Reed Union School District

We are in unprecedented times concerning the bleak condition of the California economy.  The RUSD Board of Trustees continues to be diligent in its examination and oversight of our finances, while sustaining excellent instructional programs for our children during these tenuous times. 

California Budget Crisis - $42 billion revenue shortfall February 2009 and an additional $24 billion by May, 2009

In February the Governor declared a Fiscal Emergency and called the newly sworn legislature into a Special Session to address the fiscal emergency for 2008-09.  At that time the deficit was $11.2 billion and was projected to increase to $28 billion over the next 18 months.  In reality, it grew to an unparalleled deficit of $42 billion.

The legislature eventually passed a budget in February for 2009 -10 to make up for the $42 billion deficit.  Education funding was reduced by $9.3 billion. The loss of revenue to our District was $62,000. 

By May state revenues continued to decrease, creating a deficit of $24 billion and an unbalanced budget.  Due to the weakening economy and the housing crisis, state revenues were projected to drop from $107 billion reached in 2007-08 to $83 billion in 2008-09.  More alarming was the prediction that revenues will not return to the 2007-08 level until 2013.

Effect on Reed Union School District

As the budget situation worsened through out the summer, it become very obvious to Basic Aid Districts (see below) across the state that we would not be immune from the devastating fiscal debacle that is facing our state. 

On July 28^th the state budget was revised and approved to make up for the $24 billion deficit.  The impact to our district will be a loss of revenue estimated to be $750,000.  This is on top of the $62,000 revenue decrease in February.

The Good News

RUSD has prudently managed our finances over the years, emphasizing long-range planning and fiscal stability, along with establishing reserves to help ease the burden during economic downturns.  While most California school districts have been reducing their budgets through various program cutbacks and layoffs, we have been able to avoid layoffs or severe program cutbacks.  Our number one priority is to preserve jobs for our employees and programs for our children. 

The good news is:

• All employees will be retained this school year; there were no employee layoffs.
• Instructional days for students will not be reduced.
• Foundation supported programs will continue to be provided:  art, music, Spanish, technology, and PE.
• Our budget is currently sound and well managed.

The highest concerns for the School Board are monitoring the budget situation and acting prudently to keep student programs intact.  As parents, more than ever, your continued support and involvement in our schools is needed.

We are a great school district because of our dedicated employees, supportive parents, and effective School Board that governs the District.  I am confident that if we work together, we can get through these trying times that are affecting our nation and state.  I will continue to communicate with you as I learn new information on the status of the budget.

Basic Aid District:

Funded primarily through local property taxes and community support

It is important for parents to understand the sources of the District’s revenue that sustains the excellent instructional programs offered to our students. 

We are in one of just a small number of school districts in California that are funded differently than approximately 90% of the other districts in the state, in that we are classified as a “Basic Aid” district.  We derive the majority of funding from three different local sources unlike the majority of districts in the state who rely on state funding as their primary source of income.

The largest source is local property tax revenue, which supplies about 70% of our $15.9 million budget and is based on the prior year property tax collections.  This funding sustains our core instructional programs.

A second source of financial support is parcel tax revenue, which brings in $1.3 million annually.  Parcel tax revenue is primarily used to support small class size in the District.  It was approved by the voters in 2007 and will remain in place for seven years (with a 3% annual increase for inflation).

The third source of income support is the Foundation for Reed Schools.  Annually, the Foundation gifts $1 million to the District to help support the $1.5 million cost of art, music, technology, foreign language, and PE.  Foundation funding is expended during the year in which it is received.

These three revenue streams are each critical to District operations.

Reed Union School District

Questions and Answers on the State and School District Budget

August 18, 2009

1. What is the impact of the recently approved state budget on the Reed District?

The state budget approved July 28^th balances a budget that was $24 billion out of balance.  Education suffered deep cuts. As the state budget worsened, it became very apparent that Basic Aid Districts would not be immune from loss of revenue (10% of districts in the state are considered Basic Aid since they receive the majority of their revenue from local property taxes instead of state revenue). 

The impact to our District is a decrease of $750,000 over the next two years. This reduction of revenue is on top of the $62,000 we lost when the state budget had to be balanced in February, 2009.   

We have been advised by the Marin County Office of Education that we should prepare for additional revenue loss mid-year due to the continued weak state economy. 

2. With the loss of revenue, will the District have to make program cuts?

The good news is that the district did not have to lay off employees due to the loss of funding.  We currently have placed a delay on hiring.  This means vacancies due to retirement or resignation will not be filled with a new employee other than maternity leaves and Special Education mandates.  New classes may be formed due to high enrollment.  We are monitoring attendance daily. 

All Foundation supported programs, art, music, PE, Spanish and technology will be staffed next year. We will be able to fill vacancies that have occurred from current staff.

Through the long term, it is the Board’s goal to maintain programs for our children and not have employee layoffs.

3. Will the District lose any other funding next year?

Due to the downturn in the real estate market and the decrease in home sales in Tiburon, Belvedere, and east Corte Madera, we will experience a reduction in property tax revenue increases next year.  Since 2003 the District has experienced an average annual increase of property tax revenue of around 8%.  A 4% increase is estimated for 2009-10, which amounts to added revenue to the District budget of $400,000.  This is our lowest increase since 1995.  Over the next three years, we estimate that revenue increases will be less than 3% annually, resulting in a reduction of over a $1 million in anticipated revenue.  If the real estate market rebounds faster than expected, the annual property tax increase would be higher than current projections.  If the real estate market takes longer to rebound than expected, the annual property tax increase would be lower.

4. Will the $400,000 of increased revenues be enough to cover ongoing costs next year?

The District has ongoing costs to cover employees’ health and welfare benefits, contractual salary schedule increases for longevity or earned academic units for teachers, as well as longevity increases for classified (non-teacher) staff.  Next year, $250,000 will be needed to fund these continuing expenses.

5. Will the District receive any of the federal stimulus money approved by Congress and the President?

Yes, it will help, but it will not help restore the large amount of money that has been lost.  The funding is non-recurring and is to be allocated over a two-year period, so we cannot make any long-term commitments with the stimulus funding.

6. The District had to add a new kindergarten class in 2008-2009 and had larger than usual classes in some other grades.  If enrollment continues to increase, is there adequate funding to hire more teachers to keep class sizes down?

The Board has been very prudent in building reserves to protect programs for our children, as well as employees’ jobs, in case of a fiscal emergency.  The RUSD Board of Trustees continues to be diligent in its examination and oversight of our finances, while sustaining excellent instructional programs for our children during these tenuous times.  It is the Board’s goal to maintain small class sizes, planning for future teacher hiring as enrollment increases.  Over the last two years the district has experienced an unprecedented 9% growth in enrollment.

Last year’s kindergarten class size average was 20.5 students, which was only slightly higher than in previous years.  It is critical parents register their children for school as early as possible to help the district confirm enrollment.

7. The District receives funding annually from the Parcel Tax passed in 2007.  Isn’t this money used to support low class size?

The parcel tax contributed $1,352,446 last year to the District budget.  The funding is used to maintain low class size in all grades, K-8, as well as support district programs.  The parcel tax increases 3% annually and does not come close to covering the cost of adding new teachers, as enrollment increases.  The annual increase in parcel tax funding is further reduced by additional senior exemptions filed each year.  The 2009-10 parcel tax only increased by $10,029 after a $59,003 reduction in senior exemptions.

8. The recently approved budget allows school districts to negotiate with their unions to reduce the number of days students attend school.  Is that going to happen in our District?

Reed Union School District students will continue to attend school for 180 days, just as they did last year.  This is an important component of our commitment to maintain programs for our children.

9.The Marin County Treasurer manages the District’s cash, what are their cash investment priorities?

Since California is suffering from a severe cash flow shortage and had to issue IOU’s the Board was concerned about Marin County’s cash management policies.  The Board of Trustees devoted time to meet with the County Treasurer concerning the investment of district funds.  Based on the investment returns and the fiscal prudent manner in which our cash is invested the Board feels that our funds are being invested appropriately.

Although our district was not affected by the IOU’s, it is important that the Marin County Treasurer manages our cash appropriately and we remain cash flow positive.  The Treasurer’s investment priorities are:

            1.  Capital preservation

            2.  Liquidity

            3.  Rate of return consistent with the first two investment objectives

The Board feels that this is the appropriate order of investment priorities for our funds.

10. How can parents help or contribute?

It is critical that our attention remains focused on the bigger picture as we move through these troubled times.  For example, we need to be more concerned about saving the art program so our children can have art, than offering to purchase materials so that our children can experience a particular project.  Our kids’ experiences will be enlightening if we are able to maintain our wonderful programs through out this difficult financial period.  If we have to substitute different projects or speakers or field trips to save funding, we will make sure our replacements are quality and serve their educational purpose.

Our parents are so very generous, even in these trying times.  All financial contributions should be made to the Foundation for Reed Schools.  Continuing to give financially to the Foundation and donating services through the PTA are not just a tremendous help, they are critical investments in our children’s extraordinary education, especially in these times of economic uncertainty. 

11. How can I obtain more information if I have questions pertaining to the budget?

Please email your questions to Ellen Mayer at emayer@reedschools.org in the District Office. She will make sure your questions are directed to either Superintendent Chris Carter or Business Manager John Frick for their response to you.

We will update the website as we receive new information regarding the budget or enrollment.