In a 4-1 decision on June 30, the CVUSD Board approved a 2020-2021 District budget that includes plans for a loan of $25 million to make up a shortfall in funding from the State of California. The State has signaled to school districts that they can eventually expect full funding but portions of that money may be deferred because of revenue shortfalls at the State level due to the effects of COVID-19 and shutdowns. California is facing a projected $54 billion reduction in revenue and Governor Gavin Newsom and the California Legislature have seized upon “deferrals” as the way to get through the crisis. Under the deferral plan, the State will delay the payment of $12 billion to school districts with the promise that the funds will be paid the following year in the 2021-2022 budget. Full and on-time funding could still be possible depending on the outcome of negotiations at the federal level.
Disagreement occurred within the CVUSD Board on how best to fund the District. Sandee Everett, the lone dissenting vote at the Board meeting stated that the District should use existing reserves rather than borrow money and pay interest until future State funding comes through. “This is like going through a financial crisis at home and even though you have enough money saved to pay your bills, you put them on your credit card instead. It’s just irresponsible,” said Everett. “Why borrow money, when we can use our own reserves for free? If federal stimulus dollars come, the District can pay itself back.” Everett says the District has $37 million in reserves and other available funds, enough to cover the shortfall.
CVUSD Board Trustee Betsy Connolly saw it differently. “We begin with existing reserves but they are not enough to cover the entire amount of the deferral. We borrow to close the gap”, she said. Deputy Superintendent Victor Hayek told the Board that if federal stimulus dollars come this fall, the District might not need to borrow the money. Hayek’s optimism appears to be dependent on Congress passing the HEROES Act in its current form which many Congressional observers say is in considerable doubt.
Everett also believes it was irresponsible of the board to give $3.2 million in retroactive pay raises to District employees. The pay raises were given in lump sums this summer and added $6.4 million to the 2020-21 budget. The pay raises approved by the CVUSD Board of Trustees and negotiated with the respective employee unions came with the caveat that should there be substantial changes in State funding, the parties would agree to reopen salary negotiations. That indeed happened in June when it became even more apparent that the District budget was in trouble. The Board at that time approved a two year delay in further pay raises but elected to leave in place the raises that were granted retroactively. The original board vote granting the raises was conducted in April.