MUSD forecasts balanced budget for 2020-21 despite COVID-19 impact

Although the COVID-19 pandemic has significantly impacted school district budgets throughout the country, Milpitas Unified School District’s continuous track record of fiscal responsibility has allowed for a proposed balanced budget for the 2020-21 school term.

“As you know this year, 2020, is a very different year that we will probably never forget,” said Assistant Superintendent Wendy Zhang, whose Business Services Team led the 2020-21 Budget Study presentation preceding the June 9, 2020 Board of Education meeting. “The financial impact caused by this COVID pandemic is huge.”

Unexpected COVID-related expenditures coupled with Governor Gavin Newsom’s 10-percent reduction to education in the proposed state budget have forced MUSD to shift about $15 million in reserve funds to help balance its 2020-21 budget.

“When Governor Newsom proposed the reductions to education, he did not release much detail on how to implement the cuts of the subsequent years following 2020-21,” Zhang explained. “With this large scale reduction to education, it leaves us with no choice (but to tap our reserves) to have a balanced budget.”

The COVID-19 pandemic, the County Shelter in Place Order and the implementation of distance learning impacted MUSD in many ways, such as:

• The Student Nutrition Department, which has distributed 200,000 meals to families through its No Cost Grab & Go Meals Program, went from having close to $280,000 in reserves to operating at a $302,000 deficit; and
• The Adult Education Program stopped earning funds based on instructional hours for inmates because staff was no longer allowed inside the Elmwood facility due to the SIP Order. This has led to a $245,000 deficit that will be absorbed by the program. 

“Since the pandemic has created a new reality, we will have to come up with a comprehensive adjustment to our operation and allocate our budget accordingly,” said Board President Hon Lien. “We definitely need all hands on deck.” 
 
MUSD’s 2020-21 budget estimates $127.7 million in expenditures, and because education doesn’t happen without teachers and staff, 84 percent of the budget is in people. Meanwhile, MUSD’s 2020-21 revenues are projected to be $125.8 million. A major factor is about $7 million less in Local Control Funding Formula (LCFF) funds from what MUSD received from the state for the current school year. LCFF funds make up 70 percent of the district’s revenues.

“A 10 percent cut to education in one year is significant. Many school districts are facing the same challenges,” added Zhang, who was joined by Director Linh Le, Supervisor Duc Vu and Accountant Lilia Cortes for the June 9 budget study session. “In order for us to weather through this financial storm, we need to look for opportunities to generate ongoing revenues.”

MUSD recently launched a school district-business partnership program, called MUSD Alliance Partners for Future-Ready Learners, to build mutually beneficial relationships with the City of Milpitas, colleges, and local businesses to assist in economic recovery and student career skills. One founding business member, KLA Corporation, donated $100,000 for the district’s COVID-related expenses such as Personal Protective Equipment (PPE) and technology for its EducatEveryWhere distance learning program.

“If we don’t start thinking differently as a district, we fall into that constant cycle of being at the whim of the economy,” said Superintendent Cheryl Jordan. “It is imperative that we think differently about developing new revenue streams.”

The June 9 budget study session, which can be viewed here, includes cost projections for: 

• Staffing
• Enrollment/ADA
• Retirement (STRS and PERS)
• Special Education
• Student Nutrition
• Child Development Center
• Adult Education
• Multi-Year Projection Scenarios

The 2020-21 Proposed Budget handbook can be reviewed here and hard copies are available upon request.

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