The Del Mar Union School District board is looking to update its policy on the amount of reserves it keeps to ensure it can protect the district’s educational program during economic uncertainty and fluctuations in property taxes.
In the past the board established a minimum reserve balance of 15 percent of the general fund expenditures plus 3 percent for economic uncertainties—staff has recommended an update to the policy to set the minimum reserve at 17 percent plus the 3 percent for economic uncertainties.
According to Assistant Superintendent of Business Services Cathy Birks, the district’s reserve balance is typically around 20 percent.
The board was set to approve a resolution on the new policy at the May 22 meeting but opted to postpone to further discuss in a board workshop on May 23 and revisit at a future board meeting.
Eric Beinke, Del Mar California Teachers Association president, spoke out in opposition, stating that taxpayer money should be used on students and classrooms right now and should not be put away for a “rainy day that may never come.”
“Instead of mandatorily increasing our reserve levels, which are already seven times higher than those required by the state of California, our students and classrooms have needs right now that should be addressed with these funds,” said Beinke, a teacher at Sycamore Ridge Elementary School.
Beinke said DMCTA members would rather see funds used for fully funding the STEAM + program and restoring music programs which have been cut, additional support and resources for English language learners and funding the district’s new foreign language program. Beinke said DMCTA members would also like to see funds used for increasing support and training around social and emotional education, adding guidance counselors and increasing the number of school psychologists at each school site to help with students’ growing social-emotional needs.
“Our neighbors in Solana Beach are doing the right thing purposefully spending down their reserves…they designated $350,000 in budget for enhancing mental health and guidance programs,” Beinke said. “This is what we could be doing in Del Mar, rather than raising our already-high reserves.”
During its discussion, the board looked to clarify Beinke’s comment that their reserve is seven times higher than the 3 percent required by the state.
Birks said the state’s recommended minimum 3 percent reserve level is basically for Local Control Funding Formula (LCFF) districts, which Del Mar is not. She said a 3 percent reserve for DMUSD would not be fiscally responsible as it would be about $1.7 million.
“As a community-funded Basic Aid district, it is imperative that we have reserve balance that will sustain us through when the economy is at a difficult time where we are not sure of how our property tax revenues will come in,” Birks said. “That’s what happened when we went into the Great Recession, in regards to having to spend down the reserve at $2.5 million over two years. By having that reserve we were able to sustain our educational program and keep it intact.”
At the meeting the board reviewed the first read of the district’s 2019-20 budget, with revenues at $61,351,376 and expenditures of $58,37,717. Property tax revenues are budgeted at 4.9 percent, above the 2018-19 estimated revenue. Due to declining enrollment, they are projecting a reduction of four teachers and the addition of two foreign language teachers and an additional psychologist.
Currently they are projecting a $16 million ending fund balance, a 27 percent reserve. With teachers continuing through the interest-based bargaining process on their contracts, the numbers will be adjusted in June, Birks said
Birks said she believes it is the board’s responsibility to work with the administration to ensure that the district is fiscally responsible and making sure that funds go into the classroom. Superintendent Holly McClurg said that the district is diligent about its budget and its priority is that children come first.
“My goal is to never have to layoff teachers because we don’t have enough money,” DMUSD President Erica Halpern said in support of the updated policy.