncertainty at 20.2 percent.
“It’s so important that we grow our reserves,” said trustee Erica Halpern. “Our reserves are to protect our educational program in the case of economic downturn and make sure we can keep our exceptional teachers and our top-quality education.”
The budget will be brought back to the board for approval in June.
The 2017-18 budget revenues reflect $1.2 million in state aid, Education Protection Account funding of $869,000 (based on an estimated $200 per average daily attendance) and property tax increases of 7 percent. The district will be losing the $135,000 a year in funding that it used to receive from the state for deferred maintenance that was eliminated by the Local Control Funding Formula.
Expenditures include a salary increase for teachers. The district recently completed “amicable” negotiations with the Del Mar California Teachers Association, which resulted in a retroactive 1 percent increase to the 2016-17 salary schedule and a 1.5 percent increase to the 2017-18 salary schedule. The 1-percent compensation increase amounts to $278,306. The collective bargaining agreement for 2017-18 included a 1.5 percent salary increase, four additional hours for upper grade parent teacher conferences and an increase to the health benefits cap for a total increase of $604,152.
Last year, the teachers received a retroactive 3 percent increase and a 2 percent increase for the 2016-17 school year.
The district’s contributions to the state retirement systems also continue to increase — CalSTRS (California State Teachers Retirement System) and CalPERS (California Public Employees’ Retirement System).
There will be an increase in the district’s STRS contribution from 12.58 percent to 14.43 percent. The STRS contribution rate is projected to increase annually by 1.85 percent until it reaches over 19 percent in fiscal year 2020-2021. The PERS rate will increase from 13.88 percent to 15.53 percent this year and is estimated to increase to 27 percent by fiscal year 2024-25.
The district is complying with the state-mandated 3 percent reserve level but as DMUSD President Doug Rafner noted 3 percent is not recommended for basic aid or community-funded districts. In 2010, the district’s financial task force recommended that the reserve balance be kept between 22 and 30 percent of expenditures.
“We know first-hand, having been on the board during a recession, that your reserves can drop from a healthy 28 percent down to 20 percent just like that,” Rafner said. “And if it were not for our reserves, we would have been in real financial trouble.”
Trustee Scott Wooden said he likes to see them operating at budget surpluses while building their reserves back up.
“We just need to be aware looking forward as we look to future years to make sure that we don’t spend everything we get in increases in salaries and benefits, that we put some money into reserves as well. There has to be a balance,” Wooden said, stressing he would like to see the reserves go up while the district is in good times so they can hold on to what they have in the lean times. “I don’t want to be in a situation like San Diego Unified or Poway where they have structural deficits in the future and have to figure out what they’re going to cut.”
At the May 24 meeting, the district also got a snapshot of its enrollment projections for the coming school year. Assistant Superintendent Jason Romero said the district is projecting a slight uptick in enrollment in 2017-18 to 4,541 students from 4,522 in 2016-17.
Romero said they are seeing a trend of smaller kindergarten class sections — historically they have been around 600 and in the past two years the kindergarten cohort has been around 400.
Although there is some growth in the district, it is seeing a decrease in K-6 class sections as the larger cohorts of classes drop off and the smaller cohorts are coming in. In 2016-17 the district had 191 kindergarten through sixth grade sections and in 2017-18 the district is projecting 188 sections.